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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO
SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission File Number 0-20411
MISSISSIPPI CHEMICAL CORPORATION
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(Exact name of registrant as specified in its charter)
MISSISSIPPI 64-0292638
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
Highway 49 East, P.O. Box 388,
Yazoo City, MS 39194
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (601) 746-4131
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
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Common Stock, par value $.01 New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
At September 2, 1998, Mississippi Chemical Corporation had 26,999,785 shares of
common stock, par value $0.01, outstanding. The Company estimates that the
aggregate market value of the common stock on September 2, 1998 (based upon the
closing price of the common stock on the New York Stock Exchange), held by
nonaffiliates was approximately $345,134,735.
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DOCUMENTS INCORPORATED BY REFERENCE
Annual Report to Shareholders for fiscal year ended June 30, 1998 (Item 1 in
Part I; Items 5, 6, 7, 7A and 8 in Part II; and Item 14 in Part IV).
Proxy Statement for Annual Meeting of Shareholders to be held on November 10,
1998 (Items 10, 11, 12 and 13 in Part III).
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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 incorporated in Mississippi in September 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 Company maintains a site on the World
Wide Web at www.misschem.com. The term "Company" includes Mississippi Chemical
Corporation and its wholly owned subsidiaries, Mississippi Phosphates
Corporation; Mississippi Potash, Inc.; Eddy Potash, Inc.; Triad Nitrogen, Inc.;
Triad Fertilizer, Inc.; TNI, Inc.; Triad Barge, Inc.; TNI Barge, Inc.; MCC
Investments, Inc.; NSI Land Corporation; Mississippi Chemical Management
Company; and Mississippi Chemical Company, L.P. References to the Company's
operations prior to July 1, 1994, refer to the Cooperative's operations.
The principal business of the Cooperative was to provide fertilizer products
to its shareholders pursuant to preferred patronage rights that gave the
shareholders the right to purchase fertilizer products and receive a patronage
refund on those 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. As a result of the
Reorganization, the capital stock of the Cooperative was converted into common
stock and/or cash, and the Company began to operate as a regular business
corporation.
In August 1996, the Company entered into an agreement to acquire the
fertilizer businesses of First Mississippi Corporation ("First Mississippi") in
an all-stock merger transaction. The transaction was completed on December 24,
1996. The First Mississippi fertilizer operations primarily included AMPRO
Fertilizer, Inc. ("AMPRO"), and a 50 percent interest in Triad Chemical, both
located on contiguous property at Donaldsonville, Louisiana. The Company
already held the remaining 50 percent interest in Triad Chemical. Since closing
of the transaction, the Company merged AMPRO into, and contributed its 50
percent interest in Triad Chemical to, First Mississippi and changed the name of
First Mississippi to Triad Nitrogen, Inc. ("Triad Nitrogen").
In August 1996, the Company, through two subsidiaries of its wholly owned
subsidiary Mississippi Potash, Inc., acquired substantially all of the assets
(including the right to use the corporate names) of New Mexico Potash
Corporation and Eddy Potash, Inc. ("Eddy Potash"), from Trans-Resources, Inc.
Since the acquisition, New Mexico Potash Corporation has been merged into
Mississippi Potash, Inc. Eddy Potash, which operated as a wholly owned
subsidiary of Mississippi Potash, Inc., suspended its mining and production
operations on December 3, 1997. The Company is currently evaluating alternative
methods of mining the Eddy Potash reserves. The original mine and refinery
owned by Mississippi Potash, Inc., is now known as the "West Facility," and the
former New Mexico Potash Corporation mine is known as the "East Facility."
NITROGEN
Products
The Company produces nitrogen products at its production facilities in Yazoo
City, Mississippi, and Donaldsonville, Louisiana. The Company's principal
nitrogen products include ammonia; fertilizer-grade ammonium nitrate, which is
sold under the Company's trade name Amtrate(R); UAN
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solutions, which are sold under the Company's trade name N-Sol; urea; and nitric
acid. In fiscal 1998, the Company sold approximately 2.5 million tons of
nitrogen products to farmers, fertilizer dealers and distributors, and
industrial users located primarily in the southern United States. Sales of
nitrogen products by the Company in fiscal 1998 were $298.6 million, which
represented approximately 57 percent of net sales.
Although, to some extent, the Company's various nitrogen products are
interchangeable for agricultural purposes, each has its own distinct
characteristics that produce agronomic preferences among end-users. Farmers
determine which nitrogen product to apply based on the crop planted, soil and
weather conditions, regional farming practices, and relative prices for nitrogen
products.
AMMONIA. The basic nitrogen product is anhydrous ammonia, which is a
necessary raw material for the production of the Company's other nitrogen
products. Anhydrous ammonia, which is 82 percent nitrogen, is the most
concentrated nitrogen product 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 1998, the Company produced approximately 1,543,000 tons of
anhydrous ammonia at its Yazoo City and Donaldsonville facilities. The Company
sold approximately 644,000 tons of anhydrous ammonia as a raw material for
industrial users and 4,000 tons as a primary fertilizer for direct application
to crops. The balance of the anhydrous ammonia was consumed by the Company as a
raw material to manufacture its other nitrogen products.
AMMONIUM NITRATE. The Company is the largest manufacturer and marketer of
high-density ammonium nitrate fertilizer in the United States. Ammonium
nitrate, which is 34 percent nitrogen, is produced by reacting anhydrous ammonia
and nitric acid. Ammonium nitrate is less subject to volatilization
(evaporation) losses than other nitrogen products. 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
United States has been stable in recent years, the use of conservation tillage,
which reduces soil erosion, is increasing in the United States and should have a
positive impact on ammonium nitrate demand.
In fiscal 1998, the Company sold approximately 765,000 tons of solid ammonium
nitrate fertilizer, all of which was produced at the Company's Yazoo City
facility. 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.
UAN SOLUTIONS. In fiscal 1998, the Company sold approximately 485,000 tons
of UAN solutions, which it produced at its Yazoo City facility and sold under
the trade name N-Sol. N-Sol is a 32 percent nitrogen product that is made by
mixing urea liquor and ammonium nitrate liquor. N-Sol is used as a direct
application product for cotton, corn, grains, and pastures, as well as for use
in liquid fertilizer blends. Over the past 20 years, there has been a
substantial increase in the use of UAN solutions as a part of the overall growth
in the agricultural consumption of nitrogen products in the United States.
UREA. In fiscal 1998, the Company sold approximately 366,000 tons of prilled
urea and approximately 149,000 tons of urea melt, which it produced at its
Donaldsonville facility. Urea is synthesized by the reaction of ammonia and
carbon dioxide and then solidified in prill form. At
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46 percent 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 that 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. Most of the Company's prilled urea that is sold to the
agricultural market is broadcast on rice and winter wheat crops in Arkansas,
Louisiana, Mississippi, Oklahoma, and Texas. Approximately 44 percent of the
Company's prilled urea sales are to industrial users and manufacturers of animal
feeds. Under a long-term contract with Melamine Chemicals, Inc. ("Melamine"),
that became effective on July 1, 1997, and replaced a previous long-term
commitment with Melamine, the Company is obligated to sell up to 210,000 tons
per year of urea melt at a market-related price to Melamine's facility located
adjacent to the Triad Nitrogen facility. Melamine's urea melt requirements,
coupled with the Donaldsonville facility's ability to only prill 460,000 tons on
an annual basis, determine the Company's annual production figures for prilled
urea and urea melt.
NITRIC ACID. In fiscal 1998, the Company sold 57,000 tons of nitric acid
produced at its Yazoo City facility to industrial users and used the balance of
nitric acid produced in fiscal 1998 as a raw material for the production of
Amtrate(R). The Yazoo City facility produces more nitric acid than any other
U.S. facility. Nitric acid is used to produce end products such as nylon
fibers, polyurethane foams, rubber chemicals and specialty fibers. Because of
the addition of a new 650-ton-per-day nitric acid plant at the Yazoo City
facility, completed in March 1998, the Company expects to sell a greater amount
of nitric acid in fiscal 1999.
PRODUCTION AND PROPERTIES
YAZOO CITY, MISSISSIPPI. The Yazoo City facility is a closely integrated,
multiplant production complex located on approximately 1,180 acres. The complex
includes two anhydrous ammonia plants, five nitric acid plants, an ammonium
nitrate plant, two urea plants, and a UAN solutions plant. One of the nitric
acid plants and the second ammonia plant were added through an ongoing expansion
project which is estimated to cost approximately $130 million. The 650-ton-per-
day nitric acid plant became operational in March 1998, while the 500-ton-per-
day ammonia plant is scheduled to be operational in October 1998. The addition
of the new nitric acid plant has increased the Company's annual nitric acid
production capacity to approximately 1,025,000 tons and its annual ammonium
nitrate production capacity to approximately 900,000 tons. The Company is also
planning to make certain modifications to the ammonium nitrate plant, which are
estimated to be completed by the end of fiscal 2000, and are expected to add an
additional 50,000 tons of capacity. The addition of the new ammonia plant will
increase the annual ammonia production capacity of the Yazoo City facility to
710,000 tons, while the Company's annual UAN solution production capacity will
remain at 550,000 tons.
The Yazoo City facility includes a 20.5 megawatt cogeneration facility that
produces significant savings by the sequential generation of electricity and
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 Nitrogen facility is a closely
integrated, multiplant nitrogen complex located on approximately 740 acres
fronting the Mississippi River at Donaldsonville, Louisiana, which produces
anhydrous ammonia and urea. The facility includes two anhydrous ammonia plants
with a combined annual production capacity of 1,080,000 tons and a urea plant
with an annual production capacity of approximately 560,000 tons.
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The Triad Nitrogen facility has ready access to rail, truck, and ammonia
pipeline transportation. The plant also is equipped with a deep-water port
facility on the Mississippi River, allowing access to economical oceangoing
vessel and barge transportation for its urea and ammonia products. The facility
is well-positioned for the purchase of competitively priced natural gas. See
"Raw Materials--Natural Gas."
TRINIDAD. In December 1994, the Company entered into a 50-50 joint venture
with Farmland Industries, Inc., known as Farmland MissChem Limited ("Farmland
MissChem") to construct and operate a 2,040-short-ton-per-day ammonia plant to
be located near Point Lisas, The Republic of Trinidad and Tobago. Construction
of the facility is complete, and the ammonia plant began producing commercial
quantities in July 1998. The Company is obligated by contract to purchase one-
half of the ammonia (approximately 350,000 tons per year) produced by the plant
at a purchase price that approximates market price, but is subject to an agreed-
upon floor price. The Company is currently using its portion of the production
from the new facility as a raw material for upgrading into finished fertilizer
products at its existing facilities and to meet its contractual commitments to
certain industrial customers.
OTHER. The Company also owns 11 ammonia barges and a 50 percent interest in
an ammonia storage terminal in Pasadena, Texas.
MARKETING AND DISTRIBUTION
The Company sells its nitrogen products to farmers, dealers, and
distributors, as well as industrial users, located primarily in the southern
region of the United States where its facilities are located. Although the
Company has traditionally sold the great majority of its nitrogen products
through the agricultural fertilizer distribution chain, an increasing amount of
nitrogen product is being sold to industrial users in order to reduce the
Company's exposure to the seasonal nature of the agricultural fertilizer
markets.
In the fertilizer distribution chain, distributors operate as wholesalers
supplying dealers who, in turn, sell directly to farmers. Larger customers
(distributors and large multilocation dealers) arrange for distribution,
storage, and financing of nitrogen products. The majority of the Company's
sales are made to distributors and large dealers in the Company's primary trade
area. The ten states that make up the Company's primary trade area are
Mississippi, Texas, Alabama, Louisiana, Tennessee, Georgia, Kentucky, Arkansas,
Missouri and Florida.
The Company maintains a field sales force strategically located throughout
the southern United States. The sales force attempts to maintain 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 believes it is able to ascertain local
demand for fertilizer products and supply the customer's fertilizer requirements
in the most cost-effective manner. The Company's sales force is also able to
identify specific customer service needs that the Company can meet. Customer
service and support helps differentiate the Company's products and enhance its
position as a preferred supplier.
The Company transports its nitrogen products by barge, rail, pipeline, truck
and oceangoing vessels. The Company's distribution network includes the
recently purchased 11 ammonia barges, numerous trucks and a pipeline that pumps
UAN solution from its Yazoo City plant to its Yazoo River port facility, along
with owned or leased warehouses and terminals that are strategically placed in
high-consumption areas. The Company's distribution network has been recently
strengthened through
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the establishment with Farmland Industries, Inc., of a 50-50 joint venture, FMCL
Limited Liability Company ("FMCL"), to arrange for the transportation of ammonia
from the Farmland MissChem Trinidad facility to the United States and other
world markets. FMCL has executed two long-term time charter agreements for
oceangoing vessels with a European shipowner. Both agreements establish a fixed
charter rate for the vessels during the entire time that the agreements are in
effect. The Company believes that the time charter agreements provide a hedge
against unfavorable fluctuations in shipping rates and will be a cost-effective
method of transporting its Trinidad product.
PHOSPHATE
PRODUCTS
The Company produces diammonium phosphate fertilizer ("DAP") at its facility
in Pascagoula, Mississippi. In fiscal 1998, the Company sold approximately
726,000 tons of DAP. Sales of DAP by the Company in fiscal 1998 were $127.7
million, which represented approximately 25 percent 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 percent nitrogen and 46 percent
phosphate (P205) by weight. DAP is an important fertilizer product both for
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, multiplant 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
(80,000 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
out-loading 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.
Construction of a new phosphogypsum disposal facility at Pascagoula was
substantially completed on June 30, 1998 at an estimated cost of $18 million.
In April 1998, an expansion of the Company's diammonium phosphate manufacturing
facilities at Pascagoula was completed at an estimated cost of $13 million.
This project increased annual production capacity from approximately 720,000 to
approximately 900,000 tons per year and increased DAP storage capacity from
approximately 40,000 to 80,000 tons.
MARKETING AND DISTRIBUTION
On September 30, 1997, the Company terminated its exclusive DAP marketing
arrangement with Atlantic Fertilizer & Chemical Corporation ("Atlantic") and
became a member of the Phosphate
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Chemicals Export Association, Inc., a Webb-Pomerene corporation known as
PhosChem, effective October 1, 1997. Since October 1, 1997, all of the Company's
export sales of DAP have been made through PhosChem, and all domestic sales of
DAP have been made through the Company's sales staff.
In fiscal 1998, approximately 70 percent of the Company's DAP was sold into
international markets through Atlantic and PhosChem. The largest export markets
in fiscal 1998 were China, India and countries in 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
Products
The Company produces potash at two mines and related facilities near
Carlsbad, New Mexico. In fiscal 1998, the Company sold approximately 1,022,000
tons of potash, primarily in granular form. These sales were predominately to
customers located west of the Mississippi River. Sales of potash products by
the Company in fiscal 1998 were $91.7 million, which represented approximately
18 percent 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 by which the potassium chloride is separated from
the sodium chloride.
The three principal grades of potash fertilizer are granular, coarse, and
standard, with granular being the largest particle size. Potash is an important
fertilizer product for both direct application and for use in blended
fertilizers applied to all types of crops. Granular potash is used as a direct-
application fertilizer and, among the various grades, is particularly well
suited for use in fertilizer blends. In addition, the Company produces several
grades of potash that are purchased as a raw material by industrial users.
PRODUCTION AND PROPERTIES
Prior to the August 1996 acquisition, the Company operated only the West
Facility, consisting of a potash mine and refinery located approximately 25
miles east of Carlsbad, New Mexico. This mine supplies ore to an above-ground
refinery that 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 West Facility produced approximately 440,000 tons of red granular potash
in fiscal 1998. In April 1998, the Company announced its plans for an expansion
project that will increase the West Facility's annual red granular production
capacity from approximately 445,000 tons to approximately 545,000 tons, as well
as increase potash storage capacities by 30,000 tons. The Company estimates
total cost of the expansion to be $8.2 million and expects the project to be
completed by the end of fiscal 1999.
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The East Facility, located near Carlsbad, New Mexico, produced approximately
467,000 tons of white potash in fiscal 1998 that was ultimately sold in
standard, coarse and granular forms to both agricultural and industrial users.
On December 3, 1997, the Company suspended the plant operations of Eddy Potash
due to the fact that the depletion of the higher-grade ore zone rendered the
continued operation of conventional mining methods at Eddy Potash uneconomical.
The Company continues to evaluate alternative mining methods for the Eddy Potash
reserves.
Upon completion of the West Facility expansion project, the Company will have
in excess of 1.1 million tons of combined potash capacity annually from its two
operating mines. At current production rates, the Company's combined reserves
at the East and West Facilities have a remaining life of several decades.
The Company's potash reserves are controlled under long-term federal and state
potassium leases on approximately 138,000 acres. The estimates of potash ore
reserves are calculated using the latest bore hole data and sophisticated
modeling programs. According to the latest model completed in August 1998, the
Company's total reserves are estimated to be 600 million tons with an average
grade of 15.33% K2O. The recoverable reserves are estimated to be 538 million
tons at a grade of 15.07% K2O. This reserve base is estimated to be equivalent
to approximately 105 million tons of muriate of potash. Eddy Potash's reserves
are excluded since these estimates include only the reserves which can be
economically recovered by conventional mining techniques.
MARKETING AND DISTRIBUTION
The majority of the Company's agricultural potash sales are in domestic
markets in the 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
Burlington Northern Santa Fe Railroad. Domestic potash marketing is coordinated
from a sales office located in Dallas, Texas, with a field sales force located
in Texas, Louisiana, Arkansas, Mississippi and California. Approximately 22
percent of the Company's fiscal 1998 potash sales were to international markets.
The Company's export sales are made through Potash Corporation of Saskatchewan
Sales Limited. The majority of fiscal 1998 export sales were to Latin America,
Mexico, and Brazil. Potash for export is transported by rail to terminal
facilities on the Texas Gulf Coast, where it is loaded onto ocean-going vessels
for shipment.
RAW MATERIALS
Natural Gas
Natural gas is the primary raw material used by the Company in the
manufacture of nitrogen products. Natural gas is used both as a chemical
feedstock and as a fuel to produce anhydrous ammonia that is then upgraded into
other nitrogen products. During fiscal 1998, the cost of natural gas
represented approximately 75 percent 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 success 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 delivered 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
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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 sources and transportation services.
In addition to the impact on transmission costs, access alternatives enable the
Company to benefit from natural gas price differences that may exist from time
to time in the various natural gas-producing areas. In recent years, the Company
has improved the natural gas-purchasing logistics of its nitrogen facilities.
The natural gas requirements of the Yazoo City facility will increase from
approximately 57,000 Mcf per day to approximately 72,000 Mcf per day upon the
start-up of the new ammonia plant. Since 1996, the Company has received the
majority of its natural gas requirements for the Yazoo City facility from Sonat
Marketing Company ("Sonat"), an affiliate of Southern Natural Gas Company
("Southern"). In order to secure the incremental gas requirements created by
the addition of the new ammonia plant, the Company renegotiated its agreement
with Sonat. The new agreement with Sonat, which became effective on May 15,
1998, allows for the firm delivery of gas, at market-related prices, through the
Yazoo City facility's direct connections to the interstate pipeline systems
operated by Southern and Texas Eastern Transmission Corporation ("TETCO"). The
TETCO connection was completed in November 1997, and Sonat began to flow gas
through the connection in April 1998. Pursue Energy Corporation ("Pursue")
continues to be another major natural gas supplier of the Yazoo City facility
from its reserves located in Rankin County, Mississippi. In addition, the
Company's 60-mile, 12-inch-diameter natural gas pipeline provides the plant with
direct access to the Pursue reserves, along with low-cost transportation of the
Pursue gas; direct access to an additional interstate pipeline; and direct
access to a large intrastate gathering and transmission system in southern
Mississippi. As a result of this access to multiple sources, the Company
benefits from competition for the transportation and supply of natural gas.
Natural gas requirements for the Triad Nitrogen facility are approximately
107,000 Mcf per day. The Triad Nitrogen 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 the many suppliers that have transport capabilities on the
intrastate lines. The majority of current natural gas requirements are being
supplied under fixed-term contracts with Louisiana Gas Marketing Company, a
subsidiary of Enron Corp.; Amoco Energy Trading Corporation; Noble Gas
Marketing, Inc.; NorAm Energy Services, Inc.; and Coral Energy Resources, L.P.
These contracts provide for market sensitive pricing and firm delivery supply
commitments. The remaining requirements continue to be supplied via spot market
30-day purchases.
As a result of favorable access to natural gas supplies at the Yazoo City and
Triad Nitrogen facilities, the Company believes that the loss of any particular
supplier would not have a material impact on plant operations at either
location. There have been no significant supply interruptions at either
location.
Relative to fiscal 1997 levels, the Company's delivered cost of natural gas
decreased approximately 1.5 percent. Although long-term natural gas supplies
appear adequate to meet projected demand, gas prices can be influenced
significantly by short-term fundamentals such as weather, storage levels, gas
transportation interruptions, and competing fuel prices. The Company uses
natural gas futures contracts to hedge against the risk of market fluctuations
in the cost of natural gas.
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PHOSPHATE ROCK
Phosphate rock is one of the primary raw materials used in the manufacture of
DAP. The Pascagoula facility's requirements for phosphate rock after its recent
production expansion are approximately 1.5 million tons per year. On
September 15, 1991, the Company entered into a ten-year contract with OCP to
supply all of the phosphate rock requirements of the Pascagoula facility. The
term of this contract has been extended to June 30, 2016. 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 operating 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. 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, which have increased
to approximately 330,000 tons per year as a result of the Pascagoula plant
expansion. The location of the Company's plant at Pascagoula, Mississippi, near
major oil and gas fields that supply substantial amounts of sulfur, provides the
Company with a strategic advantage in the purchase of sulfur over its Florida
competitors.
AMMONIA
Ammonia is a necessary raw material for production of the Company's other
nitrogen products and DAP. The Company supplied the great majority of its
ammonia requirements in fiscal 1998. Third-party ammonia purchases by the
Company in fiscal 1998 were only 118,000 tons. It is anticipated that the
Company's third-party ammonia purchases in fiscal 1999 will be even less due to
the addition of the Trinidad plant and the new ammonia plant at the Yazoo City
facility.
COMPETITION
Since fertilizers are global commodities available from numerous sources,
fertilizer suppliers compete primarily on the basis of delivered 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 nonmarket factors such as the need for
hard currency.
The Company produces and sells its nitrogen products primarily in the southern
United States. However, dealers and distributors located in this region re-
market a substantial quantity of these nitrogen products to end-users outside of
the southern United States. Because competition is based largely on the
10
<PAGE>
delivered price, maintaining low production costs is critical to
competitiveness. Natural gas comprises the vast majority of the raw materials
cost of its nitrogen products. 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 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 market, product quality and customer
service also can be sources of product differentiation.
The Company sells over two-thirds of its DAP in international markets. The
U.S. phosphate industry has become more concentrated as a result of recent
consolidations and joint ventures, and the Company is 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 percent of U.S. 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 may be offset by logistical
and freight advantages in certain markets in the southwestern United States and
the lower United States corn belt.
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 1998, 1997 and 1996 were approximately $1.6 million, $1.3 million
and $1.2 million, respectively.
EMPLOYEES
As of June 30, 1998, the Company employed approximately 1,600 persons
throughout all of its 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 various other federal and state statutes. 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.
Since 1967, the Company has spent in excess of $60 million on its fertilizer
production facilities in order to meet applicable federal and state pollution
standards. 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. Capital expenditures related to environmental obligations for the
past three fiscal years were approximately as follows: 1998 -- $8,800,000;
1997--$8,400,000; and 1996--$920,000.
11
<PAGE>
Environmental capital expenditures are expected to be approximately $1.0
million for fiscal 1999. These funds relate to environmental aspects of the
production expansion project at the Carlsbad facilities and a groundwater
monitoring project at the Pascagoula facility.
The Company is currently accruing costs for the future closure of the west
gypsum disposal facility located at Pascagoula, Mississippi. The balance of the
accrual at June 30, 1998, of $9.3 million relates to the portion of the disposal
facility utilized to date. In future years, the Company expects to record
additional charges of approximately $2.0 million related to the future closure
of the facility. These charges will be recorded over the estimated remaining
life of the west storage facility. The accrual of closure costs for the new
east facility will begin when it is placed in service.
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.
OUTLOOK AND UNCERTAINTIES
Except for the historical statements and discussions, statements set forth in
this report may constitute "forward-looking statements" within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended. In some cases,
forward-looking statements can be identified by the use of terminology such as
"may," "will," "expects," "plans," "anticipates," "estimates," "potential," or
"continue," the negatives thereof or other comparable terminology. Since these
forward-looking statements rely on a number of assumptions concerning future
events, risks and other uncertainties that are beyond the Company's ability to
control, actual results may differ materially from such forward-looking
statements. Future events, risks and uncertainties that could cause a material
difference in such results include, but are not limited to:
Factors Affecting Fertilizer Demand and Prices. With virtually all of its
nitrogen net sales and approximately 79 percent of its total net sales in fiscal
1998 derived from domestic markets, the Company's operating results are highly
dependent upon conditions in the U.S. agricultural industry. A variety of
factors beyond the Company's control can materially affect domestic fertilizer
demand and pricing. These factors include, but are not limited to futures
prices for crops that require significant fertilizer application, U.S. planted
acreage, government agricultural policies, projected grain stocks, crop failure,
weather, changing or unpredictable crop choices by farmers and changes in
agricultural production methods. Since fertilizers, particularly anhydrous
ammonia, are also used for industrial applications, industrial markets and the
general economy can also affect fertilizer demand and prices.
International market conditions also significantly influence the Company's
operating results. The market for fertilizers is influenced by such factors as
the relative value of the U.S. dollar and its impact upon the cost of importing
or exporting fertilizers; foreign agricultural policies; the existence of, or
changes in, import or foreign currency exchange barriers in certain foreign
markets; changes in the hard currency demands of certain countries; and other
regulatory policies of foreign governments, as well as the laws and policies of
the United States affecting foreign trade and investment. The Company is also
subject to general risks of doing business abroad, including risks associated
with economic or political instability.
In the past, fertilizer prices have been extremely volatile, with significant
price changes from one growing season to the next. Fertilizers are global
commodities and can be subject to intense price
12
<PAGE>
competition from domestic and foreign sources. No assurance can be given that
average realized prices paid for the Company's fertilizer products will be at
any level.
Seasonality. The usage of fertilizer for agricultural application is highly
seasonal, and the Company's quarterly results reflect the fact that, in its
markets, significantly more fertilizer is purchased in the spring. Substantial
portions of the Company's net sales and operating income are generated in the
last four months of its fiscal years (March through June). Quarterly results
can vary significantly from one year to the next due primarily to weather-
related shifts in planting schedules and purchase patterns. The Company incurs
appreciable expenditures for fixed costs throughout the year and for inventory
in advance of the spring planting season.
Dependence on Natural Gas. Natural gas is the primary raw material used in
the manufacture of nitrogen products. Natural gas is used as both a chemical
feedstock and a fuel to produce anhydrous ammonia, which is then used in the
production of all other nitrogen products. Anhydrous ammonia is also a raw
material in the production of DAP. Accordingly, the Company's profitability is
dependent upon the price and availability of natural gas. A significant
increase in the price of natural gas that is not recovered through an increase
in the price of the Company's nitrogen products, or an extended interruption in
the supply of natural gas to its production facilities, could have a material
adverse effect on its results of operations and financial condition.
Environmental Regulations. The Company is subject to various environmental
laws and regulations of federal, state and local governments. Significant
capital expenditures and operating costs have been incurred and will continue to
be incurred as a result of these laws and regulations. The Company cannot
predict or quantify the impact of new or changed laws or regulations. In the
normal course of business, the Company is exposed to risks such as possible
release of hazardous substances into the environment. Such releases could cause
substantial damage or injuries and result in material costs to the Company.
Competition. Fertilizer products are global commodities and customers base
their purchasing decisions principally on the delivered price of the product.
As a result, markets for the Company's products are highly competitive. A
number of U.S. producers compete with the Company in domestic and export
markets, and producers in other countries, including state-owned and government-
subsidized entities, compete with the Company in the United States and in
foreign markets to which the Company exports. Many of the Company's competitors
are larger and have greater financial resources than the Company.
Year 2000 Issues. The Company has formed a Year 2000 Committee (the
"Committee") that is responsible for addressing all Year 2000 issues that could
affect the Company. The Year 2000 discussion in Management's Discussion and
Analysis section of its 1998 Annual Report to Shareholders, which is
incorporated herein by reference, details the Committee's efforts to date on
Year 2000 issues. As of September 1, 1998, the Company has spent approximately
$100,000 addressing both its information technology ("IT") and non-IT systems.
Although no one can accurately predict how many Year 2000 related failures will
occur or the severity, duration or financial consequences of such failures, it
is possible that the Company could sustain what is expected to be nonmaterial
operational inconveniences and inefficiencies and be involved in nonmaterial
business disputes related to the Company or one of its vendor's or customer's
inability to carry out certain contractual obligations. The Committee is
working with an outside consultant to oversee its efforts on Year 2000 issues
and assist in developing a contingency plan by the end of calendar 1998 to be
implemented if its efforts to identify and correct Year 2000 problems are not
successful.
13
<PAGE>
ITEM 2. PROPERTIES
The Company owns an administration building in Yazoo City that contains
approximately 65,000 square feet of office space.
The Company owns the production plants in Yazoo City and Pascagoula,
Mississippi; Donaldsonville, Louisiana; and Carlsbad, New Mexico, which 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 23 major fertilizer storage and distribution
facilities at other locations in Alabama, Arkansas, California, Georgia,
Louisiana, Mississippi, Missouri, Tennessee, and Texas, with a total system-wide
storage capacity of approximately 267,000 tons.
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, consisting 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 January 1998, the third party exercised its option, and on
April 16, 1998, the sale to the third party was consummated with the $57.0
million purchase price being paid in the form of an initial cash payment of $2.4
million and a note for $54.6 million. The note was paid in full by the third
party and canceled on August 19, 1998.
ITEM 3. LEGAL PROCEEDINGS
Cleve Reber CERCLA Site. Triad Nitrogen has received and responded to letters
issued by the U.S. 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
cleanup 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 cleanup. They are now engaged in
negotiations for cleanup. 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.
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. The
Company is also seeking damages for defamation based on Terra's public statement
related to the Company's alleged role in the explosion. Also, on August 31,
1995, Terra filed suit in federal court in Iowa against the Company seeking to
recover property damage, lost profits and other out-of-pocket expenses caused by
the explosion. Terra alleges that the ammonium nitrate neutralizer technology
licensed to Terra was defectively designed by the Company and that the design
defect caused the
14
<PAGE>
Port Neal explosion. It has been conclusively determined that the Mississippi
federal district court is the proper venue to resolve all issues between the
parties relating to the Port Neal explosion. Discovery has commenced and a trial
date of August 1999 has been set by the court.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information required by this item is set forth in the Company's 1998
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 1998
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 1998
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 7A. MARKET RISK
The information required by this item is set forth in the Company's 1998
Annual Report to Shareholders under the caption "Market Risk," 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 22, 1998, appearing in the Company's 1998 Annual
Report to Shareholders, are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
15
<PAGE>
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 1998 Annual Meeting of Shareholders under
the captions "Nominees for Election to Serve Until 2001," "Directors Continuing
to Serve Until 2000," and "Directors Continuing to Serve Until 1999," which
information is incorporated herein by reference.
(b) Executive officers are elected for a one-year term by the Board of
Directors. The Company's executive officers are as follows:
<TABLE>
<CAPTION>
OFFICE AND EMPLOYMENT DURING THE
NAME OF OFFICER AGE LAST FIVE FISCAL YEARS
- ---------------- --- ---------------------------------------------------------------------
<S> <C> <C>
Charles O. Dunn 50 President and Chief Executive Officer since April 1, 1993; Executive
Vice President (1988-1993)
C. E. McCraw 50 Senior Vice President-Operations since July 12, 1994; Senior Vice
President-Fertilizer Group (1991-1994)
Robert E. Jones 50 Senior Vice President-Corporate Development effective October 1, 1997;
Senior Vice President and General Counsel (1996-1997); Vice President
and General Counsel (1989-1996)
David W. Arnold 61 Senior Vice President-Technical Group since July 1, 1991
Timothy A. Dawson 44 Vice President-Finance and Chief Financial Officer since January 18,
1996; Director of Finance (1987-1996)
John J. Duffy 64 Vice President-Marketing and Distribution since November 1, 1996; Vice
President-Marketing (1995-1996); Vice President-Sales and Marketing
(1994-1995); Director of Sales and Marketing (1991-1994)
Ethel Truly 48 Vice President-Administration since January 18, 1996; Director of
Administrative Services (1995-1996); Assistant General Counsel
(1985-1995)
Larry W. Holley 50 Vice President-Nitrogen Production since July 17, 1997; Director of
Nitrogen Production (1997); Director of Energy (1991-1997)
William L. Smith 48 General Counsel since October 1, 1997; partner in the law firm of
Brunini, Grantham, Grower & Hewes, PLLC (1982-1997)
</TABLE>
(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 or understandings between any
named officer and any other person pursuant to which such person was selected as
an officer.
16
<PAGE>
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 1998
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 1998 Annual Meeting of Shareholders under the captions
"Compensation Committee Report on Executive Compensation" and "Executive
Compensation," 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 1998 Annual Meeting of Shareholders under the caption
"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 1998 Annual Meeting of Shareholders under the caption "Board
of Directors and Committees," which information is incorporated herein by
reference.
17
<PAGE>
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 22, 1998, appearing in the 1998 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, 7A and 8, the 1998 Annual Report to Shareholders is
not to be deemed filed as part of this Form 10-K. The following financial
statement schedule also should be read in conjunction with the financial
statements in such 1998 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 percent or less owned
persons accounted for by the equity method that 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, 1998 and 1997
Consolidated Statements of Income, Years Ended June 30, 1998, 1997 and
1996
Consolidated Statements of Shareholders' Equity, Years Ended June 30,
1998, 1997 and 1996
Consolidated Statements of Cash Flows, Years Ended June 30, 1998, 1997
and 1996
Notes to Consolidated Financial Statements
(B) EXHIBITS:
Exhibits filed as part of this report are listed below. Certain
exhibits have been filed previously with the Commission and are
incorporated herein by reference.
18
<PAGE>
SEC EXHIBIT
REFERENCE NO. DESCRIPTION
- ------------- -----------
2.1 Asset Purchase Agreement, dated as of May 21, 1996, by and
among the Company, Mississippi Acquisition I, Inc., Mississippi
Acquisition II, Inc., Eddy Potash, Inc., and New Mexico Potash
Corporation; filed as Exhibit 2.1 to the Company's Current
Report on Form 8-K filed September 3, 1996, SEC File No.
0-20411, and incorporated herein by reference.
2.2 Agreement and Plan of Merger and Reorganization, dated as of
August 27, 1996, by and among the Company, MISS SUB, INC., and
First Mississippi Corporation; filed as Exhibit 2.2 to the
Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1996, SEC File No. 0-20411, 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
Annual Report on Form 10-K for the fiscal year ended June 30,
1997, SEC File No. 0-20411, and incorporated herein by reference.
4.1 Shareholder Rights Plan; filed as Exhibit 1 to the Company's
Form 8-A Registration Statement dated August 15, 1994, SEC File
No. 2-7803, and incorporated herein by reference.
4.2 Indenture dated as of November 25, 1997, between the Company and
Harris Trust and Savings Bank, as Trustee, for the issuance of
up to $300 million of debt securities; filed as Exhibit 4(a) to
the Company's Current Report on Form 8-K filed November 25,
1997, SEC File No. 001-12217, and incorporated herein by
reference.
4.3 Indenture of Trust dated as of March 1, 1998, between Mississippi
Business Finance Corporation and Deposit Guaranty National Bank,
for the issuance of bonds in the aggregate principal amount of
$14.5 million to assist the Company in financing and
refinancing the cost of construction and equipping of solid
waste disposal facilities at its Pascagoula, Mississippi,
facility.
10.1 Agreement made and entered into as of September 15, 1991, between
Office Cherifien des Phosphates and the Company 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.
19
<PAGE>
10.2 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 for the sale and purchase of phosphate
rock; filed as Exhibit 10.12 to the Company's Annual Report on
Form 10-K for the fiscal year ended June 30, 1995, SEC File No.
2-7803, and incorporated herein by reference /1/
10.3 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 for the sale and purchase of phosphate
rock; filed as Exhibit 10.11 to the Company's Annual Report on
Form 10-K for the fiscal year ended June 30, 1995, SEC File No.
2-7803, and incorporated herein by reference. /2/
10.4 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 for the sale and
purchase of phosphate rock; filed as Exhibit 10.10 to the
Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1995, SEC File No. 2-7803, and incorporated herein by
reference. /3/
10.5 Amendment No. 4, effective as of January 1, 1997, to the
Agreement effective as of September 15, 1991, between Office
Cherifien des Phosphates and the Company for the sale and
purchase of phosphate rock; filed as Exhibit 10.8 to the
Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1997, SEC File No. 0-20411, and incorporated herein by
reference.
10.6 Credit Agreement dated as of November 25, 1997, among the
Company; the Lenders Party Thereto; Harris Trust and Savings
Bank, as Administrative Agent; Bank of Montreal, Chicago Branch,
as Syndication Agent; and Credit Agricole Indosuez, as Co-Agent,
establishing the Company's $200 million revolving line of credit.
10.7 Form of Severance Agreement dated July 29, 1996, by and between
the Company and each of its Executive Officers; filed as
Exhibit 10.14 to the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1996, SEC File No. 2-7803, and
incorporated herein by reference.
10.8 Mississippi Chemical Corporation Officer and Key Employee
Incentive Plan.
- -------------------
/1/ 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.
/2/ 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.
/3/ 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.
20
<PAGE>
10.9 Mississippi Chemical Corporation Executive Deferred Compensation
Plan.
10.10 Mississippi Chemical Corporation Nonemployee Directors' Deferred
Compensation Plan.
10.11 Mississippi Chemical Corporation Supplemental Benefit Plan, as
amended and restated as of July 1, 1996.
10.12 Mississippi Chemical Corporation 1994 Stock Incentive Plan;
filed as Exhibit 4.2 to the Company's Form S-8 Registration
Statement filed December 21, 1995, SEC File No. 33-65209, and
incorporated herein by reference.
10.13 Mississippi Chemical Corporation 1995 Stock Option Plan for
Nonemployee Directors; filed as Exhibit 4.3 to the Company's
Form S-8 Registration Statement filed December 21, 1995, SEC
File No. 33-65209, and incorporated herein by reference.
10.14 Mississippi Chemical Corporation 1995 Restricted Stock Purchase
Plan for Nonemployee Directors; filed as Exhibit 4.4 to the
Company's Form S-8 Registration Statement filed December 21,
1995, SEC File No. 33-65209, and incorporated herein by
reference.
13.1 Portions of the Company's 1998 Annual Report to Shareholders as
referenced in this Form 10-K for the fiscal year ending June 30,
1998.
21 List of subsidiaries of the Company.
23 Consent of Arthur Andersen LLP.
27 Financial Data Schedule.
(c) REPORTS ON FORM 8-K:
No reports were filed on Form 8-K during the three months ended June 30,
1998.
21
<PAGE>
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
-------------------
Charles O. Dunn
President
Principal Executive Officer
By: /s/ Timothy A. Dawson
---------------------
Timothy A. Dawson
Vice President-Finance
Principal Financial Officer and Chief Accounting
Officer
Date: September 25, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Charles O. Dunn Director, September 25, 1998
- ------------------------------------ President and Chief Executive Officer
Charles O. Dunn (principal executive officer)
/s/ Coley L. Bailey Director, Chairman of the Board September 25, 1998
- ------------------------------------
Coley L. Bailey
/s/ John Sharp Howie Director, Vice Chairman of the Board September 25, 1998
- ------------------------------------
John Sharp Howie
/s/ John W. Anderson Director September 25, 1998
- ------------------------------------
John W. Anderson
/s/ Haley Barbour Director September 25, 1998
- ------------------------------------
Haley Barbour
/s/ Frank R. Burnside, Jr. Director September 25, 1998
- ------------------------------------
Frank R. Burnside, Jr.
/s/ Robert P. Dixon Director September 25, 1998
- ------------------------------------
Robert P. Dixon
/s/ W. R. Dyess Director September 25, 1998
- ------------------------------------
W. R. Dyess
/s/ Woods E. Eastland Director September 25, 1998
- ------------------------------------
Woods E. Eastland
/s/ George D. Penick, Jr. Director September 25, 1998
- ------------------------------------
George D. Penick, Jr.
/s/ W. A. Percy II Director September 25, 1998
- ------------------------------------
W. A. Percy II
/s/ David M. Ratcliffe Director September 25, 1998
- ------------------------------------
David M. Ratcliffe
/s/ Wayne Thames Director September 25, 1998
- ------------------------------------
Wayne Thames
</TABLE>
22
<PAGE>
MISSISSIPPI CHEMICAL CORPORATION
EXHIBIT INDEX
TO
FORM 10-K
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- ------- --------------------------------------------------------------------------- -------
<C> <S> <C>
2.1 Asset Purchase Agreement, dated as of May 21, 1996, by and among the
Company, Mississippi Acquisition I, Inc., Mississippi Acquisition II, Inc.,
Eddy Potash, Inc., and New Mexico Potash Corporation; filed as Exhibit 2.1
to the Company's Current Report on Form 8-K filed September 3, 1996, SEC
File No. 0-20411, and incorporated herein by reference.
2.2 Agreement and Plan of Merger and Reorganization, dated as of August 27,
1996, by and among the Company, MISS SUB, INC., and First Mississippi
Corporation; filed as Exhibit 2.2 to the Company's Annual Report on Form
10-K for the fiscal year ended June 30, 1996, SEC File No. 0-20411, 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 Annual Report
on Form 10-K for the fiscal year ended June 30, 1997, SEC File No. 0-20411,
and incorporated herein by reference.
4.1 Shareholder Rights Plan; filed as Exhibit 1 to the Company's Form 8-A
Registration Statement dated August 15, 1994, SEC File No. 2-7803, and
incorporated herein by reference.
4.2 Indenture dated as of November 25, 1997, between the Company and Harris
Trust and Savings Bank, as Trustee, for the issuance of up to $300 million
of debt securities; filed as Exhibit 4(a) to the Company's Current Report
on Form 8-K filed November 25, 1997, SEC File No. 001-12217, and
incorporated herein by reference.
4.3 Indenture of Trust dated as of March 1, 1998, between Mississippi Business [ ]
Finance Corporation and Deposit Guaranty National Bank, for the issuance of
bonds in the aggregate principal amount of $14.5 million to assist the
Company in financing and refinancing the cost of construction and equipping
of solid waste disposal facilities at its Pascagoula, Mississippi, facility.
</TABLE>
23
<PAGE>
<TABLE>
<C> <S>
10.1 Agreement made and entered into as of September 15, 1991, between Office
Cherifien des Phosphates and the Company 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.
10.2 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 for the sale and purchase of phosphate rock; filed as Exhibit 10.12
to the Company's Annual Report on Form 10-K for the fiscal year ended June
30, 1995, SEC File No. 2-7803, and incorporated herein by reference /4/
10.3 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 for the sale and purchase of phosphate rock; filed as Exhibit 10.11
to the Company's Annual Report on Form 10-K for the fiscal year ended June
30, 1995, SEC File No. 2-7803, and incorporated herein by reference. /5/
10.4 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 for the sale and purchase of phosphate rock; filed as
Exhibit 10.10 to the Company's Annual Report on Form 10-K for the fiscal
year ended June 30, 1995, SEC File No. 2-7803, and incorporated herein by
reference. /6/
10.5 Amendment No. 4, effective as of January 1, 1997, to the Agreement
effective as of September 15, 1991, between Office Cherifien des Phosphates
and the Company for the sale and purchase of phosphate rock; filed as
Exhibit 10.8 to the Company's Annual Report on Form 10-K for the fiscal
year ended June 30, 1997, SEC File No. 0-20411, and incorporated herein by
reference.
</TABLE>
- --------------------
/4/ 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/ 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.
/6/ 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.
24
<PAGE>
<TABLE>
<C> <S> <C>
10.6 Credit Agreement dated as of November 25, 1997, among the Company; the [ ]
Lenders Party Thereto; Harris Trust and Savings Bank, as Administrative
Agent; Bank of Montreal, Chicago Branch, as Syndication Agent; and Credit
Agricole Indosuez, as Co-Agent, establishing the Company's $200 million
revolving line of credit.
10.7 Form of Severance Agreement dated July 29, 1996, by and between the Company
and each of its Executive Officers; filed as Exhibit 10.14 to the Company's
Annual Report on Form 10-K for the fiscal year ended June 30, 1996, SEC
File No. 2-7803, and incorporated herein by reference.
10.8 Mississippi Chemical Corporation Officer and Key Employee Incentive Plan. [ ]
10.9 Mississippi Chemical Corporation Executive Deferred Compensation Plan. [ ]
10.10 Mississippi Chemical Corporation Nonemployee Directors' Deferred [ ]
Compensation Plan.
10.11 Mississippi Chemical Corporation Supplemental Benefit Plan, as amended and [ ]
restated as of July 1, 1996.
10.12 Mississippi Chemical Corporation 1994 Stock Incentive Plan; filed as
Exhibit 4.2 to the Company's Form S-8 Registration Statement filed December
21, 1995, SEC File No. 33-65209, and incorporated herein by reference.
10.13 Mississippi Chemical Corporation 1995 Stock Option Plan for Nonemployee
Directors; filed as Exhibit 4.3 to the Company's Form S-8 Registration
Statement filed December 21, 1995, SEC File No. 33-65209, and incorporated
herein by reference.
10.14 Mississippi Chemical Corporation 1995 Restricted Stock Purchase Plan for
Nonemployee Directors; filed as Exhibit 4.4 to the Company's Form S-8
Registration Statement filed December 21, 1995, SEC File No. 33-65209, and
incorporated herein by reference.
13.1 Portions of the Company's 1998 Annual Report to Shareholders as referenced [ ]
in this Form 10-K for the fiscal year ending June 30, 1998.
21 List of subsidiaries of the Company. [ ]
23 Consent of Arthur Andersen LLP. [ ]
27 Financial Data Schedule. [ ]
</TABLE>
25
<PAGE>
EXHIBIT 4.3
MISSISSIPPI BUSINESS FINANCE CORPORATION
TO
DEPOSIT GUARANTY NATIONAL BANK,
As Trustee
_________________________
INDENTURE OF TRUST
_________________________
Dated as of March 1, 1998
<PAGE>
INDENTURE OF TRUST
(This Table of Contents is not a part of
this Indenture of Trust and is only for
convenience of reference)
TABLE OF CONTENTS
PAGE
----
Preamble.................................................................. 1
Bond Form................................................................. 3
ARTICLE I
DEFINITIONS AND RULES OF INTERPRETATION
Section 1.1. Definitions. 13
Section 1.2. Rules of Interpretation 16
ARTICLE II
THE BONDS
Section 2.1. Authorized Amount of Bonds 16
Section 2.2. Issuance of Bonds 16
Section 2.3. Execution; Limited Obligation 17
Section 2.4. Authentication 18
Section 2.5. Form of Bonds 18
Section 2.6. Delivery of Bonds 18
Section 2.7. Mutilated, Lost, Stolen or Destroyed Bonds 19
Section 2.8. Registration and Exchange of Bond; Persons Treated as
Owners 19
Section 2.9. Cancellation of Bonds 20
Section 2.10. Book Entry System 20
ARTICLE III
REDEMPTION OF BONDS BEFORE MATURITY
Section 3.1. Redemption Dates and Prices 20
Section 3.2. Notice of Redemption 22
Section 3.3. Deposit of Funds 22
Section 3.4. Partial Redemption of Bonds 23
Section 3.5. Selection of Bonds for Redemption 23
<PAGE>
ARTICLE IV
GENERAL COVENANTS
Section 4.1. Payment of Principal and Interest 23
Section 4.2. Performance of Covenants; Issuer 23
Section 4.3. Right to Payments under Agreement and Guaranty;
Instruments of Further Assurance 24
Section 4.4. Recordation and Other Instruments 24
Section 4.5. Inspection of Project Books 25
Section 4.6. List of Bondholders 25
Section 4.7. Rights Under Agreement and Guaranty 25
Section 4.8. Prohibited Activities 25
ARTICLE V
REVENUES AND FUNDS
Section 5.1. Source of Payment of Bonds 25
Section 5.2. Creation of Bond Fund 25
Section 5.3. Payments into Bond Fund 26
Section 5.4. Use of Moneys in Bond Fund 26
Section 5.5. Custody of Bond Fund 26
Section 5.6. Construction Fund 26
Section 5.7. Payments into Construction Fund; Disbursements 26
Section 5.8. Completion of Project 27
Section 5.9. Transfer of Construction Fund 27
Section 5.10. Creation of Refunding Fund 27
Section 5.11. Payments into the Refunding Fund 27
Section 5.12. Use of Moneys in the Refunding Fund 27
Section 5.13. Non-presentment of Bonds 28
Section 5.14. Moneys to be Held in Trust 28
Section 5.15. Repayment to the Company from Bond Fund 28
Section 5.16. Additional Payments Under the Agreement 28
Section 5.17. Arbitrage Requirements 29
Section 5.18. Rebate Fund; Tax Agreement 29
ARTICLE VI
INVESTMENT OF MONEYS
Section 6.1. Investment of Moneys 29
ARTICLE VII
DISCHARGE OF LIEN
Section 7.1. Discharge of Lien 30
<PAGE>
ARTICLE VIII
DEFAULT PROVISIONS AND REMEDIES OF TRUSTEE AND BONDHOLDERS
Section 8.1. Defaults; Events of Default 31
Section 8.2. Acceleration 32
Section 8.3. Other Remedies; Rights of Bondholders 32
Section 8.4. Right of Bondholders to Direct Proceedings 32
Section 8.5. Appointment of Receivers 33
Section 8.6. Reserved 33
Section 8.7. Application of Moneys 33
Section 8.8. Remedies Vested in Trustee 34
Section 8.9. Rights and Remedies of Bondholders 34
Section 8.10. Termination of Proceedings 35
Section 8.11. Waivers of Events of Default 35
Section 8.12. Notice of Defaults under Section 8.1(c); Opportunity of
the Issuer and the Company to Cure Such Defaults 36
Section 8.13. Notice to Bondholders; Defaults; Acceleration 36
ARTICLE IX
THE TRUSTEE
Section 9.1. Acceptance of Trusts 36
Section 9.2. Fees, Charges and Expenses of the Trustee 39
Section 9.3. Trustee as Paying Agent and Registrar 39
Section 9.4. Intervention by the Trustee 39
Section 9.5. Successor Trustee 40
Section 9.6. Resignation by the Trustee 40
Section 9.7. Removal of the Trustee 40
Section 9.8. Appointment of Successor Trustee by Bondholders or Issuer 40
Section 9.9. Concerning Any Successor Trustee 41
Section 9.10. Appointment of Co-Trustee 41
Section 9.11. Representations, Warranties and Covenants of the Trustee 42
Section 9.12. Required Reporting to Issuer 42
ARTICLE X
SUPPLEMENTAL INDENTURES
Section 10.1. Supplemental Indentures Not Requiring Consent of
Bondholders 43
Section 10.2. Supplemental Indentures Requiring Consent of Bondholders 44
Section 10.3. Consent of Company 44
Section 10.4. Opinion of Bond Counsel 45
<PAGE>
ARTICLE XI
AMENDMENT OF AGREEMENT AND GUARANTY
Section 11.1. Amendments, etc., to Agreement and Guaranty Not
Requiring Consent of Bondholders 45
Section 11.2. Amendments, etc., to Agreement and Guaranty Requiring
Consent of Bondholders 45
Section 11.3. Opinion of Bond Counsel 46
ARTICLE XII
MISCELLANEOUS
Section 12.1. Consents, etc., of Bondholders 46
Section 12.2. Limitation of Rights 47
Section 12.3. Severability 47
Section 12.4. Notices 47
Section 12.5. Payments Due on Saturdays, Sundays and Holidays 48
Section 12.6. Action by Company and Issuer 48
Section 12.7. Counterparts 48
Section 12.8. Applicable Provisions of Law 48
Section 12.9. No Recourse 48
<PAGE>
INDENTURE OF TRUST
THIS INDENTURE OF TRUST dated as of March 1, 1998, by and between the
MISSISSIPPI BUSINESS FINANCE CORPORATION, a public corporation created under the
laws of the State of Mississippi, including the Act, party of the first part
(hereinafter sometimes referred to as the "Issuer"), and DEPOSIT GUARANTY
NATIONAL BANK, a national banking association duly organized, existing and
authorized to accept and execute trusts of the character herein set out under
and by virtue of the laws of the United States, with its principal corporate
trust office located in Jackson, Mississippi, as trustee (hereinafter sometimes
referred to as the "Trustee"), party of the second part,
W I T N E S S E T H:
WHEREAS, pursuant to the authority set forth in Section 57-10-201 et seq.,
Mississippi Code of 12972, as amended (the "Act"), and Indenture of Trust dated
as of July 1, 1997 (the "Series 1997A Indenture"), between the Issuer and the
Trustee, the Issuer has hitherto issued its Solid Waste Disposal Revenue Bonds
(Mississippi Phosphates Corporation Project) Series 1997A (the "Series 1997A
Bonds") in the principal amount of $6,000,000, the proceeds of which were loaned
to Mississippi Phosphates Corporation, a Delaware corporation (the "Company"),
and used to finance a portion of the costs of the Project (as hereinafter
defined); and
WHEREAS, the proceeds of the Series 1997A Bonds were loaned to the Company
pursuant to the terms of a Loan Agreement dated as of July 1, 1997 (the "Series
1997A Loan Agreement") between the Issuer and the Company; and
WHEREAS, pursuant to the Act and an Indenture of Trust dated as of July 1,
1997 (the "Series 1997B Indenture"), between the Issuer and the Trustee, the
Issuer has hitherto issued its Solid Waste Disposal Revenue Bonds (Mississippi
Phosphates Corporation Project) Series 1997B (the "Series 1997B Bonds") in the
principal amount of $8,500,000, the proceeds of which were loaned to the Company
and used to finance a portion of the costs of the Project; and
WHEREAS, the proceeds of the Series 1997B Bonds were loaned to the Company
pursuant to the terms of a Loan Agreement dated as of July 1, 1997 (the "Series
1997B Loan Agreement") between the Issuer and the Company; and
WHEREAS, the Issuer is authorized and empowered by the provisions of the Act
to issue its limited obligation revenue bonds in accordance with the Act and to
make secured or unsecured loans for the purpose of refunding the outstanding
Series 1997A Bonds and the Series 1997B Bonds (collectively, the "Series 1997
Bonds"), and to pledge the proceeds of any loan agreements as security for the
payment of the principal of, premium, if any, and interest on such revenue
bonds; and
<PAGE>
WHEREAS, the Issuer is entering into a Loan Agreement of even date herewith
with the Company in which the Issuer has agreed to loan the proceeds of its
Solid Waste Disposal Revenue Refunding Bonds (Mississippi Phosphates Corporation
Project) Series 1998 (the "Bonds") to the Company to defray the cost of
refunding the outstanding principal amount of the Series 1997 Bonds and pursuant
to which the Company has agreed to repay the loan in an amount sufficient to pay
the principal of, premium, if any, and interest on the Bonds when due; and
WHEREAS, the Issuer has determined that the Bonds in the aggregate principal
amount of $14,500,000 should be issued, sold and delivered pursuant to the Act
and this Indenture to provide proceeds for loan to the Company to provide for
the refunding of the Series 1997 Bonds; and
WHEREAS, the Issuer has contracted for the sale and delivery of the Bonds to
be issued in the aggregate principal amount of $14,500,000 as herein provided;
and
WHEREAS, all Bonds issued under this Indenture will be secured by a pledge and
assignment of the aforesaid Loan Agreement (except as otherwise herein
provided); and
WHEREAS, the Bonds and the Trustee's certificate of authentication to be
endorsed on the Bonds are to be in substantially the following form, with
appropriate variations, omissions and insertions as permitted or required by
this Indenture, to-wit:
<PAGE>
(FORM OF BONDS)
UNITED STATES OF AMERICA
STATE OF MISSISSIPPI
MISSISSIPPI BUSINESS FINANCE CORPORATION
SOLID WASTE DISPOSAL REVENUE REFUNDING BOND
(MISSISSIPPI PHOSPHATES CORPORATION PROJECT)
SERIES 1998
Registered Registered
No. R-__________ $_______________
Interest Rate: Maturity Date: CUSIP No.:
- ------------- ------------- ---------
5.80% March 1, 2022 ________________
Registered Owner:
Principal Amount:
KNOW ALL MEN BY THESE PRESENTS that the MISSISSIPPI BUSINESS FINANCE
CORPORATION (the "Issuer"), a public corporation created under the laws of the
State of Mississippi, for value received, promises to pay (but only out of the
sources and in the manner as hereinafter provided) to the Registered Owner
identified above, or registered assigns as hereinafter provided, on the Maturity
Date identified above, except as the provisions set forth in the Indenture with
respect to redemption prior to maturity may become applicable hereto, the
Principal Amount identified above, and in like manner to pay interest on said
Principal Amount from the date hereof at the Interest Rate per annum identified
above, payable semiannually on March 1 and September 1 of each year, commencing
September 1, 1998 (each, an "Interest Payment Date"), until said Principal
Amount is paid. The principal of this Bond shall be payable in lawful money of
the United States of America at the principal corporate trust office of Deposit
Guaranty National Bank, a national banking association organized under the laws
of the United States, as Trustee, or its successor in trust (the "Trustee").
Payment of interest on any Interest Payment Date shall be made in lawful money
of the United States of America to the Registered Owner hereof as of the close
of business on the Record Date with respect to such Interest Payment Date and
shall be paid (i) by check or draft mailed to such Registered Owner at his
address as it appears on the registration books of the Issuer maintained by the
Trustee or (ii) at the option of any Registered Owner of at least $1,000,000 in
aggregate principal amount of the Bonds, by wire transfer or other means
acceptable to the Trustee at an address within the United States upon written
instructions filed by such Registered Owner with the Trustee not later than the
close of business on such Record Date (which instructions shall remain in effect
until revoked by subsequent written instructions).
<PAGE>
THIS BOND AND THE OBLIGATION TO PAY INTEREST HEREON ARE LIMITED OBLIGATIONS
OF THE ISSUER, SECURED AS AFORESAID AND PAYABLE SOLELY OUT OF THE REVENUES AND
INCOME DERIVED FROM THE HEREINAFTER DEFINED AGREEMENT AND AS OTHERWISE PROVIDED
IN THE HEREINAFTER DEFINED INDENTURE AND AGREEMENT. THIS BOND AND THE
OBLIGATION TO PAY INTEREST HEREON SHALL NOT BE DEEMED TO CONSTITUTE AN
INDEBTEDNESS OR AN OBLIGATION OF THE ISSUER, THE STATE OF MISSISSIPPI OR ANY
POLITICAL SUBDIVISION THEREOF WITHIN THE PURVIEW OF ANY CONSTITUTIONAL
LIMITATION OR PROVISION OR A CHARGE AGAINST THE GENERAL CREDIT OR TAXING POWERS,
IF ANY, OF ANY OF THEM. THE ISSUER HAS NO TAXING POWER. NO OWNER OF THIS BOND
SHALL HAVE THE RIGHT TO COMPEL ANY EXERCISE OF THE TAXING POWER, IF ANY, OF THE
ISSUER, THE STATE OF MISSISSIPPI OR ANY POLITICAL SUBDIVISION THEREOF TO PAY ANY
PRINCIPAL INSTALLMENT OF, OR INTEREST ON, THIS BOND.
_________________________
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS BOND SET FORTH
ON THE REVERSE HEREOF AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE
THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.
_________________________
This Bond shall not be valid or become obligatory for any purpose or be
entitled to any security or benefit under the Indenture until the certificate of
authentication hereon shall have been manually executed by the Trustee.
This Bond is issued with the intent that the laws of the State of
Mississippi will govern its construction.
IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and
things required to exist, happen and be performed precedent to and in the
execution and delivery of the Indenture and the issuance of this Bond do exist,
have happened and have been performed in due time, form and manner as required
by law; and that the issuance of this Bond and the series of which it forms a
part does not exceed or violate any constitutional or statutory limitation.
<PAGE>
IN WITNESS WHEREOF, the MISSISSIPPI BUSINESS FINANCE CORPORATION has caused
this Bond to be executed in its name by the manual or facsimile signature of its
Executive Director, and its corporate seal to be impressed or imprinted hereon,
attested by the manual or facsimile signature of its Secretary, all as of the
1st day of March, 1998.
MISSISSIPPI BUSINESS FINANCE CORPORATION
By: ____________________________________
Executive Director
ATTEST:
______________________
Secretary
[SEAL]
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This Bond is one of the Bonds of the issue described in the within mentioned
Indenture of Trust.
Date of Authentication:
DEPOSIT GUARANTY NATIONAL BANK,
as Trustee
By: ______________________________
Authorized Signatory
(FORM OF REVERSE OF BONDS)
This Bond is one of an authorized series of Bonds in the aggregate principal
amount of $14,500,000 (the "Bonds") issued for the purpose of funding a loan by
the Issuer to Mississippi Phosphates Corporation, a Delaware corporation (the
"Company"), for the purpose of refunding those certain Mississippi Business
Finance Corporation Solid Waste Disposal Revenue Bonds (Mississippi Phosphates
Corporation Project) Series 1997A (the "Series 1997A Bonds") and those certain
Mississippi Business Finance Corporation Solid Waste Disposal Revenue Bonds
<PAGE>
(Mississippi Phosphates Corporation Project) Series 1997B (the "Series 1997B
Bonds"), the proceeds of which Series 1997A Bonds and Series 1997B Bonds
(collectively, the "Series 1997 Bonds") have been used to provide financing for
the cost of land, buildings and equipment to be acquired, constructed and
installed by the Company (the "Project") for the disposal of solid waste which
solid waste is generated by the Company's chemical fertilizer manufacturing
plant in Jackson County, Mississippi (the "Plant").
The Bonds are all issued under and are equally and ratably secured by and
entitled to the protection of an Indenture of Trust dated as of March 1, 1998
(which indenture, as from time to time amended and supplemented, is herein
referred to as the "Indenture"), duly executed and delivered by the Issuer to
the Trustee. Reference is hereby made to the Indenture for a description of the
rights, duties and obligations of the Issuer, the Trustee and the owners of the
Bonds and the terms upon which the Bonds are issued and secured. The terms and
conditions of the loan of the proceeds of the Bonds to the Company to provide
for the refunding of the principal of the Series 1997 Bonds and to provide for
the payment of a portion of the costs of issuance of the Bonds, and the
repayment of said loan, are contained in a Loan Agreement dated as of March 1,
1998, between the Issuer and the Company (which agreement, as from time to time
amended and supplemented, is herein referred to as the "Agreement"). The
Project is not pledged as security for the Bonds.
This Bond is issued pursuant to and in full compliance with the Constitution
and laws of the State of Mississippi, and particularly the Act, and pursuant to
a resolution duly adopted by the Issuer authorizing, among other things, the
execution and delivery of the Indenture. The Bonds are limited obligations of
the Issuer payable solely from certain payments provided to be made by the
Company under the Agreement, which payments are designed to be sufficient to pay
the principal of, premium, if any and interest on the Bonds as the same become
due and payable. The Bonds are further secured by the unlimited guaranty of
Mississippi Chemical Corporation, the corporate parent of the Company, pursuant
to a Guaranty Agreement dated as of March 1, 1998. The principal of, premium,
if any and interest on the Bonds are payable solely from the funds pledged for
their payment in accordance with the proceedings authorizing their issuance and
the Indenture. All payments under the Agreement are to be paid to the Trustee
for the account of the Issuer and deposited in a special trust fund created by
the Issuer, maintained by the Trustee and designated "Mississippi Business
Finance Corporation Solid Waste Disposal Revenue Refunding Bonds (Mississippi
Phosphates Corporation Project) Series 1998 Bond Fund," and, in addition, the
rights of the Issuer under the Agreement (except the right to receive certain
fee, expense and indemnification payments and to receive notices) have been
assigned and pledged to the Trustee to secure the payment of such principal and
interest under the Indenture.
This Bond is transferable by the Registered Owner hereof in person or by his
attorney duly authorized in writing at the principal corporate trust office of
the Trustee, but only in the manner, subject to the limitations and upon payment
of the charges provided in the Indenture, and upon surrender and cancellation of
this Bond. Upon such transfer a new registered Bond or Bonds of an Authorized
Denomination or Authorized Denominations, for the same aggregate principal
amount, will be issued to the transferee in exchange therefor. Subject to the
limitations
<PAGE>
and upon payment of the charges provided in the Indenture, and upon surrender
and cancellation thereof, Bonds may be exchanged for a like aggregate principal
amount of Bonds of another Authorized Denomination or Authorized Denominations.
The Trustee shall not be required to transfer or exchange any Bond from the
fifteenth day of the month next preceding an Interest Payment Date and such
Interest Payment Date, nor to transfer or exchange any Bond after the mailing of
notice calling such Bond or a portion thereof for redemption, nor during the
period of fifteen days next preceding the giving of such notice of redemption.
The Issuer and the Trustee may deem and treat the Registered Owner hereof as the
absolute owner hereof for the purpose of receiving payment of or on account of
principal hereof and interest due hereon and for all other purposes and neither
the Issuer nor the Trustee shall be affected by any notice to the contrary.
The Bonds are subject to extraordinary optional redemption at any time in
whole, but not in part, at a redemption price equal to 100% of the principal
amount thereof plus accrued interest, if any, to the redemption date, upon the
exercise by the Company of its option to prepay loan repayment installments
under the Agreement, if any of the following shall have occurred:
(a) The Project or the Plant shall have been damaged or destroyed
(in whole or in part) by fire or other casualty to such extent that, in the
opinion of the Company, it is not practicable or desirable to rebuild,
repair or restore the Project or the Plant; or
(b) Title to, or the temporary use of, all or substantially all the
Project or Plant shall have been taken under the exercise of the power of
eminent domain by any governmental authority, or person, firm or
corporation acting under governmental authority; or
(c) Changes in the economic availability of raw materials, operating
supplies or facilities necessary for the operation of the Project or Plant
shall have occurred or such technological or environmental or other changes
shall have occurred which, in the Company's judgment, render the continued
operation of the Project or Plant uneconomic.
The Bonds are subject to optional redemption prior to maturity at the election
of the Corporation on March 1, 2008, and thereafter, either as a whole or in
part on any date from any moneys that may be made available for such purpose, at
the following redemption prices (expressed as a percentage of principal amount
or portion thereof to be redeemed), plus accrued interest to the redemption
date:
Redemption Dates (Inclusive) Redemption Price
---------------------------- ----------------
March 1, 2008 through February 28, 2009 102%
March 1, 2009 through February 28, 2010 101%
March 1, 2010 and thereafter 100%
<PAGE>
The Bonds are subject to mandatory redemption at any time in whole (or in the
case of the events stated in (b) or (c) of this paragraph, in whole or in part
as provided in the Indenture), at a redemption price equal to 100% of the
principal amount thereof plus accrued interest, if any, to the redemption date,
if any of the following shall have occurred:
(a) As a result of any changes in the Constitution of the State of
Mississippi or the Constitution of the United States of America or of
legislative or administrative action (whether state or federal) or by final
decree, judgment or order of any court or administrative body (whether
state or federal) the Agreement shall have become void or unenforceable or
impossible to perform in accordance with the intent and purposes of the
parties as expressed in the Agreement; or
(b) A final determination by the Internal Revenue Service or a court
of competent jurisdiction as a result of a proceeding in which the Company
participates to the degree it deems sufficient, which determination the
Company, in its discretion, does not contest by an appropriate proceeding,
that, as a result of failure by the Company to observe any covenant,
agreement or representation by the Company in the Agreement, the interest
payable on the Bonds or any of them is includable for federal income tax
purposes in the gross income of any owner of a Bond (other than an owner
who is a "substantial user" of the Project or a "related person" within the
meaning of Section 147 of the Code and the applicable regulations
thereunder); or
(c) Proceeds of the Series 1997 Bonds, including income from the
investment thereof, in an amount equal to or greater than $100,000 shall
remain after completion of the Project and the payment of all costs of the
Project.
In the event any of the Bonds or portions thereof (in Authorized
Denominations) are called for redemption as aforesaid, notice thereof
identifying the Bonds or portions thereof to be redeemed will be given by the
Trustee by mailing a copy of the redemption notice by first-class mail at least
thirty (30) days prior to the date fixed for redemption to the Registered Owner
of each Bond to be redeemed in whole or in part at the address shown on the
registration books; provided, however, that failure to give such notice by
mailing, or any defect therein, shall not affect the validity of any proceeding
for the redemption of any Bond with respect to which no such failure or defect
has occurred. Any notice mailed in such manner shall be conclusively presumed
to have been duly given whether or not the Registered Owner receives such
notice. If less than all of the Bonds are to be redeemed, Bonds or portions
thereof (in Authorized Denominations) shall be selected by lot in the manner
provided in the Indenture. All Bonds or portions thereof so called for
redemption will cease to bear interest on and after the specified redemption
date provided funds for the redemption thereof are on deposit with the Trustee
at that time.
The Registered Owner of this Bond shall have no right to enforce the
provisions of the Indenture or the Agreement or to institute action to enforce
the covenants therein, or to take any action with respect to any event of
default under the Indenture or the Agreement, or to institute,
<PAGE>
appear in or defend any suit or other proceedings with respect thereto, except
as provided in the Indenture. In certain events, on the conditions, in the
manner and with the effect set forth in the Indenture, the principal of all the
Bonds issued under the Indenture and then outstanding may become or may be
declared due and payable before the stated maturity thereof, together with
interest accrued thereon. The Indenture prescribes the manner in which it may be
discharged, including a provision that under certain circumstances the Bonds
shall be deemed to be paid if Governmental Obligations, maturing as to principal
and interest in such amounts and at such times as will, without reinvestment,
provide sufficient funds to pay the principal of, premium, if any and interest
on the Bonds, shall have been deposited with the Trustee, and all fees and
expenses of the Trustee and all other liabilities of the Company under the
Agreement are paid or provided for, after which the Bonds shall no longer be
secured by or entitled to the benefits of the Indenture or the Agreement, except
for purposes of exchange and transfer and payment from such Governmental
Obligations on the date or dates specified at the time of such deposit.
The Indenture permits the amendment thereof and the modification of the rights
and obligations of the Issuer and the rights of the owners of the Bonds at any
time by the Issuer with the consent of the owners of not less than a majority,
or in certain instances 100%, in aggregate principal amount of the Bonds at the
time outstanding, as defined in the Indenture. Any such consent or waiver by
the owner of this Bond shall be conclusive and binding upon such owner and upon
all future owners of this Bond and of any Bond issued upon the transfer or
exchange of this Bond, whether or not notation of such consent or waiver is made
upon this Bond. The Indenture also contains provisions permitting the Trustee
to enter into certain supplemental indentures without the consent of the owners
of the Bonds and to waive certain past defaults under the Indenture and their
consequences. No supplemental indenture will become effective without the
consent of the Company.
No recourse shall be had for the payment of the principal of, premium, if any
and interest on any of the Bonds or for any claim based thereon or upon any
obligation, covenant or agreement in the Indenture or the Agreement contained,
against any past, present or future member, officer, agent or employee of the
Issuer, under any rule of law or equity, statute or constitution or by the
enforcement of any assessment or penalty or otherwise, and all such liability of
any such member, officer, employee, director or agent as such is hereby
expressly waived and released as a condition of and consideration for the
execution of the Indenture or the Agreement and the issuance of any of the
Bonds.
Terms which are used herein as defined terms and which are not otherwise
defined herein shall have the meanings assigned to them in the Indenture.
<PAGE>
(FORM OF ASSIGNMENT)
The following abbreviations, when used in the inscription on the face of this
Bond, shall be construed as though they were written out in full according to
applicable laws or regulations:
UNIF GIFT MIN ACT--
TEN COM __as tenants in common _____________________________
TEN ENT __as tenants by the (Custodian)
entireties under Uniform Gifts to Minors
JT TEN __as joint tenants with right Act of
of survivorship and not as _____________________________
tenants in common (State)
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, the undersigned sells, assigns and transfers unto
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Name and Address of Assignee)
the within Bond of the Mississippi Business Finance Corporation and does hereby
irrevocably constitute and appoint to transfer said Bond on the books kept for
registration thereof with full power of substitution in the premises.
Dated: __________________
Signature Guaranteed:
__________________________
NOTICE: The signature to this assignment must correspond with the name as
it appears upon the face of the within Bond in every particular, without
alteration or enlargement or any change whatever; and
NOTICE: Signature(s) must be guaranteed by a member firm of the Securities
Transfer Agent Medallion Program.
<PAGE>
VALIDATION CERTIFICATE
The issue of the Bonds of which this Bond is one has been validated and
confirmed by decree of the Chancery Court of the First Judicial District of
Hinds County, Mississippi, rendered on the ____day of _______, 1998.
(END OF FORM OF BONDS)
<PAGE>
WHEREAS, all things necessary to make the Bonds, when authenticated by the
Trustee and issued as in this Indenture provided, the valid, binding and legal
obligations of the Issuer according to the import thereof, and to constitute
this Indenture a valid assignment and pledge of the amounts assigned and pledged
to the payment of the principal of, premium, if any and interest on the Bonds
and a valid assignment of certain rights of the Issuer under the Agreement have
been done and performed, and the creation, execution and delivery of this
Indenture, and the creation, execution and issuance of the Bonds, subject to the
terms hereof, have in all respects been duly authorized;
GRANTING CLAUSES
NOW, THEREFORE, THIS INDENTURE OF TRUST WITNESSETH;
That the Issuer in consideration of the premises and the acceptance by the
Trustee of the trusts hereby created and of the purchase and acceptance of the
Bonds by the owners thereof, and for other good and valuable considerations, the
receipt of which is hereby acknowledged, in order to secure the payment of the
principal of, premium, if any and interest on the Bonds according to their tenor
and effect and to secure the performance and observance by the Issuer of all the
covenants expressed or implied herein and in the Bonds, does hereby grant,
bargain, sell, convey, assign and pledge, and grant a security interest in, to
Deposit Guaranty National Bank, as Trustee, and its successors in trust and
assigns forever, to the extent provided in this Indenture:
GRANTING CLAUSE FIRST
All of the rights and interest of the Issuer in and to the Loan Agreement
dated as of March 1, 1998, between the Issuer and Mississippi Phosphates
Corporation, except for the rights of the Issuer to receive notices thereunder
and the rights of the Issuer under Sections 4.2(c), 5.2 and 6.3 of said Loan
Agreement, and all rights of the Issuer in and to the Guaranty Agreement dated
as of March 1, 1998, delivered by Mississippi Chemical Corporation.
GRANTING CLAUSE SECOND
All moneys and securities from time to time held by the Trustee under the
terms of this Indenture and any and all other real or personal property of every
name and nature from time to time hereafter by delivery or by writing of any
kind conveyed, mortgaged, pledged, assigned or transferred, as and for
additional security hereunder by the Issuer or by anyone in its behalf, or with
its written consent to the Trustee which is hereby authorized to receive any and
all such property at any and all times and to hold and apply the same subject to
the terms hereof.
TO HAVE AND TO HOLD all and singular the Trust Estate, whether now owned or
hereafter acquired, unto the Trustee and its respective successors in said trust
and assigns forever:
IN TRUST NEVERTHELESS, upon the terms and trusts herein set forth for the
equal and proportionate benefit, security and protection of all present and
future owners of the Bonds
<PAGE>
from time to time issued under and secured by this Indenture without privilege,
priority or distinction as to the lien or otherwise of any of the Bonds over any
of the other Bonds (except as herein otherwise expressly provided);
PROVIDED, HOWEVER, that if the Issuer, its successors or assigns, shall well
and truly pay, or cause to be paid, the principal of, premium, if any and
interest on the Bonds due or to become due, at the times and in the manner
mentioned in the Bonds according to the true intent and meaning thereof, and
shall cause the payments to be made on the Bonds as required under Article IV
hereof, or shall provide, as permitted hereby, for the payment thereof by
depositing with the Trustee the entire amount due or to become due thereon (or
Governmental Obligations sufficient for that purpose as provided in Article VII
hereof), and shall pay or cause to be paid to the Trustee all sums of money due
or to become due to it in accordance with the terms and provisions hereof, then
upon the final payment thereof or provision therefor this Indenture and the
rights hereby granted shall cease, determine and be void; otherwise this
Indenture to be and remain in full force and effect.
THIS INDENTURE OF TRUST FURTHER WITNESSETH, and it is expressly declared that,
all Bonds issued and secured hereunder are to be issued, authenticated and
delivered and all property, rights and interest, including, without limitation,
the amounts hereby assigned and pledged, are to be dealt with and disposed of
under, upon and subject to the terms, conditions, stipulations, covenants,
agreements, trusts, uses and purposes as hereinafter expressed, and Issuer has
agreed and covenanted, and does hereby agree and covenant with the Trustee and
with the respective owners of the Bonds as follows (subject, however, to the
provisions of Section 2.3 hereof):
ARTICLE I
DEFINITIONS AND RULES OF INTERPRETATION
SECTION 1.1. DEFINITIONS. All words and phrases defined in the Recitals
hereof and in Article I of the Agreement shall have the same meaning in this
Indenture. All words when capitalized herein but not defined shall have the
meaning provided in the Agreement. In addition, the following words and phrases
shall have the following meanings:
"Act" means the Mississippi Small Business Financing Act, appearing as Section
57-10-201 et seq., Mississippi Code of 1972, as amended.
"Affiliate" means any person directly or indirectly controlling or controlled
by or under direct or indirect common control with another person. For the
purposes of this definition, "control" when used with respect to a person means
the power to direct the management and policies of such person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise, and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Agreement" means the Loan Agreement of even date herewith, between the Issuer
and the Company, and any amendments and supplements thereto.
<PAGE>
"Authorized Denominations" means $100,000 and any integral multiple thereof.
"Bondholder" or "holder" or "owner" means the Registered owner of any Bond.
"Bonds" means the $14,500,000 aggregate principal amount of Bonds authorized
to be issued by the Issuer pursuant to the terms and conditions of Sections 2.1
and 2.2 hereof.
"Default" or "event of default" means any occurrence or event specified in and
defined by Section 8.1 hereof.
"Governmental Obligations" means noncallable direct general obligations of, or
obligations the payment of the principal and interest of which are
unconditionally guaranteed by, the United States of America.
"Interest Payment Date" means March 1 and September 1 of each year, commencing
September 1, 1998.
"Outstanding" or "Bonds outstanding" means all Bonds which have been
authenticated and delivered by the Trustee under this Indenture, except:
(a) Bonds canceled after purchase or because of payment at, or redemption
prior to, maturity;
(b) Bonds or portions thereof (of Authorized Denominations) for the
payment or redemption of which cash funds or Governmental Obligations shall
have been theretofore deposited with the Trustee (whether upon or prior to
the maturity or redemption date of any such Bonds or portions thereof);
provided that, if such Bonds or portions thereof are to be redeemed prior
to the maturity thereof, notice of such redemption shall have been given or
arrangements satisfactory to the Trustee shall have been made therefor, or
waiver of such notice satisfactory in form to the Trustee shall have been
filed with the Trustee; and
(c) Bonds in lieu of which others have been authenticated under Section
2.7 hereof.
If this Indenture shall have been discharged pursuant to the provisions of
Article VII hereof, no Bonds shall be deemed to be outstanding within the
meaning of this provision.
"Paying Agent" means the Trustee.
"Plant" means the chemical fertilizer manufacturing plant operated by the
Company in Pascagoula, Mississippi.
<PAGE>
"Project" means the land and those items of machinery, equipment, structures
and related property purchased or to be purchased, acquired, constructed or
installed with proceeds from the sale of the Series 1997 Bonds or the proceeds
of any payment by the Company pursuant to Section 3.4 of the Agreement, as more
particularly described in Exhibit A to the Agreement.
"Project Site" means the real property upon which the Company is constructing
its solid waste disposal facilities in Jackson County, Mississippi, as it may at
any time exist and as it currently exists.
"Record Date" means the fifteenth day of the month next preceding an Interest
Payment Date.
"Registered owner" shall mean the person or persons in whose name or names a
Bond shall be registered on books of the Issuer kept by the Trustee for that
purpose in accordance with the terms of this Indenture.
"Registrar" means the Trustee.
"Revenues" means all amounts payable pursuant to Section 4.2(a) of the
Agreement.
"Series 1997A Bonds" means the Mississippi Business Finance Corporation Solid
Waste Disposal Revenue Bonds (Mississippi Phosphates Corporation Project) Series
1997A issued in the principal amount of $6,000,000.
"Series 1997B Bonds" means the Mississippi Business Finance Corporation Solid
Waste Disposal Revenue Bonds (Mississippi Phosphates Corporation Project) Series
1997B issued in the principal amount of $8,500,000.
"Series 1997A Indenture" means the Indenture of Trust dated as of July 1,
1997, between the Issuer and the Trustee pertaining to the Series 1997A Bonds.
"Series 1997B Indenture" means the Indenture of Trust dated as of July 1,
1997, between the Issuer and the Trustee pertaining to the Series 1997B Bonds.
"Tax Agreement" means the Tax Exemption Certificate and Agreement with respect
to the Bonds, dated the date of the delivery of the Bonds, among the Company,
the Issuer and the Trustee, as it may hereafter be amended or supplemented.
"Trust Estate" means the property conveyed to the Trustee pursuant to the
Granting Clauses hereof.
<PAGE>
"Trustee" means Deposit Guaranty National Bank and its successors and any
corporation resulting from or surviving any consolidation or merger to which it
or its successors may be a party and any successor trustee and/or co-trustee at
the time serving as such hereunder.
"Underwriter" means BancAmerica ROBERTSON STEPHENS.
SECTION 1.2. RULES OF INTERPRETATION. The following rules of interpretation
shall govern the interpretation of this Indenture unless the context clearly
indicates otherwise:
The words "hereof", "herein", "hereunder" and other words of similar import
refer to this Indenture as a whole.
References to Articles, Sections and other subdivisions of this Indenture are
to the designated Articles, Sections and other subdivisions of this Indenture as
originally executed.
The plural includes the singular, and the singular includes the plural.
The headings of this Indenture are for convenience only and shall not define
or limit the provisions hereof.
ARTICLE II
THE BONDS
SECTION 2.1. AUTHORIZED AMOUNT OF BONDS. No Bonds may be issued under the
provisions of this Indenture except in accordance with this Article. The total
principal amount of Bonds that may be issued is hereby expressly limited to
$14,500,000, except as provided in Section 2.7 hereof.
SECTION 2.2. ISSUANCE OF BONDS. The Bonds shall be designated "Mississippi
Business Finance Corporation Solid Waste Disposal Revenue Refunding Bonds
(Mississippi Phosphates Corporation Project) Series 1998," and shall be issuable
only as fully registered Bonds without coupons in Authorized Denominations.
Unless the Issuer shall otherwise direct, the Bonds shall be numbered separately
from 1 upward.
The Bonds shall be dated as of March 1, 1998 and shall mature, subject to
prior redemption, upon the terms and conditions hereinafter set forth, on March
1, 2022. The Bonds shall bear interest at the rate of five and eight-tenths
percent (5.80%) per annum from and including the date thereof until payment of
the principal or redemption price thereof shall have been made or provided for
in accordance with the provisions hereof, whether at maturity, upon redemption
or otherwise. Interest on the Bonds shall be computed upon the basis of a 360-
day year, consisting of twelve (12) thirty (30) day months. Each Bond shall
bear interest on overdue principal and, to the extent permitted by law, on
overdue interest at the rate of interest borne by the Bonds.
<PAGE>
The principal of the Bonds shall be payable in lawful money of the United
States of America at the principal corporate trust office of the Trustee.
Payment of interest on any Bond on any Interest Payment Date shall be made in
lawful money of the United States of America to the Registered owner as of the
close of business on the Record Date immediately prior thereto and shall be paid
(i) by check or draft mailed on the applicable Interest Payment Date to the
Registered owner at his address as it appears on the registration books of the
Issuer maintained by the Trustee or (ii) at the option of any Registered owner
of at least $1,000,000 in aggregate principal amount of the Bonds, by wire
transfer or other means acceptable to the Trustee at an address within the
United States upon written instructions filed by such Registered owner with the
Trustee not later than the close of business on the Record Date immediately
prior thereto (which instructions shall remain in effect until revoked by
subsequent written instructions).
Interest on each Bond shall be computed from the Interest Payment Date to
which interest has been paid or duly provided for next preceding its date of
authentication, unless (i) such date shall be prior to the first Interest
Payment Date, in which case such interest shall be computed from the date of the
Bonds, or (ii) such date of authentication shall be an Interest Payment Date to
which interest on the Bonds has been paid in full or duly provided for, in which
case interest on such Bond shall be computed from such date of authentication;
provided, however, that if, as shown by the records of the Trustee, interest on
the Bonds shall be in default, interest on Bonds issued in exchange for Bonds
surrendered for transfer or exchange shall be computed from the last date to
which interest has been paid in full or duly provided for on the Bonds, or if no
interest has been paid or duly provided for on the Bonds, from the date thereof.
SECTION 2.3. EXECUTION; LIMITED OBLIGATION. The Bonds shall be executed on
behalf of the Issuer with the manual or facsimile signature of its Executive
Director, and shall have impressed or imprinted thereon the official seal of the
Issuer or a facsimile thereof, attested by the manual or facsimile signature of
its Secretary. All authorized facsimile signatures shall have the same force
and effect as if manually signed. In case any official whose signature or a
facsimile of whose signature shall appear on the Bonds shall cease to be such
official before the delivery of such Bonds, such signature or such facsimile
shall nevertheless be valid and sufficient for all purposes, the same as if such
official had remained in office until delivery. The Bonds may be signed on
behalf of the Issuer by such persons who, at the time of the execution of such
Bonds, are duly authorized or hold the appropriate offices of the Issuer,
although on the date of the Bonds such persons were not so authorized or did not
hold such offices.
The Bonds, together with interest thereon, are limited obligations of the
Issuer payable solely from the Revenues (except to the extent paid out of moneys
attributable to the proceeds of the Bonds or the income from the temporary
investment thereof) and shall be a valid claim of the respective owners thereof
only against the Bond Fund and other moneys held by the Trustee and the
Revenues, which Revenues shall be used for no other purpose than to pay the
principal of, premium, if any and interest on the Bonds, except as may be
otherwise expressly authorized in this Indenture or the Agreement. The Bonds
and the obligation to pay interest thereon do not now and shall never constitute
an indebtedness or obligation of the Issuer, the State of Mississippi or any
political subdivision thereof, within the purview of any constitutional
<PAGE>
limitation or provision, or a charge against the general credit or taxing
powers, if any, of any of them, but shall be secured as aforesaid, and shall be
payable solely from the Revenues. No owner of the Bonds shall have the right to
compel the exercise of the taxing power, if any, of the Issuer, the State of
Mississippi or any political subdivision thereof to pay the principal of,
premium, if any or interest on the Bonds. The Issuer has no taxing power.
SECTION 2.4. AUTHENTICATION. No Bond shall be valid or obligatory for any
purpose or entitled to any security or benefit under this Indenture unless and
until a certificate of authentication on such Bond substantially in the form
hereinabove set forth shall have been duly executed by the Trustee, and such
executed certificate of the Trustee by duly authorized signatory upon any such
Bond shall be conclusive evidence that such Bond has been authenticated and
delivered under this Indenture. The Trustee's certificate of authentication on
any Bond shall be deemed to have been executed by it if manually signed by an
authorized signatory of the Trustee, but it shall not be necessary that the same
signatory sign the certificate of authentication on all of the Bonds issued
hereunder. The Trustee shall insert the date of authentication of each Bond in
the place provided for such purpose in the form of certificate of authentication
of the Trustee to appear on each Bond.
SECTION 2.5. FORM OF BONDS. The Bonds issued under this Indenture shall be
substantially in the form hereinabove set forth with such variations, omissions
and insertions as are permitted or required by this Indenture.
SECTION 2.6. DELIVERY OF BONDS. Upon the execution and delivery of this
Indenture, the Issuer shall execute and deliver to the Trustee and the Trustee
shall authenticate the Bonds and deliver them to the Underwriter as directed in
writing by the Issuer as hereinafter in this Section provided.
Prior to the delivery by the Trustee of any of the Bonds there shall be filed
with the Trustee:
(a) A copy, duly certified by the Secretary of the Issuer, of the
proceedings of the Issuer authorizing the execution and delivery of the
Agreement and this Indenture and the issuance of the Bonds.
(b) Original executed counterparts of this Indenture, the Agreement, the
Tax Agreement and the Guaranty.
(c) A request and authorization to the Trustee on behalf of the Issuer
and signed by its Executive Director to authenticate and deliver the Bonds
to or as directed by the Underwriter upon payment to the Trustee, but for
the account of the Issuer, of a sum specified in such request and
authorization. The proceeds of such payment shall be deposited in
accordance with Sections 5.3 and 5.7 hereof.
<PAGE>
SECTION 2.7. MUTILATED, LOST, STOLEN OR DESTROYED BONDS. In the event any
Bond is mutilated, lost, stolen, or destroyed, the Issuer may execute and the
Trustee may authenticate a new Bond of like denomination as that mutilated,
lost, stolen or destroyed; provided that, in the case of any mutilated Bond,
such mutilated Bond shall first be surrendered to the Issuer, and in the case of
any lost, stolen or destroyed Bond, there shall be first furnished to the Issuer
and the Trustee and the Company evidence of such loss, theft or destruction
satisfactory to the Issuer, the Trustee and the Company, together with any
indemnity satisfactory to them. In the event any such Bond shall have matured,
instead of issuing a duplicate Bond, the Issuer may pay the same without
surrender thereof. The Issuer and the Trustee may charge the owner of such Bond
with their reasonable fees and expenses in this connection.
SECTION 2.8. REGISTRATION AND EXCHANGE OF BOND; PERSONS TREATED AS OWNERS.
The Issuer shall cause books for the registration and for the transfer of the
Bonds as provided in this Indenture to be kept by the Trustee which is hereby
constituted and appointed the Registrar of the Issuer.
Upon surrender for transfer of any Bond at the principal corporate trust
office of the Trustee, duly endorsed for transfer or accompanied by an
assignment duly executed by the Registered owner or his attorney duly authorized
in writing, the Trustee shall authenticate and deliver in the name of the
transferee or transferees a new Bond or Bonds duly executed by the Issuer of an
Authorized Denomination or Authorized Denominations for a like aggregate
principal amount.
Any Bond or Bonds may be exchanged at the principal corporate trust office of
the Trustee for a new Bond or Bonds of like principal amount of another
Authorized Denomination or Authorized Denominations. Upon surrender of any
Bond or Bonds for exchange, the Trustee shall authenticate and deliver a new
Bond or Bonds duly executed by the Issuer which the Bondholder making the
exchange is entitled to receive.
The Trustee shall not be required to transfer or exchange any Bond during the
period of fifteen days next preceding any Interest Payment Date, nor to transfer
or exchange any Bond after the mailing of notice calling such Bond or portion
thereof for redemption has been given as herein provided, nor during the period
of fifteen days next preceding the giving of such notice of redemption.
The person in whose name any Bond shall be registered shall be deemed and
regarded as the absolute owner thereof for all purposes, and payment of or on
account of the principal of, premium, if any or interest on any such Bond shall
be made only to or upon the written order of the Registered owner thereof or his
legal representative, but such registration may be changed as hereinabove
provided. All such payments shall be valid and effectual to satisfy and
discharge the liability upon such Bond to the extent of the sum or sums so paid.
<PAGE>
In each case the Trustee shall require the payment by the Bondholder
requesting exchange or transfer of any tax or other governmental charge required
to be paid with respect to such exchange or transfer, but otherwise no charge
shall be made to the Bondholder for such exchange or transfer.
SECTION 2.9. CANCELLATION OF BONDS. Whenever any outstanding Bond shall be
delivered to the Trustee for cancellation pursuant to this Indenture, upon
payment of the principal amount represented thereby, or for replacement pursuant
to Section 2.7 hereof, such Bond shall be promptly canceled and destroyed by the
Trustee and counterparts of a certificate of destruction evidencing such
cancellation and destruction shall be furnished by the Trustee to the Issuer and
the Company.
SECTION 2.10. BOOK ENTRY SYSTEM. The Trustee and the Issuer, at the
direction of the Company, may from time to time enter into, and discontinue, an
agreement with a "clearing agency" (securities depository) registered under
Section 17A of the Securities Exchange Act of 1934, as amended (the "Securities
Depository"), which is the owner of the Bonds, to establish procedures with
respect to the Bonds not inconsistent with the provisions of this Indenture;
provided, however, that any such agreement may provide:
(a) that such Securities Depository is not required to present a Bond to
the Trustee in order to receive a partial payment of principal;
(b) that a legend shall appear on each Bond so long as the Bonds are
subject to such agreement; and
(c) that different provisions for notice to such Securities Depository
may be set forth therein.
So long as any such agreement with a Securities Depository is in effect, the
term "owner", as it appears in Section 3.1(b) and the second paragraph of
Article VII hereof (but not for any other provision of this Indenture, except
only as specifically provided herein) and in Sections 5.3 and 7.1(b) of the
Agreement, shall be deemed to include the Beneficial Owner. "Beneficial Owner"
shall mean the owner of a Bond or portion thereof for federal income tax
purposes.
ARTICLE III
REDEMPTION OF BONDS BEFORE MATURITY
SECTION 3.1. REDEMPTION DATES AND PRICES. (a) The Bonds shall be subject to
extraordinary optional redemption at any time in whole, but not in part, at a
redemption price equal to 100% of the principal amount thereof plus accrued
interest, if any, to the redemption date, upon the exercise by the Company of
its option to prepay loan repayment installments under Section 7.2 of the
Agreement, if any of the following shall have occurred:
<PAGE>
(1) The Project or the Plant shall have been damaged or destroyed (in
whole or in part) by fire or other casualty to such extent that, in the
opinion of the Company, it is not practicable or desirable to rebuild,
repair or restore the Project or Plant; or
(2) Title to, or the temporary use of, all or substantially all the
Project or Plant shall have been taken under the exercise of the power of
eminent domain by any governmental authority, or person, firm or
corporation acting under governmental authority; or
(3) Changes in the economic availability of raw materials, operating
supplies or facilities necessary for the operation of the Project or Plant
shall have occurred or such technological or environmental or other changes
shall have occurred which, in the Company's judgment, render the continued
operation of the Project or Plant uneconomic.
(b) The Bonds are subject to optional redemption prior to maturity at the
election of the Corporation on March 1, 2008, and thereafter, either as a whole
or in part on any date from any moneys that may be made available for such
purpose, at the following redemption prices (expressed as a percentage of
principal amount or portion thereof to be redeemed), plus accrued interest to
the redemption date:
Redemption Dates (Inclusive) Redemption Price
---------------------------- ----------------
March 1, 2008 through February 28, 2009 102%
March 1, 2009 through February 28, 2010 101%
March 1, 2010 and thereafter 100%
(c) The Bonds shall be subject to mandatory redemption at any time in
whole (or in the case of the events stated in (2) or (3) of this paragraph in
whole or in part as provided below), at a redemption price equal to 100% of the
principal amount thereof plus accrued interest, if any, to the redemption date,
if any of the following shall have occurred:
(1) As a result of any changes in the Constitution of the State of
Mississippi or the Constitution of the United States of America or of
legislative or administrative action (whether state or federal) or by final
decree, judgment or order of any court or administrative body (whether
state or federal) the Agreement shall have become void or unenforceable or
impossible to perform in accordance with the intent and purposes of the
parties as expressed in the Agreement; or
(2) A final determination by the Internal Revenue Service or a court of
competent jurisdiction as a result of a proceeding in which the Company
participates to the degree it deems sufficient, which determination the
Company, in its discretion, does not contest by an appropriate proceeding,
that, as a result of failure by the Company to observe any covenant,
agreement or representation by the Company in the Agreement,
<PAGE>
the interest payable on the Bonds or any of them is includable for federal
income tax purposes in the gross income of any owner of a Bond (other than
an owner who is a "substantial user" of the Project or a "related person"
within the meaning of Section 147 of the Code and the applicable
regulations thereunder); or
(3) Proceeds of the Series 1997 Bonds, including income from the
investment thereof, in an amount equal to or greater than $100,000 shall
remain after completion of the Project and the payment of all costs of the
Project.
Upon the occurrence of the event stated in Section 3.1(c)(2) hereof, the Bonds
will be redeemed in whole unless the Company delivers to the Trustee, at the
Company's expense, an opinion of Bond Counsel upon which the Trustee may rely to
the effect that redemption of a portion of the Bonds outstanding would have the
result that interest payable on the Bonds remaining outstanding after such
redemption would not be includable for federal income tax purposes in the gross
income of any owner of a Bond (other than an owner who is a "substantial user"
of the Project or a "related person" within the meaning of Section 147 of the
Code and the applicable regulations thereunder), and in such event the Bonds or
portions thereof (in Authorized Denominations) shall be redeemed at such times
and in such amounts as Bond Counsel shall so direct in such opinion. Upon the
occurrence of the event stated in Section 3.1(c)(3) hereof, the principal amount
of the Bonds to be redeemed will be a principal amount equal to the highest
integral multiple of $100,000 equal to or less than the remaining proceeds of
the Bonds. Any of such remaining proceeds which are not utilized for such
mandatory redemption of Bonds shall be applied to the debt service coming due on
the Bonds on the next Interest Payment Date.
SECTION 3.2. NOTICE OF REDEMPTION. Upon receipt of written notice given by
the Company pursuant to Section 7.4 of the Agreement not less than forty (40)
days prior to the date of redemption (or such later date as is acceptable to the
Issuer and the Trustee), notice of the call for any redemption of Bonds or any
portions thereof pursuant to Section 3.1 hereof identifying the Bonds or
portions thereof to be redeemed, specifying the redemption date, the redemption
price, the place and manner of payment and that from the redemption date
interest will cease to accrue on the Bonds provided that funds for the
redemption thereof are on deposit with the Trustee, shall be given by the
Trustee by mailing a copy of the redemption notice by first-class mail at least
thirty (30) days prior to the date fixed for redemption to the Registered owner
of each Bond to be redeemed in whole or in part at the address shown on the
registration books; provided, however, that failure to duly give such notice, or
any defect therein, shall not affect the validity of any proceeding for the
redemption of Bonds with respect to which no such failure or defect occurred.
Any notice mailed as provided in this Section shall be conclusively presumed to
have been duly given, whether or not the Registered owner receives the notice.
SECTION 3.3. DEPOSIT OF FUNDS. For the redemption of any of the Bonds, the
Issuer shall cause to be deposited in the Bond Fund out of the Revenues (or out
of maturing principal and interest, if any, of Governmental Obligations in which
Revenues for such purpose are required to be invested) moneys sufficient to pay
when due the principal of, premium, if any and interest on the Bonds or portions
thereof to be redeemed on
<PAGE>
the redemption date. Moneys in the Bond Fund which are available therefor shall
be credited against any moneys which the Issuer is required to cause to be so
deposited in the Bond Fund.
SECTION 3.4. PARTIAL REDEMPTION OF BONDS. In case a Bond is of a
denomination larger than the minimum Authorized Denomination, all or a portion
of such Bond may be redeemed in an Authorized Denomination. Upon surrender of
any Bond for redemption in part only, the Trustee shall authenticate and deliver
to the owner thereof, without cost to the owner, a new Bond or Bonds duly
executed by the Issuer of an Authorized Denomination or Authorized Denominations
in aggregate principal amount equal to the unredeemed portion of the Bond
surrendered.
SECTION 3.5. SELECTION OF BONDS FOR REDEMPTION. If less than all of the
Bonds are called for redemption, the Trustee shall select the Bonds or portions
thereof (in Authorized Denominations) to be redeemed from the Bonds outstanding
not previously called for redemption by lot in such manner as the Trustee in its
discretion may deem proper, and each $100,000 of face value of each Bond shall
be treated as a separate Bond for the purpose of selection by lot. If it is
determined that a portion but not all of the principal amount of any Bond is to
be called for redemption, then, upon notice of intention to redeem such portion,
the Registered owner of such Bond shall surrender such Bond to the Trustee for
(a) payment to such owner of the redemption price of the portion of principal
amount called for redemption, and (b) delivery to such owner of a new Bond or
Bonds in the aggregate principal amount of the unredeemed portion of the
principal amount of such Bond. New Bonds representing the unredeemed portion of
the principal amount of such Bond shall be issued to the Registered owner
thereof without charge therefor. If the Registered owner of any such Bond shall
fail to present such Bond to the Trustee for payment and exchange as aforesaid,
such Bond shall, nevertheless, become due and payable on the date fixed for
redemption to the extent of the portion of principal amount called for
redemption (and to that extent only) and interest with respect to such portion
will cease to accrue.
ARTICLE IV
GENERAL COVENANTS
SECTION 4.1. PAYMENT OF PRINCIPAL, PREMIUM, AND INTEREST. The Issuer
covenants that it will promptly pay the principal of, premium, if any and
interest on, every Bond issued under this Indenture at the place, on the dates
and in the manner provided herein and in said Bonds according to the true intent
and meaning thereof. The principal and interest are payable by the Issuer
solely from the Revenues (except to the extent paid out of moneys attributable
to the Bond proceeds or the income from the temporary investment thereof) and
nothing in the Bonds or this Indenture should be considered as assigning or
pledging any other funds or assets of the Issuer other than such Revenues and
the right, title and interest of the Issuer in the Agreement in the manner and
to the extent herein specified.
SECTION 4.2. PERFORMANCE OF COVENANTS; ISSUER. The Issuer covenants that it
will faithfully perform on its part at all times any and all covenants,
undertakings, stipulations and provisions contained in this
<PAGE>
Indenture, in any and every Bond executed, authenticated and delivered hereunder
and in all of its proceedings pertaining thereto; provided, however, that except
for the matters set forth in Section 4.1 hereof, the Issuer shall not be
obligated to take any action or execute any instrument pursuant to any provision
hereof until it shall have been requested to do so by the Company or by the
Trustee, or shall have received the instrument to be executed, and at the
Issuer's option shall have received from the Company assurance satisfactory to
the Issuer that the Issuer shall be reimbursed for its reasonable expenses
incurred or to be incurred in connection with taking such action or executing
such instrument. The Issuer covenants that it is duly authorized under the
Constitution and laws of the State of Mississippi, including particularly the
Act and the resolution of the Issuer pursuant to which the Bonds were issued, to
issue the Bonds authorized hereby and to execute this Indenture, to grant the
security interest herein provided, to assign and pledge the Agreement (except as
otherwise provided herein) and the Guaranty (to the extent of its interest
therein) and to assign and pledge the amounts hereby assigned and pledged in the
manner and to the extent herein set forth; that all action on its part for the
issuance of the Bonds and the execution and delivery of this Indenture has been
duly and effectively taken, and that the Bonds in the hands of the owners
thereof are and will be valid and enforceable obligations of the Issuer
according to the terms thereof and hereof. Anything contained in this Indenture
to the contrary notwithstanding, it is hereby understood that none of the
covenants of the Issuer contained in this Indenture are intended to create a
general or primary obligation of the Issuer.
SECTION 4.3. RIGHT TO PAYMENTS UNDER AGREEMENT AND GUARANTY; INSTRUMENTS OF
FURTHER ASSURANCE. The Issuer covenants that it will defend its right to the
payment of amounts due from the Company under the Agreement or the Guarantor
under the Guaranty (to the extent of its interest therein) to the Trustee for
the benefit of the owners of the Bonds against the claims and demands of all
persons whomsoever. The Issuer covenants that it will do, execute, acknowledge
and deliver such indentures supplemental hereto and such further acts,
instruments and transfers as the Trustee may reasonably require for the better
assuring, transferring, conveying, pledging, assigning and confirming unto the
Trustee all and singular the rights assigned hereby and the amounts pledged and
assigned hereby to the payment of the principal of, premium, if any and
interest on the Bonds. The Issuer covenants and agrees that, except as herein
and in the Agreement provided, it will not sell, convey, mortgage, encumber or
otherwise dispose of any part of the Revenues or its rights under the Agreement.
SECTION 4.4. RECORDATION AND OTHER INSTRUMENTS. The Trustee covenants that
it will cause, at the Company's expense and as provided in Section 5.13 of the
Agreement, and the Issuer, to the extent permitted by law, covenants that it
will cooperate with the Trustee in causing, such security agreements, financing
statements and all supplements thereto and other instruments as may be required
hereunder or under the Agreement from time to time to be kept, recorded and
filed in such manner and in such places as may be required by law in order to
fully preserve and protect the security of the Trustee on behalf of the owners
of the Bonds and the rights of Trustee hereunder, and to perfect the security
interest of the Trustee.
<PAGE>
SECTION 4.5. INSPECTION OF PROJECT BOOKS. The Issuer and the Trustee
covenant and agree that all books and documents in their possession relating to
the Project and the Revenues shall at all reasonable times be open to inspection
by such accountants or other agencies as the other party may from time to time
designate in writing.
SECTION 4.6. LIST OF BONDHOLDERS. The Trustee will keep on file a list of
the names and addresses of all registered owners of Bonds on the registration
books of the Issuer maintained by the Trustee as Registrar, together with the
principal amount and numbers of such Bonds. At reasonable times and under
reasonable regulations established by the Trustee, said list may be inspected
and copied by the Company.
SECTION 4.7. RIGHTS UNDER AGREEMENT AND GUARANTY. The Agreement and the
Guaranty, duly executed counterparts of which have been filed with the Trustee,
set forth the covenants and obligations of the Issuer, the Company and the
Guarantor, including provisions that subsequent to the issuance of Bonds and
prior to their payment in full or provision for payment thereof in accordance
with the provisions hereof the Agreement and the Guaranty may not be effectively
amended, changed, modified, altered or terminated without the written consent of
the Trustee, and reference is hereby made to the same for a detailed statement
of said covenants and obligations of the Company and the Guarantor thereunder,
and the Issuer agrees that the Trustee in its name or in the name of the Issuer
may enforce all rights of the Issuer and all obligations of the Company under
and pursuant to the Agreement or the obligations of the Guarantor under the
Guaranty for and on behalf of the Bondholders, whether or not the Issuer is in
default hereunder.
SECTION 4.8. PROHIBITED ACTIVITIES. Subject to the limitations on its
liability as stated herein, the Issuer covenants and agrees that it has not
knowingly engaged and will not knowingly engage in any activities and that it
has not knowingly taken and will not knowingly take any action which might
result in its income becoming taxable to it or any interest on the Bonds
becoming includable in the gross income of the owners thereof for federal income
tax purposes.
ARTICLE V
REVENUES AND FUNDS
SECTION 5.1. SOURCE OF PAYMENT OF BONDS. The Bonds herein authorized and all
payments to be made by the Issuer hereunder are not general obligations of the
Issuer but are limited obligations payable solely from the Revenues (except to
the extent paid out of moneys attributable to the Bond proceeds or the income
from the temporary investment thereof), and as authorized by the Act and
provided in the Agreement, the Guaranty and in this Indenture. The Revenues are
to be remitted directly to the Trustee for the account of the Issuer and
deposited in the Bond Fund (hereinafter created). The entire amount of the
Revenues is hereby pledged and assigned to the payment of the principal of,
premium, if any and interest on the Bonds.
SECTION 5.2. CREATION OF BOND FUND. There is hereby created by the Issuer
and ordered established with the Trustee a trust fund to be
<PAGE>
designated "Mississippi Business Finance Corporation Solid Waste Disposal
Revenue Refunding Bonds (Mississippi Phosphates Corporation Project) Series 1998
Bond Fund," which is pledged and shall be used to pay the principal of, premium,
if any and interest on the Bonds.
SECTION 5.3. PAYMENTS INTO BOND FUND. There shall be deposited into the Bond
Fund, as and when received, (a) accrued interest received upon the delivery of
the Bonds to the Underwriter; (b) any amount in the Construction Fund directed
to be paid into the Bond Fund under Section 5.8 or 5.9 hereof; (c) all Revenues;
and (d) all other moneys received by the Trustee under and pursuant to any of
the provisions of the Agreement or the Guaranty which are required or which are
accompanied by directions that such moneys are to be paid into the Bond Fund.
The Issuer hereby covenants and agrees that so long as any of the Bonds issued
hereunder are outstanding it will deposit, or cause to be paid to the Trustee
for deposit in the Bond Fund for its account, sufficient sums from revenues and
receipts derived from the Agreement promptly to meet and pay the principal of,
premium, if any and interest on the Bonds as the same become due and payable.
SECTION 5.4. USE OF MONEYS IN BOND FUND. Except as provided in Sections 5.18
and 9.2 hereof, moneys in the Bond Fund shall be used solely for the payment of
the principal of, premium, if any and interest on the Bonds.
SECTION 5.5. CUSTODY OF BOND FUND. The Bond Fund shall be in the custody of
the Trustee but in the name of the Issuer, and the Issuer hereby authorizes and
directs the Trustee to withdraw sufficient funds from the Bond Fund to pay the
principal of, premium, if any and interest on the Bonds as the same become due
and payable and to make payments and reimbursements pursuant to Section 9.2
hereof, which authorization and direction the Trustee hereby accepts.
SECTION 5.6. CONSTRUCTION FUND. There is hereby created and established with
the Trustee a trust fund in the name of the Issuer to be designated "Mississippi
Business Finance Corporation Solid Waste Disposal Revenue Refunding Bonds
(Mississippi Phosphates Corporation Project) Series 1998 Construction Fund,"
which shall be expended in accordance with the provisions of the Agreement.
SECTION 5.7. PAYMENTS INTO CONSTRUCTION FUND; DISBURSEMENTS. The Issuer
hereby notifies and directs the Trustee that amounts on deposit in the
Mississippi Business Finance Corporation Solid Waste Disposal Revenue Bonds
Construction Fund-Mississippi Phosphates Corporation Project-Series 1997A
established pursuant to the provisions of the Series 1997A Indenture and on
deposit in the Mississippi Business Finance Corporation Solid Waste Disposal
Revenue Bonds Construction Fund-Mississippi Phosphates Corporation Project-
Series 1997B established pursuant to the provisions of the Series 1997B
Indenture shall be transferred to and deposited in the Construction Fund.
Moneys in the Construction Fund shall be expended for the purposes set forth in
Section 3.3 of the Agreement pursuant to requisitions signed by an Authorized
Company Representative and delivered to the Trustee stating, with respect to
each payment to be made:
<PAGE>
(a) The requisition number;
(b) The name and address of the person, firm or corporation to whom payment is
due or has been made, which may include the Company;
(c) The amount to be or which has been paid; and
(d) That each obligation mentioned therein has been properly incurred, is a
proper charge against the Construction Fund in accordance with the
provisions hereof and of the Agreement and has not been the basis of any
previous requisition from the Construction Fund or from the proceeds
(including investment income) of any other obligations issued by or on
behalf of any state or political subdivision, including authorities,
agencies, departments or other similar issuers.
The Trustee is hereby authorized and directed to make the disbursement
pursuant to each such requisition and to issue its checks therefor. In making
any such disbursement, the Trustee may rely on any such requisition. The
Trustee shall keep and maintain adequate records pertaining to the Construction
Fund and all disbursements therefrom and shall provide monthly statements of
transactions and investments pertaining to the Construction Fund to the Company
so long as any Bonds remain outstanding.
SECTION 5.8. COMPLETION OF PROJECT. The completion of the Project and
payment or provision made for payment of the full Cost of the Project shall be
evidenced by the filing with the Trustee of a certificate required by the
provisions of Section 3.4 of the Agreement. Any balance remaining in the
Construction Fund on the Completion Date shall be used in accordance with
Section 3.4 of the Agreement.
SECTION 5.9. TRANSFER OF CONSTRUCTION FUND. If all of the Bonds are paid or
deemed to be paid as herein provided, then, notwithstanding anything herein to
the contrary, any balance then remaining in the Construction Fund shall, without
further authorization, be deposited in the Bond Fund by the Trustee.
SECTION 5.10. CREATION OF REFUNDING FUND. There is hereby created by the
Issuer and ordered established with the Trustee a trust fund to be designated
"Mississippi Business Finance Corporation Solid Waste Disposal Revenue Refunding
Bonds (Mississippi Phosphates Corporation Project) Series 1998 Refunding Fund."
SECTION 5.11. PAYMENTS INTO THE REFUNDING FUND. There shall be deposited
into the Refunding Fund as and when received, $14,500,000 of the proceeds of the
sale of the Bonds.
SECTION 5.12. USE OF MONEYS IN REFUNDING FUND. Of the amount deposited in
the Refunding Fund, $6,000,000 shall be transferred immediately to the trustee
under the Series 1997A Indenture and used and applied to the redemption, at the
earliest practicable time, of all of
<PAGE>
the Series 1997A Bonds, and $8,500,000 shall be transferred immediately to the
trustee under the Series 1997B Indenture and used and applied to the redemption,
at the earliest practicable time, of all of the Series 1997B Bonds. Payment of
interest on the Series 1997A Bonds and the Series 1997B Bonds shall be paid from
a draw on the respective Letters of Credit applicable to such Bonds.
SECTION 5.13. NON-PRESENTMENT OF BONDS. In the event any Bond shall not be
presented for payment when the principal thereof becomes due, either at maturity
or otherwise, or at the date fixed for redemption thereof, or in the event any
check for the payment of interest shall not be cashed or any wire transfer for
interest shall be returned, then if funds sufficient to pay such Bond or
interest shall have been made available to the Trustee, all liability of the
Issuer for the payment of such Bond or interest shall forthwith cease, terminate
and be completely discharged, and thereupon it shall be the duty of the Trustee
to hold such funds uninvested, without liability for interest thereon, for the
benefit of the owner of such Bond, who shall thereafter be restricted
exclusively to such funds, for any claim of whatever nature on his part under
this Indenture or on, or with respect to, said Bond or interest. The Trustee
shall hold such funds until required to pay such funds to the State Treasurer
under the Mississippi Uniform Disposition of Unclaimed Property Act.
Thereafter, the Bondholders shall be entitled to look only to the State
Treasurer for payment, and then only to the extent of the amount so repaid, and
the State Treasurer shall not be liable for any interest thereon to the
Bondholders and shall not be regarded as a trustee of such money.
SECTION 5.14. MONEYS TO BE HELD IN TRUST. All moneys required to be
deposited with or paid to the Trustee for account of the Bond Fund, the
Construction Fund and the Refunding Fund under any provision of this Indenture
shall be held by the Trustee in trust, and except for moneys deposited with or
paid to the Trustee for the redemption of Bonds, notice of the redemption of
which has been duly given, and moneys referred to in Section 5.13 hereof held by
the Trustee for the payment of Bonds or interest, shall, while held by the
Trustee, constitute part of the Trust Estate and be subject to the lien or
security interest created hereby.
SECTION 5.15. REPAYMENT TO THE COMPANY FROM BOND FUND. Any amounts remaining
in the Bond Fund after payment in full of the Bonds (or provision therefor
having been made in accordance herewith), the fees, charges and expenses
(including reasonable attorneys' fees and expenses) of the Trustee, and all
other amounts required to be paid hereunder or under the Agreement, shall be
paid to the Company as provided in Section 8.5 of the Agreement.
SECTION 5.16. ADDITIONAL PAYMENTS UNDER THE AGREEMENT. Pursuant to Section
4.2(b) of the Agreement, the Company has agreed to pay as provided therein fees
and expenses (including reasonable attorneys' fees and expenses) of the Trustee
and to indemnify and hold harmless the Trustee for and against certain losses,
liabilities and expenses. Such additional payments received by the Trustee
shall not be paid into the Bond Fund but shall be for the account of the
Trustee.
<PAGE>
SECTION 5.17. ARBITRAGE REQUIREMENTS. Anything in the Agreement or this
Indenture to the contrary notwithstanding, the Trustee is hereby authorized to
deposit moneys in the Construction Fund, the Bond Fund and the Refunding Fund
and to withdraw moneys from such Funds upon the written direction of the Company
in order to comply with the provisions of the Tax Agreement.
SECTION 5.18. REBATE FUND; TAX AGREEMENT. The Trustee agrees to establish a
trust fund to be designated the "Mississippi Business Finance Corporation Solid
Waste Disposal Revenue Refunding Bonds Rebate Fund - Mississippi Phosphates
Corporation Project - Series 1998", if so requested by the Issuer or the
Company, and will hold amounts in the Rebate Fund in trust as provided herein
and as directed by the Issuer and the Company pursuant hereto and pursuant to
the Tax Agreement. Moneys in the Rebate Fund shall not be considered moneys
held under the Indenture and shall not constitute a part of the Trust Estate
held for the benefit of the Bondholders, or, except as otherwise provided herein
or as provided in the Tax Agreement, for the benefit of the Issuer or the
Company. Moneys in the Rebate Fund (including earnings and deposits therein)
shall be held in trust by the Trustee and held for future payment to the United
States Government as required by Section148(f) of the Code and as contemplated
under the provisions of the Tax Agreement and shall be paid out by the Trustee
to such persons, in such amounts and at such times as shall be set forth in
written instructions delivered to the Trustee by an Authorized Company
Representative. Notwithstanding anything in the Agreement or this Indenture to
the contrary, the Trustee is hereby authorized, at the written direction of an
Authorized Company Representative, to transfer moneys from the Rebate Fund to
the Construction Fund and the Bond Fund and to transfer moneys from the Bond
Fund to the Rebate Fund, in order to comply with the provisions of the Tax
Agreement.
ARTICLE VI
INVESTMENT OF MONEYS
SECTION 6.1. INVESTMENT OF MONEYS. Any moneys held as part of the
Construction Fund or the Bond Fund shall be invested and reinvested by the
Trustee in accordance with the provisions of Section 3.5 of the Agreement. The
Trustee may make any and all such investments through its own or any of its
Affiliate's trust investment department. Any such investments shall be held by
or under the control of the Trustee and shall be deemed at all times a part of
the fund for which they were made. The interest accruing thereon and any profit
realized from such investments shall be credited to such fund, and any net loss
resulting from such investments shall be charged to such fund. The Trustee
shall sell and reduce to cash a sufficient amount of such investments of the
Construction Fund whenever the cash balance in the Construction Fund is
insufficient to pay a requisition when presented or of the Bond Fund whenever
the cash balance in the Bond Fund is insufficient to pay the principal of,
premium, if any, and interest on the Bonds when due. The Trustee shall have no
responsibility with respect to the compliance by the Company or the Issuer with
any covenant herein or in the Tax Agreement regarding the yield on investments
made in accordance with this Section, other than to use its best reasonable
efforts to comply with instructions from the Company regarding such investments
and the Trustee shall bear no responsibility for losses incurred from such
investments. Since the investments permitted by this Section have been made
<PAGE>
at the request of the Company and the making of such investments from time to
time will be subject to the Company's direction, the Issuer and the Trustee
specifically disclaim any obligation to the Company for any loss arising from,
or tax consequences of, investments pursuant to the provisions of this Section.
The Trustee shall not be responsible for any depreciation of the value of any
investment made pursuant to this Section or for losses incurred in the
redemption, sale or other disposal of any investments made in accordance with
this Section.
ARTICLE VII
DISCHARGE OF LIEN
If the Issuer shall pay or cause to be paid, or there shall be otherwise paid
or provision for payment made to or for the owners of the Bonds, of the
principal and interest due or to become due on the Bonds at the times and in the
manner stipulated therein, and shall pay or cause to be paid to the Trustee all
sums of money due or to become due according to the provisions hereof, and if
all other liabilities of the Company under the Agreement shall have been paid or
the payment thereof provided for, then these presents and the estate and rights
hereby granted shall cease, determine and be void, whereupon the Trustee shall
cancel and discharge the lien of this Indenture and execute and deliver to the
Issuer such instruments in writing as shall be requisite to cancel and discharge
the lien hereof, and reconvey, release, assign and deliver unto the Issuer any
and all the estate, right, title and interest in and to any and all property
conveyed, assigned or pledged to the Trustee or otherwise subject to the lien of
this Indenture, except (i) amounts in the Bond Fund required to be paid to the
Company under Section 5.18 hereof and (ii) moneys or securities held by the
Trustee for the payment of the principal of, premium, if any and interest on
the Bonds.
Any Bond shall be deemed to be paid within the meaning of this Article when
payment of the principal of, premium, if any, plus interest thereon to the due
date thereof (whether such due date be by reason of maturity or upon redemption
as provided in this Indenture, or otherwise), either (i) shall have been made or
caused to be made in accordance with the terms thereof, or (ii) shall have been
provided by irrevocably depositing with the Trustee, in trust and irrevocably
set aside exclusively for such payment, (1) moneys sufficient to make such
payment or (2) Governmental Obligations (provided that the Company delivers to
the Trustee, at the Company's expense, an opinion of Bond Counsel upon which the
Trustee may rely to the effect that all conditions with respect to such deposit
specified in this Article VIII have been satisfied or provision therefor made
and that such deposit will not cause interest on any of the Bonds to be
includable for federal income tax purposes in the gross income of any owner
thereof (other than an owner who is a "substantial user" of the Project or a
"related person" within the meaning of Section 147(a) of the Code and the
applicable regulations thereunder) or cause any of the Bonds to be classified as
arbitrage bonds (within the meaning of Section 148 of the Code and the
applicable regulations thereunder)) maturing as to principal and interest in
such amount and at such times as will, without reinvestment, provide sufficient
moneys to make such payment, as verified by a report prepared by a firm of
certified public accountants, and all necessary and proper fees, compensation
and expenses (including reasonable attorneys' fees and expenses) of the Trustee
pertaining to the Bonds with respect to which such deposit is made shall have
been paid or provided for to the satisfaction of the Trustee. At such time as a
Bond shall be deemed to
<PAGE>
be paid hereunder, as aforesaid, it shall no longer be secured by or entitled to
the benefits of this Indenture, except for the purposes of transfer and exchange
and of payment from such moneys or Governmental Obligations on the date or dates
specified at the time of such deposit.
Notwithstanding the foregoing, in the case of Bonds which by their terms may
be redeemed prior to the stated maturities thereof, no deposit under clause (ii)
of the immediately preceding paragraph shall be deemed a payment of such Bonds
as aforesaid until the deposit shall have been made under the terms of an escrow
deposit arrangement in form and substance satisfactory to the Trustee and
consistent herewith and until the Company, on behalf of the Issuer, shall have
given the Trustee, in form satisfactory to the Trustee, irrevocable instructions
in writing:
(a) stating the date when principal of each such Bond is to be paid, whether
at maturity or on a redemption date (which may be any redemption date permitted
by this Indenture);
(b) to call for redemption pursuant to the Indenture any Bonds to be
redeemed prior to maturity pursuant to (a) hereof; and
(c) to mail, as soon as practicable, in the manner prescribed by Article III
hereof, a notice to the owners of such Bonds that the deposit required by (ii)
above has been made with the Trustee and that said Bonds are deemed to have
been paid in accordance with this Article and stating the maturity or
redemption date upon which moneys are to be available for the payment of the
principal or redemption price, as applicable, on said Bonds as specified in
(a) hereof.
Anything in Article X hereof to the contrary notwithstanding, if moneys or
Governmental Obligations have been deposited or set aside with the Trustee
pursuant to this Article for the payment of Bonds and the interest thereon and
such Bonds and the interest thereon shall not have in fact been actually paid in
full, no amendment to the provisions of this Article shall be made without the
consent of the owner of each of the Bonds affected thereby.
ARTICLE VIII
DEFAULT PROVISIONS AND REMEDIES OF TRUSTEE
AND BONDHOLDERS
SECTION 8.1. DEFAULTS; EVENTS OF DEFAULT. If any of the following events
occur, it is hereby declared to constitute an "event of default":
(a) Failure to pay interest on any Bond as and when such interest shall
have become due and payable, and the continuation of such failure for one
business day;
(b) Failure to pay any principal of any Bond, as and when due, whether at
the stated maturity thereof or upon proceedings for redemption thereof, and
the continuation of such failure for one business day;
<PAGE>
(c) Failure to perform or observe any other of the covenants, agreements
or conditions on the part of the Issuer in this Indenture or in the Bonds
contained and failure to remedy the same after notice thereof pursuant to
Section 8.12 hereof; or
(d) The occurrence of an "Event of Default" under the Agreement or the
Guaranty.
SECTION 8.2. ACCELERATION. Upon the occurrence of an event of default the
Trustee may, and upon the written request of the owners of not less than a
majority in aggregate principal amount of Bonds then outstanding shall, by
notice in writing delivered to the Issuer, declare the principal of all Bonds
then outstanding and the interest accrued thereon to the date of such
declaration immediately due and payable, and such principal and interest shall
thereupon become and be immediately due and payable. Upon any declaration of
acceleration hereunder the Trustee shall immediately declare an amount equal to
all amounts then due and payable on the Bonds to be immediately due and payable
under Section 4.2(a) of the Agreement.
SECTION 8.3. OTHER REMEDIES; RIGHTS OF BONDHOLDERS. Upon the occurrence
of an event of default the Trustee may, in addition or as an alternative, pursue
any available remedy by suit at law or in equity to enforce the payment of the
principal of, premium, if any and interest on the Bonds then outstanding,
including making claim under or enforcing the Guaranty.
If an event of default shall have occurred, and if requested so to do by
the owners of a majority in aggregate principal amount of Bonds then outstanding
and upon being indemnified as provided in Section 9.1(1) hereof, the Trustee
shall be obligated to exercise such one or more of the rights and powers
conferred by this Section 8.3 as the Trustee, being advised by counsel, shall
deem most expedient in the interests of the Bondholders. No remedy by the terms
of this Indenture conferred upon or reserved to the Trustee (or to the
Bondholders) is intended to be exclusive of any other remedy, but each and every
such remedy shall be cumulative and shall be in addition to any other remedy
given to the Trustee or to the Bondholders hereunder or now or hereafter
existing at law or in equity.
No delay or omission to exercise any right or power accruing upon any
default or event of default shall impair any such right or power or shall be
construed to be a waiver of any such default or event of default or acquiescence
therein; and such right and power may be exercised from time to time as often as
may be deemed expedient.
No waiver of any default or event of default hereunder, whether by the
Trustee or by the Bondholders, shall extend to or shall affect any subsequent
default or event of default or shall impair any rights or remedies consequent
thereon.
SECTION 8.4. RIGHT OF BONDHOLDERS TO DIRECT PROCEEDINGS. Subject to the
provisions of Section 9.1(1) hereof, anything in this Indenture to the contrary
notwithstanding, the owners of a majority in aggregate principal amount of the
Bonds then outstanding shall have the right, at any time, by an instrument or
instruments in writing executed and delivered to the Trustee, to direct the
method
<PAGE>
and place of conducting all proceedings to be taken in connection with the
enforcement of the terms and conditions of this Indenture, or for the
appointment of a receiver or any other proceedings hereunder; provided, that
such direction shall not be otherwise than in accordance with the provisions of
law and of this Indenture.
SECTION 8.5. APPOINTMENT OF RECEIVERS. Upon the occurrence of an event of
default, and upon the filing of a suit or other commencement of judicial
proceedings to enforce the rights of the Trustee and of the Bondholders under
this Indenture, the Trustee shall be entitled, as a matter of right, to the
appointment of a receiver or receivers of the Trust Estate and of the revenues,
earnings, income, products and profits thereof, pending such proceedings, with
such powers as the court making such appointment shall confer.
SECTION 8.6. RESERVED.
SECTION 8.7. APPLICATION OF MONEYS. All moneys received by the Trustee
pursuant to any right given or action taken under the provisions of this Article
shall, after payment of the costs and expenses of the proceedings resulting in
the collection of such moneys and of the expenses, liabilities and advances
incurred or made by the Trustee, be deposited in the Bond Fund and, subject to
the provisions of Section 9.2 hereof, all moneys held or deposited in the Bond
Fund during the continuation of the Event of Default shall be applied as
follows:
(a) Unless the principal of all the Bonds shall have become or shall have
been declared due and payable, all such moneys shall be applied:
FIRST - To the payment to the persons entitled thereto of all
interest then due on the Bonds (other than interest due on Bonds for the
payment of which moneys are held pursuant to the provisions of this
Indenture), and, if the amount available shall not be sufficient to pay
said amount in full, then to the payment ratably, according to the amounts
due, to the persons entitled thereto, without any discrimination or
privilege;
SECOND - To the payment to the persons entitled thereto of the
unpaid principal of any of the Bonds which shall have become due (other
than Bonds matured or called for redemption for the payment of which moneys
are held pursuant to the provisions of this Indenture), and, if the amount
available shall not be sufficient to pay in full such unpaid principal,
then to the payment ratably to the persons entitled thereto without any
discrimination or privilege; and
THIRD - To the payment to the persons entitled thereto of interest on
overdue principal of any Bonds and, to the extent permitted by law,
interest on overdue interest on any Bonds, without preference or priority
as between principal or interest one over the others, or any installment of
interest over any other installment of interest, or of any Bond over any
other Bond, and if the amount available shall not be sufficient to pay such
amounts in full, then ratably, without any discrimination or privilege.
<PAGE>
(b) If the principal of all the Bonds shall have become due or shall have
been declared due and payable, all such moneys shall be applied to the
payment of the principal and interest then due and unpaid upon the Bonds
(other than Bonds matured or called for redemption or interest due on Bonds
for the payment of which moneys are held pursuant to the provisions of this
Indenture), without preference or priority of principal or interest one over
the other, or of any installment of interest over any other installment of
interest, or of any Bond over any other Bond, ratably, according to the
amounts due respectively for principal and interest, to the persons entitled
thereto without any discrimination or privilege.
(c) If the principal of all the Bonds shall have been declared due and
payable, and if such declaration shall thereafter have been rescinded and
annulled under the provisions of this Article then, subject to the provisions
of Section 8.7(b) hereof in the event that the principal of all the Bonds
shall later become due or be declared due and payable, the moneys shall be
applied in accordance with the provisions of Section 8.7(a) hereof.
Subject to the provisions of Section 9.2 hereof, whenever moneys are to be
applied pursuant to the provisions of this Section 8.7, such moneys shall be
applied at such times, and from time to time, as the Trustee shall determine,
having due regard to the amount of such moneys available for application and the
likelihood of additional moneys becoming available for such application in the
future. Whenever the Trustee shall apply such funds, it shall fix the date
(which shall be an Interest Payment Date unless it shall deem another date more
suitable) upon which such application is to be made and upon such date interest
on the amounts of principal to be paid on such date shall cease to accrue. The
Trustee shall give such notice as it may deem appropriate of the deposit with it
of any such moneys and of the fixing of any such date, and shall not be required
to make payment to the owner of any Bond until such Bond shall be presented to
the Trustee for appropriate endorsement or for cancellation if fully paid.
Whenever the principal of, premium, if any and interest on all Bonds has been
paid under the provisions of this Section 8.7 and all expenses, charges and fees
of the Trustee and the Issuer have been paid, any balance remaining in the Bond
Fund shall be paid to the Company as provided in Section 5.18 hereof.
SECTION 8.8. REMEDIES VESTED IN TRUSTEE. All rights of action (including the
right to file proofs of claim) under this Indenture or under any of the Bonds
may be enforced by the Trustee without the possession of any of the Bonds or the
production thereof in any trial or other proceeding relating thereto and any
such suit or proceeding instituted by the Trustee shall be brought in its name
as Trustee without the necessity of joining as plaintiffs or defendants any
owners of the Bonds, and any recovery of judgment shall be for the equal and
ratable benefit of the owners of the outstanding Bonds.
SECTION 8.9. RIGHTS AND REMEDIES OF BONDHOLDERS. No owner of any Bond shall
have any right to institute any suit, action or proceeding at law or in equity
for the enforcement of this Indenture or the Agreement or for the execution of
any trust hereof or for the appointment of a
<PAGE>
receiver or any other remedy hereunder or thereunder, unless also a default has
occurred of which the Trustee has been notified as provided in Section 9.1(h)
hereof, or of which by said subsection it is deemed to have notice, nor unless
also such default shall have become an event of default and the owners of a
majority in aggregate principal amount of Bonds then outstanding shall have made
written request to the Trustee and shall have offered it reasonable opportunity
either to proceed to exercise the powers hereinbefore granted or to institute
such action, suit or proceeding in its own name, nor unless also they have
offered to the Trustee indemnity as provided in Section 9.1(1), nor unless the
Trustee shall thereafter fail or refuse to exercise the powers hereinbefore
granted, or to institute such action, suit or proceeding in its own name; and
such notification, request and offer of indemnity are hereby declared in every
case at the option of the Trustee to be conditions precedent to the execution of
the powers and trusts of this Indenture, and to any action or cause of action
for the enforcement of this Indenture or the Agreement, or for the appointment
of a receiver or for any other remedy hereunder or thereunder; it being
understood and intended that no one or more owners of the Bonds shall have any
right in any manner whatsoever to affect, disturb or prejudice the lien of this
Indenture by its, his or their action or to enforce any right hereunder or
thereunder except in the manner herein provided, and that all proceedings at law
or in equity shall be instituted, had and maintained in the manner herein
provided and for the equal and ratable benefit of the owners of all Bonds then
outstanding. However, nothing contained in this Indenture shall affect or
impair the right of any Bondholder to enforce the payment of the principal of,
premium, if any and interest on any Bond at and after the maturity thereof, or
the obligation of the Issuer to pay the principal of, premium, if any and
interest on each of the Bonds issued hereunder to the respective owners thereof
at the time, place, from the source and in the manner in the Bonds expressed.
SECTION 8.10. TERMINATION OF PROCEEDINGS. In case the Trustee shall have
proceeded to enforce any right under this Indenture by the appointment of a
receiver or otherwise, and such proceedings shall have been discontinued or
abandoned for any reason, or shall have been determined adversely, then and in
every such case the Issuer, the Trustee and the Bondholders shall be restored to
their former positions and rights hereunder respectively with regard to the
property subject to this Indenture, and all rights, remedies and powers of the
Trustee shall continue as if no such proceedings had been taken.
SECTION 8.11. WAIVERS OF EVENTS OF DEFAULT. The Trustee may, in its
discretion, waive any event of default hereunder and its consequences and
rescind any declaration of acceleration of principal, and shall do so upon the
written request of the owners of (1) a majority in principal amount of all the
Bonds then outstanding in respect of which default in the payment of principal
and interest, or either of them, exists, or (2) a majority in principal amount
of all Bonds then outstanding in the case of any other default; provided,
however, that there shall not be waived (a) any event of default in the payment
of the principal of any outstanding Bonds or (b) any default in the payment when
due of the interest on any such Bonds, unless prior to such waiver or rescission
all arrears of principal, with interest thereon as in the Bonds provided, and
all arrears of interest with interest thereon to the extent permitted by law as
in the Bonds provided, and all expenses of the Trustee in connection with such
default, shall have been paid or provided for, and in case of any such waiver or
rescission, or in case any proceeding taken by the Trustee on account of any
such default shall have been discontinued or abandoned or determined adversely,
<PAGE>
then and in every such case the Issuer, the Trustee and the Bondholders shall be
restored to their former positions and rights hereunder respectively, but no
such waiver or rescission shall extend to any subsequent or other default or
impair any right consequent thereon.
SECTION 8.12. NOTICE OF DEFAULTS UNDER SECTION 8.1(C); OPPORTUNITY OF THE
ISSUER AND THE COMPANY TO CURE SUCH DEFAULTS. Anything herein to the contrary
notwithstanding, no default under Section 8.1(c) hereof shall constitute an
event of default until actual notice of such default by registered or certified
mail, return receipt requested, shall be given to the Issuer, the Company and
the Guarantor by the Trustee or by the owners of not less than a majority in
aggregate principal amount of all Bonds outstanding, and the Issuer, the Company
and the Guarantor shall have had thirty days after receipt of such notice to
correct said default or cause said default to be corrected within the applicable
period; provided, however, if said default be such that it cannot be corrected
within the applicable period, it shall not constitute an event of default if
corrective action is instituted within the applicable period and diligently
pursued until the default is corrected.
With regard to any default concerning which notice is given to the Issuer, the
Company and the Guarantor under the provisions of this Section, the Issuer
hereby grants the Company and the Guarantor full authority for account of the
Issuer to perform any covenant or obligation alleged in said notice to
constitute a default, in the name and stead of the Issuer with full power to do
any and all things and acts to the same extent that the Issuer could do and
perform any such things and acts and with power of substitution.
SECTION 8.13. NOTICE TO BONDHOLDERS; DEFAULTS; ACCELERATION. If a default
occurs of which the Trustee is by Section 9.1(h) hereof required to take notice
or if notice of default be given as therein provided, then the Trustee shall
promptly give written notice thereof by first-class mail to the owner of each
Bond. If the Trustee declares the principal of all Bonds then outstanding and
the interest accrued thereon to the date of such declaration immediately due and
payable pursuant to Section 8.2 hereof, then the Trustee shall promptly give
written notice thereof by first-class mail to the owner of each Bond.
ARTICLE IX
THE TRUSTEE
SECTION 9.1. ACCEPTANCE OF TRUSTS. The Trustee hereby accepts the trusts
imposed upon it by this Indenture, and agrees to perform said trusts, but only
upon and subject to the following express terms and conditions to which the
Issuer, the owners of the Bonds and the Company agree:
(a) The Trustee, prior to the occurrence of an event of default and after
curing of all events of default which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in
this Indenture. In case an event of default has occurred (which has not
been cured or waived) of which the Trustee has notice or is deemed to have
notice, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture, and
<PAGE>
use the same degree of care and skill in their exercise, as a prudent man
would exercise or use under the circumstances in the conduct of his own
affairs.
(b) The Trustee may execute any of the trusts or powers hereof and
perform any of its duties by or through Affiliates, attorneys, accountants
and other experts, agents or receivers and shall not be answerable for the
conduct of the same appointed in good faith in accordance with the standard
specified above, and shall be entitled to advice of counsel concerning its
duties hereunder, and may in all cases pay such reasonable compensation to
all such attorneys, accountants and other experts, agents and receivers as
may reasonably be employed in connection with the trusts hereof.
(c) The Trustee shall not be responsible for any recital herein, or in
the Bonds, or for the recording or filing of any instrument required to
secure the Bonds, or for the validity of the execution by the Issuer of
this Indenture, or of any instruments of further assurance, or for the
sufficiency of the security for the Bonds issued hereunder or intended to
be secured hereby; but the Trustee shall be responsible for the filing of
any continuation statements which may from time to time be required to be
filed under the Mississippi Uniform Commercial Code in order to continue
the perfection of the lien of this Indenture and, in filing such
continuation statements, the Trustee shall be entitled to rely on an
opinion of counsel. The Trustee shall not be responsible for insuring the
Project or collecting any insurance moneys, or for the validity of the
execution by the Issuer of this Indenture or of any supplements thereto or
instruments of further assurance, or for the sufficiency of documents
relating to the security for the Bonds issued hereunder or intended to be
secured hereby, and the Trustee shall not be bound to ascertain or inquire
as to the observance or performance of any covenants, conditions or
agreements on the part of the Issuer or on the part of the Company under
the Agreement except as herein set forth.
(d) The Trustee shall not be accountable for the use of any Bonds
authenticated or delivered hereunder. The Trustee may become the owner of
Bonds secured hereby with the same rights which it would have if not the
Trustee.
(e) The Trustee shall be protected in acting upon any notice, request,
consent, certificate, order, affidavit, letter, telegram or other paper or
document believed to be genuine and correct and to have been signed or sent
by the proper person or persons. Any action taken by the Trustee pursuant
to this Indenture upon the request or authority or consent of any person
who at the time of making such request or giving such authority or consent
is the owner of any Bond, shall be conclusive and binding upon all future
owners of the same Bond and upon Bonds issued in exchange therefor or in
place thereof.
(f) As to the existence or non-existence of any fact or as to the
sufficiency or validity of any instrument, paper or proceeding, the Trustee
shall be entitled to rely upon a certificate signed by the Executive
Director or an authorized officer of the Issuer or an Authorized Company
Representative under the Agreement as sufficient evidence of the facts
therein contained and prior to the occurrence of a default of which the
Trustee has been notified as provided in Section 9.1(h) hereof, or of which
by Section 9.1(h) it is deemed to have notice,
<PAGE>
shall also be at liberty to accept a similar certificate to the effect that
any particular dealing, transaction or action is necessary or expedient,
but may at its discretion secure such further evidence deemed by it to be
necessary or advisable, but shall in no case be bound to secure the same.
The Trustee may accept a certificate of the Executive Director or an
authorized officer of the Issuer under the seal of the Issuer to the effect
that an authorization in the form therein set forth has been adopted by the
Issuer as conclusive evidence that such authorization has been duly adopted
and is in full force and effect.
(g) The permissive right of the Trustee to do things enumerated in this
Indenture shall not be construed as a duty and it shall not be answerable
for other than its negligence or willful default.
(h) The Trustee shall not be required to take notice or be deemed to have
notice of any default hereunder except failure by the Issuer to cause to be
made any of the payments to the Trustee required to be made by Article IV
hereof, unless the Trustee shall be specifically notified in writing of
such default by the Issuer or by an owner of Bonds, and all notices or
other instruments required by this Indenture to be delivered to the
Trustee, must, in order to be effective, be delivered at the principal
corporate trust office of the Trustee (or such other office designated in
writing by the Trustee to the Issuer), and in the absence of such notice so
delivered the Trustee may conclusively assume there is no default except as
aforesaid.
(i) At any and all reasonable times the Trustee, and its duly authorized
agents, attorneys, experts, engineers, accountants and representatives,
shall have the right fully to inspect any and all of the property herein
conveyed, including all books, papers and records of the Issuer pertaining
to the Project and the Bonds, and to take such memoranda from and with
regard thereto as may be desired.
(j) The Trustee shall not be required to give any bond or surety in
respect of the execution of the said trusts and powers or otherwise in
respect of the premises.
(k) Notwithstanding anything elsewhere in this Indenture with respect to
the authentication of any Bonds, the withdrawal of any cash, the release of
any property, or any action whatsoever within the purview of this
Indenture, the Trustee shall have the right, but shall not be required, to
demand any showings, certificates, opinions, appraisals or other
information, or corporate action or evidence thereof, in addition to that
by the terms hereof required as a condition of such action, by the Trustee
deemed desirable for the purpose of establishing the right to the
authentication of any Bonds, the withdrawal of any cash, or the taking of
any other action by the Trustee.
(l) Before taking any action referred to in Section 8.3, 8.4, 8.8 or 9.4
hereof the Trustee may require that a satisfactory indemnity bond be
furnished for the reimbursement of all expenses to which it may be put and
to protect it against all liability, except liability which is adjudicated
to have resulted from its failure to comply with the standard of care
prescribed by Section 9.1(a) and (g) hereof by reason of any action so
taken.
<PAGE>
(m) All moneys received by the Trustee shall, until used or applied or
invested as herein provided, be held in trust for the purposes for which
they were received but need not be segregated from other funds except to
the extent required by law.
(n) The Trustee may rely upon advice of counsel chosen by the Trustee
with due care and shall not be responsible for any loss or damage resulting
from any action or non-action by it taken or omitted to be taken in good
faith in reliance upon advice of such counsel. The permissive right of the
Trustee to do things enumerated in this Indenture shall not be construed as
a duty and the Trustee shall not be answerable for the exercise of any
discretion or power under this Indenture or for anything whatsoever in
connection with the trusts created hereby, except only for its own
negligence or willful misconduct, including that of its directors, officer,
employees or agents.
(o) None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise to incur financial
liability in the performance of any of its duties or the exercise of any of
its rights or powers hereunder, except as expressly provided herein. The
Trustee shall not be required to give any bond or surety in respect to the
execution of its rights and obligations hereunder.
SECTION 9.2. FEES, CHARGES AND EXPENSES OF THE TRUSTEE. The Trustee shall
be entitled to payment and reimbursement for reasonable fees for its services
rendered hereunder and all advances, counsel fees and expenses (including the
allocated costs and expenses of its in-house counsel and legal staff) and other
expenses reasonably made or incurred by the Trustee in connection with such
services and in connection with entering into this Indenture, including any such
fees and expenses incurred in connection with action taken hereunder. Upon an
event of default, but only upon an event of default, the Trustee shall have a
first lien with right of payment prior to payment on account of principal of,
premium, if any and interest on any Bond upon the Trust Estate for the foregoing
fees, charges and expenses incurred by it.
SECTION 9.3. TRUSTEE AS PAYING AGENT AND REGISTRAR. The Trustee shall
also serve as the Paying Agent and the Registrar for the Bonds, and all
references to fees, charges and expenses of the Trustee in this Indenture,
including without limitation such references in Section 9.2 hereof, shall be
deemed also to refer to the fees, charges and expenses of the Paying Agent and
the Registrar.
SECTION 9.4. INTERVENTION BY THE TRUSTEE. In any judicial proceeding to
which Issuer is a party which, in the opinion of the Trustee and its counsel,
has a substantial bearing on the interests of owners of the Bonds, the Trustee
may intervene on behalf of Bondholders and shall do so if requested in writing
by the owners of at least a majority of the aggregate principal amount of Bonds
then outstanding, provided that the Trustee shall first have been offered such
indemnification in accordance with Section 9.1(1) hereof against such liability
as it may incur in or by reason of such proceeding. The rights and obligations
of the Trustee under this Section are subject to the approval of a court of
competent jurisdiction.
<PAGE>
SECTION 9.5. SUCCESSOR TRUSTEE. Any corporation or association into which
the Trustee may be converted or merged, or with which it may be consolidated, or
to which it may sell or transfer its corporate trust business and assets as a
whole or substantially as a whole, or any corporation or association resulting
from any such conversion, sale, merger, consolidation or transfer, to which it
is a party, shall be and become successor trustee hereunder and vested with all
of the title to the Trust Estate and all the trusts, powers, discretions,
immunities, privileges and all other matters as was its predecessor, without the
execution or filing of any instrument or any further act, deed or conveyance on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding. Any such successor trustee shall give notice thereof to the
Issuer and the Company.
SECTION 9.6. RESIGNATION BY THE TRUSTEE. The Trustee and any successor
trustee may at any time resign from the trusts hereby created by giving at least
thirty days written notice by registered or certified mail, return receipt
requested, to the Issuer, the Company and the owner of each Bond, and such
resignation shall take effect upon the appointment of a successor trustee
pursuant to the provisions of Section 9.8 hereof and the acceptance by the
successor trustee of such appointment.
SECTION 9.7. REMOVAL OF THE TRUSTEE. The Trustee may be removed at any time,
by an instrument or concurrent instruments in writing delivered to the Trustee
at least thirty days prior to the successor trustee's acceptance of its
appointment, to the Issuer and to the Company, and signed by the owners of a
majority in aggregate principal amount of Bonds then outstanding, or (so long as
no event of default is then existing under Section 6.1(a), (b), (c) or (d) of
the Agreement) signed by the Company and delivered to the Trustee and the
Issuer, and such removal shall take effect upon the appointment of a successor
trustee pursuant to the provisions of Section 9.8 hereof and the acceptance by
the successor trustee of such appointment.
SECTION 9.8. APPOINTMENT OF SUCCESSOR TRUSTEE BY BONDHOLDERS OR ISSUER. In
case the Trustee hereunder shall resign or be removed, or be dissolved, or shall
be in the course of dissolution or liquidation, or otherwise become incapable of
acting hereunder, or in case it shall be taken under the control of any public
officer or officers, or of a receiver appointed by a court, a successor may be
appointed by the Issuer (at the direction of the Company so long as no event of
default is then existing under Section 6.1(a), (b), (c) or (d) of the
Agreement), or if no successor trustee is so appointed by the Issuer, then by
the owners of a majority in aggregate principal amount of Bonds then
outstanding, by an instrument or concurrent instruments in writing signed by
such owners, or by their duly authorized attorneys in fact, a copy of which
shall be delivered personally or sent by registered mail, return receipt
requested, to the Issuer and the Company; provided, that if a successor trustee
is not so appointed and accepts such appointment within thirty days of such
resignation, removal or other action, then the Trustee may petition a court of
competent jurisdiction for the appointment of a successor trustee. Every such
Trustee appointed pursuant to the provisions of this Section shall be a trust
company or bank in good standing having a reported capital and surplus of not
less than $100,000,000, if there be such an institution willing, qualified and
able to accept the trust upon customary terms, and (unless the Company shall
then be in default under Section 6.1(a), (b), (c) or (d) of the Agreement) shall
be satisfactory to the Company.
<PAGE>
SECTION 9.9. CONCERNING ANY SUCCESSOR TRUSTEE. Every successor trustee
appointed hereunder shall execute, acknowledge and deliver to its or his
predecessor and also to the Issuer and the Company an instrument in writing
accepting such appointment hereunder and thereupon such successor, without any
further act, deed or conveyance, shall become fully vested with all the estates,
properties, rights, powers, trust, duties and obligations of its predecessors;
but such predecessor shall, nevertheless, on the written request of the Issuer,
or of its successor, execute and deliver an instrument transferring to such
successor all the estates, properties, rights, powers and trusts of such
predecessor hereunder; and every predecessor Trustee shall deliver all
securities and moneys held by it as Trustee hereunder to its successor. Should
any instrument in writing from the Issuer be required by any successor trustee
for more fully and certainly vesting in such successor the estate, rights, power
and duties hereby vested or intended to be vested in the predecessor, any and
all such instruments in writing shall, on request, be executed, acknowledged and
delivered by the Issuer. The resignation of any Trustee and the instrument or
instruments removing any Trustee and appointing a successor hereunder, together
with all other instruments provided for in this Article, shall be filed or
recorded by the successor trustee in each recording office, if any, where the
Indenture shall have been filed or recorded.
SECTION 9.10. APPOINTMENT OF CO-TRUSTEE. It is the purpose of this
Indenture that there shall be no violation of any law of any jurisdiction
(including particularly the law of Mississippi) denying or restricting the right
of banking corporations or associations to transact business as Trustee in such
jurisdiction. It is recognized that in case of litigation under this Indenture
or the Agreement, and in particular in case of the enforcement of either on
default, or in case the Trustee deems that by reason of any present or future
law of any jurisdiction it may not exercise any of the powers, rights or
remedies herein granted to the Trustee or hold title to the properties, in
trust, as herein granted, or take any other action which may be desirable or
necessary in connection therewith, it may be necessary that the Trustee appoint
an additional individual or institution as a separate or co-trustee. The
following provisions of this Section 9.10 are adapted to these ends.
In the event that the Trustee appoints an additional individual or institution
as a separate or co-trustee, each and every remedy, power, right, obligation,
claim, demand, cause of action, immunity, estate, title, interest and lien
expressed or intended by this Indenture to be imposed upon, exercised by or
vested in or conveyed to the Trustee with respect thereto shall be imposed upon,
exercisable by and vest in such separate or co-trustee but only to the extent
necessary to enable such separate or co-trustee to exercise such powers, rights
and remedies and every covenant and obligation necessary to the exercise thereof
by such separate or co-trustee shall run to and be enforceable by either of
them. Such separate or co-trustee shall deliver an instrument in writing
acknowledging and accepting its appointment hereunder to the Issuer, the Trustee
and the Company.
Should any instrument in writing from the Issuer be required by the separate
trustee or co-trustee so appointed by the Trustee for more fully and certainly
vesting in and confirming to him or it such properties, rights, powers, trusts,
duties and obligations, any and all such instruments in writing shall, on
request, be executed, acknowledged and delivered by the Issuer.
<PAGE>
In case any separate trustee or co-trustee, or a successor to either, shall die,
become incapable of acting, resign or be removed, all the estates, properties,
rights, powers, trusts, duties and obligations of such separate trustee or co-
trustee, so far as permitted by law, shall vest in and be exercised by the
Trustee until the appointment of a new trustee or successor to such separate
trustee or co-trustee.
The appointment of a co-trustee hereunder shall not in any way change the
Trustee's fiduciary duties and obligations hereunder.
SECTION 9.11. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE TRUSTEE. All
federal, state and local governmental, public and regulatory authority
approvals, consents, notices, authorizations, registrations, licenses,
exemptions, and filings that are required to have been obtained or made by
Trustee with respect to the authorization, execution, delivery and performance
by, or the enforcement against or by, the Trustee of this Indenture have been
obtained and are in full force and effect and all conditions of such approvals,
consents, notices, authorizations, registrations, licenses, exemptions, and
filings have been fully complied with.
The Trustee is qualified to do business in the State of Mississippi. The
Trustee has a combined capital and surplus of at least $50,000,000 or,
alternatively, a liability policy having the type of coverage and in an amount
acceptable to the Issuer and the Company. The Trustee has an operations group
of at least four experienced trust officers, with primary responsibility for
municipal bond issues. The Trustee administers at least 25 municipal bond
indentures aggregating at least $25,000,000 under its administration.
SECTION 9.12. REQUIRED REPORTING TO ISSUER. The Trustee shall keep, or cause
to be kept, proper books of record and account in which complete and accurate
entries shall be made of all funds and accounts established by or pursuant to
this Indenture, which shall at all reasonable times be subject to the inspection
by the Issuer or the owners (or a designated representative thereof) of not less
than 10% in aggregate principal amount of the Bonds then outstanding.
If requested in writing by the Issuer, the Trustee shall furnish to the Issuer
within five days after each date on which principal of, premium, if any or
interest on, any of the Bonds is due, a written certificate setting forth the
following:
(i) the designated name of the Bonds;
(ii) the date on which such interest on any of the Bonds was due, the rate of
interest borne by such Bonds and the amount of such interest due;
(iii) the date on which such interest on any of the Bonds was paid and the
amount of such interest paid;
(iv) the date on which such principal of any of the Bonds was due (whether at
maturity, upon call for redemption or acceleration) and the amount of such
principal due;
<PAGE>
(v) the date on which such principal of any of the Bonds was paid and the
amount of such principal paid; and
(vi) the name of the Trustee.
Not later than 30 days after the end of each calendar year commencing with the
calendar year 1998, the Trustee will prepare and file with the Issuer a
statement setting forth, with respect to the preceding year, (l) amounts
withdrawn from and deposited in each fund and account relating to the Bonds
hereunder, (2) the balance on deposit in each such fund or account relating to
the Bonds at the end of each year for which such statement is prepared, (3) a
brief description of all obligations held as investments in each such fund or
account relating to the Bonds, (4) the amount, if any, applied to the redemption
of the Bonds, a description of the Bonds or portions of Bonds so redeemed, and
an accounting of the Bonds of each maturity outstanding, and (5) any other
information that the Issuer may reasonably request or that the Trustee may from
time to time deem appropriate.
ARTICLE X
SUPPLEMENTAL INDENTURES
SECTION 10.1. SUPPLEMENTAL INDENTURES NOT REQUIRING CONSENT OF BONDHOLDERS.
The Issuer and the Trustee may, without consent of, or notice to, any of the
Bondholders enter into an indenture or indentures supplemental to this Indenture
for any one or more of the following purposes:
(a) To cure any ambiguity or formal defect or omission in this Indenture;
(b) To grant to or confer upon the Trustee for the benefit of the
Bondholders any additional rights, remedies, powers or authority that may
lawfully be granted to or conferred upon the Bondholders or the Trustee;
(c) To evidence the appointment of a separate trustee or a co-trustee or
the succession of a new trustee hereunder;
(d) To provide for an uncertificated book-entry system of registration
for the Bonds;
(e) To preserve the tax exempt status of interest on the Bonds as
required in an opinion of Bond Counsel delivered to the Trustee;
(f) To obtain or maintain an appropriate rating or ratings on the Bonds;
and
(g) To make any other change which, in the judgment of the Trustee, is
not to the prejudice of the Bondholders.
<PAGE>
SECTION 10.2. SUPPLEMENTAL INDENTURES REQUIRING CONSENT OF BONDHOLDERS.
Exclusive of supplemental indentures covered by Section 10.1 hereof and subject
to the terms and provisions contained in this Section, and not otherwise, the
owners of not less than a majority in aggregate principal amount of the Bonds
then outstanding shall have the right, from time to time, anything contained in
this Indenture to the contrary notwithstanding, to consent to and approve the
execution by the Issuer and the Trustee of such other indenture or indentures
supplemental hereto as shall be deemed necessary and desirable by the Issuer for
the purpose of modifying, altering, amending, adding to or rescinding, in any
particular, any of the terms or provisions contained in this Indenture or in any
supplemental indenture; provided, however, that nothing in this Section or in
Section 10.1 hereof contained shall permit, or be construed as permitting,
without the consent of the owners of 100% in aggregate principal amount of the
Bonds then outstanding, (a) an extension of the maturity (or mandatory
redemption date) of the principal of, or the interest on, any Bond issued
hereunder, or (b) a reduction in the principal amount of, or rate of interest
on, any Bond issued hereunder, or (c) a privilege or priority of any Bond or
Bonds over any other Bond or Bonds, or (d) a reduction in the aggregate
principal amount of the Bonds the owners of which are required to consent to
such supplemental indenture, or (e) the creation of any lien ranking prior to or
on a parity with the lien of this Indenture on the Trust Estate or any part
thereof, or (f) deprivation of the owner of any Bond then outstanding of the
lien hereby created on the Trust Estate.
If at any time the Issuer shall request the Trustee to enter into any such
supplemental indenture for any of the purposes of this Section, the Trustee
shall, upon being satisfactorily indemnified with respect to expenses, cause
notice of the proposed execution of such supplemental indenture to be mailed by
first class mail to all Bondholders. Such notice shall briefly set forth the
nature of the proposed supplemental indenture and shall state that copies
thereof are on file at the corporate trust office of the Trustee for inspection
by all Bondholders. If, within sixty days or such longer period as shall be
prescribed by the Issuer following the mailing of such notice, the owners of not
less than a majority or 100%, as the case may be, in aggregate principal amount
of the Bonds then outstanding shall have consented to and approved the execution
thereof as herein provided, no owner of any Bond shall have any right to object
to any of the terms and provisions contained therein, or the operation thereof,
or in any manner to question the propriety of the execution thereof, or to
enjoin or restrain the Trustee or the Issuer from executing the same or from
taking any action pursuant to the provisions thereof. Upon the execution of any
such supplemental indenture as in this Section permitted and provided, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith.
SECTION 10.3. CONSENT OF COMPANY. Anything herein to the contrary
notwithstanding, a supplemental indenture under this Article shall not become
effective unless and until the Company shall have consented to the execution and
delivery of such supplemental indenture. In this regard, the Trustee shall
cause notice of the proposed execution of any such supplemental indenture
together with a copy of the proposed supplemental indenture to be mailed by
certified or registered mail, return receipt requested, to the Company at least
fifteen days prior to the proposed date of execution and delivery of any such
supplemental indenture. The Company shall be deemed to have consented to the
execution and delivery of any such supplemental indenture if
<PAGE>
the Trustee does not receive a letter of protest or objection thereto signed by
or on behalf of the Company by an Authorized Company Representative on or before
4:30 o'clock P.M. local time at the principal corporate trust office or other
designated corporate trust office of the Trustee, on the fifteenth day after the
mailing of said notice.
SECTION 10.4. OPINION OF BOND COUNSEL. The Trustee may require that the
Company deliver to the Trustee at the Company's expense an opinion of Bond
Counsel upon which the Trustee may rely to the effect that a supplemental
indenture is permitted by applicable law and will not adversely affect the tax-
exempt status of the interest on the Bonds and that such supplemental indenture
complies with the terms and provisions of this Indenture.
ARTICLE XI
AMENDMENT OF AGREEMENT AND GUARANTY
SECTION 11.1. AMENDMENTS, ETC., TO AGREEMENT AND GUARANTY NOT REQUIRING
CONSENT OF BONDHOLDERS. The Trustee shall without the consent of or notice to
the Bondholders consent to any amendment, change or modification of the
Agreement or the Guaranty which does not adversely affect the Bondholders (i) as
may be required by the provisions of the Agreement, the Guaranty or this
Indenture, (ii) for the purpose of curing any ambiguity or formal defect or
omission therein, (iii) to describe more fully or to amplify or correct the
description of any property financed under the Agreement or intended so to be,
(iv) to preserve the tax exempt status of interest on the Bonds, (v) to obtain
or maintain an appropriate rating or ratings on the Bonds, or (vi) in connection
with any other change therein which, in the judgment of the Trustee, is not to
the prejudice of the Bondholders.
SECTION 11.2. AMENDMENTS, ETC., TO AGREEMENT AND GUARANTY REQUIRING CONSENT
OF BONDHOLDERS. Except for the amendments, changes or modifications as provided
in Section 11.1 hereof, the Trustee shall not consent to any other amendment,
change or modification of the Agreement or the Guaranty without the giving of
notice and the written approval or consent of the owners of not less than a
majority in aggregate principal amount of the Bonds at the time outstanding
given as in this Section provided; provided, however, that nothing in this
Section or in Section 11.1 herein contained shall permit or be construed as
permitting, without the consent of the owners of 100% in aggregate principal
amount of the Bonds then outstanding, (a) an extension of time for the payment
of an amount due pursuant to Section 4.2(a) of the Agreement or an extension of
time for an amount due under the Guaranty, (b) a reduction in the total amount
due pursuant to Section 4.2(a) of the Agreement or under the Guaranty, (c) a
reduction in the aggregate principal amount of the Bonds the owners of which are
required to consent to such amendment, change or modification of the Agreement
or the Guaranty, or (d) any release or modification of the obligation of a
Guarantor under the Guaranty. If at any time the Issuer, the Company or the
Guarantor shall request the consent of the Trustee to any such proposed
amendment, change or modification of the Agreement or Guaranty, the Trustee
shall, upon being satisfactorily indemnified with respect to expenses, cause
notice of such proposed amendment, change or modification to be given in the
same manner as provided by Section 10.2 hereof with
<PAGE>
respect to supplemental indentures. Such notice shall briefly set forth the
nature of such proposed amendment, change or modification and shall state that
copies of the instrument embodying the same are on file at the principal
corporate trust office of the Trustee for inspection by all Bondholders.
SECTION 11.3. OPINION OF BOND COUNSEL. The Trustee may require that the
Company deliver to the Trustee at the Company's expense an opinion of Bond
Counsel upon which the Trustee may rely to the effect that any amendment, change
or modification of the Agreement is permitted by applicable law and will not
adversely affect the tax-exempt status of interest on the Bonds and that such
amendment, change or modification complies with the terms and provisions of the
Agreement and this Indenture.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1. CONSENTS, ETC., OF BONDHOLDERS. Any consent, request,
direction, approval, objection or other instrument required by this Indenture to
be signed and executed by the Bondholders may be in any number of concurrent
documents and may be executed by such Bondholders in person or by agent
appointed in writing. Proof of the execution of any such consent, request,
direction, approval, objection or other instrument or of the writing appointing
any such agent and of the ownership of Bonds, if made in the following manner,
shall be sufficient for any of the purposes of this Indenture, and shall be
conclusive in favor of the Trustee with regard to any action taken by it under
such request or other instrument, namely:
(a) The fact and date of the execution by any person of any such writing
may be proved by the certificate of any officer in any jurisdiction who by
law has power to take acknowledgments within such jurisdiction that the
person signing such writing acknowledged before him the execution thereof, or
by an affidavit of any witness to such execution.
(b) The fact of ownership of Bonds and the amount or amounts, numbers and
other identification of such Bonds, and the date of owning the same shall be
proved by the registration books of the Issuer maintained by the Trustee
pursuant to Section 2.8 hereof.
For all purposes of this Indenture and of the proceedings for the
enforcement hereof, such person shall be deemed to continue to be the owner of
such Bond until the Trustee shall have received notice in writing to the
contrary.
In determining whether the owners of the requisite principal amount of
Bonds outstanding have given any request, demand, authorization, direction,
notice, consent or waiver under this Indenture, Bonds owned by the Company or
any affiliate of the Company shall be disregarded and deemed not to be
Outstanding under this Indenture, except that in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Bonds which the Trustee knows to be
so owned shall
<PAGE>
be so disregarded. For purposes of this paragraph (a) an "affiliate" means any
person directly or indirectly controlling or controlled by or under direct or
indirect common control with the Company; and for the purposes of this
definition (b) "control", means the power to direct the management and policies
of such person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise. Notwithstanding the foregoing, Bonds so
owned which have been pledged in good faith shall not be disregarded as
aforesaid if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Bonds and that the pledgee is not
the Company or any affiliate of the Company.
Notwithstanding the foregoing paragraph, Bonds owned by the Company or any
affiliate of the Company shall be deemed to be Outstanding under the Indenture
if all the Bonds Outstanding at the time are owned by the Company or an
affiliate of the Company; provided, however, that in such event the Company or
such affiliate may not consent to any supplement to this Indenture that would
affect the validity of the Bonds or the tax-exempt status of the interest on the
Bonds; and provided further that if a supplement to this Indenture is executed
at a time when the Company or any affiliate is the owner of all the Outstanding
Bonds, Bond Counsel shall render an opinion that the execution of the supplement
to this Indenture does not adversely affect the validity of the Bonds or the
tax-exempt status of the interest thereon.
SECTION 12.2. LIMITATION OF RIGHTS. With the exception of rights herein
expressly conferred, nothing expressed or mentioned in or to be implied from
this Indenture or the Bonds is intended or shall be construed to give to any
person or company other than the parties hereto and the Company, the Guarantor
and the owners of the Bonds, any legal or equitable right, remedy or claim under
or with respect to this Indenture or any covenants, conditions and provisions
herein contained; this Indenture and all of the covenants, conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of the parties hereto and the Company, the Guarantor and the owners of
the Bonds as herein provided.
SECTION 12.3. SEVERABILITY. If any provisions of this Indenture shall be
held or deemed to be or shall, in fact, be illegal, inoperative or
unenforceable, the same shall not affect any other provision or provisions
herein contained or render the same invalid, inoperative, or unenforceable to
any extent whatever.
SECTION 12.4. NOTICES. Unless otherwise specifically provided herein, any
notice, request, complaint, demand, communication or other paper shall be
sufficiently given and shall be deemed given (i) on the fourth day following the
day on which the same has been mailed by first class mail, postage prepaid, or
(ii) when the same are delivered, in each case to the parties at the following
addresses: if to the Issuer, at Mississippi Business Finance Corporation, 1300
Walter Sillers Building, P.O. Box 849, Jackson, Mississippi 39205-0849
Attention: Executive Director; if to the Trustee, at Deposit Guaranty National
Bank, One Deposit Guaranty Plaza-DGP#8, P.O. Box 23100, Jackson, Mississippi
39225-3100 Attention: Corporate Trust Department; if to the Company, at
Mississippi Phosphates Corporation, c/o Mississippi Chemical Corporation, 3622
Highway 49 East, Yazoo City, Mississippi 39199-0388 Attention: Chief
<PAGE>
Financial Officer; and if to the Guarantor at Mississippi Chemical Corporation,
3622 Highway 49 East, Yazoo City, Mississippi 39199-0388 Attention: Chief
Financial Officer. A duplicate copy of each notice, certificate or other
communication given hereunder by either the Issuer, the Guarantor or the Company
shall also be given to the Trustee. The Issuer, the Company, the Guarantor and
the Trustee may, by notice given hereunder, designate any further or different
addresses to which subsequent notices, certificates or other communications
shall be sent.
SECTION 12.5. PAYMENTS DUE ON SATURDAYS, SUNDAYS AND HOLIDAYS. In any case
where the date of maturity of interest on or principal of the Bonds or the date
fixed for redemption of any Bonds shall be at the principal corporate trust
office of the Trustee, a Saturday, a Sunday or a legal holiday or a day on which
banking institutions are required or authorized by law to close (and the
principal corporate trust office of the Trustee is in fact closed), then payment
of principal or interest need not be made on such date but may be made on the
next succeeding business day with the same force and effect as if made on the
date of maturity or the date fixed for redemption.
SECTION 12.6. ACTION BY COMPANY AND ISSUER. Wherever it is herein provided
or permitted for any action to be taken by the Company, such action may be taken
by an Authorized Company Representative under the Agreement unless the context
clearly indicates otherwise. Whenever it is herein provided or permitted for
any action to be taken by the Issuer, such action may be taken by an Authorized
Issuer Representative under the Agreement unless the context clearly indicates
otherwise.
SECTION 12.7. COUNTERPARTS. This Indenture may be simultaneously executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
SECTION 12.8. APPLICABLE PROVISIONS OF LAW. This Indenture shall be governed
by and construed in accordance with the laws of the State of Mississippi
applicable to contracts performed wholly therein.
SECTION 12.9. NO RECOURSE. No recourse shall be had for the payment of the
principal of, premium, if any and interest on any of the Bonds or for any claim
based thereon or upon any obligation, covenant or agreement contained in this
Indenture or the Agreement against any past, present or future member, officer,
agent or employee of the Issuer, or any incorporator, member, officer, employee,
director or trustee of any successor corporation, as such, either directly or
through the Issuer or any successor corporation, under any rule of law or
equity, statute or constitution or by the enforcement of any assessment or
penalty or otherwise, and all such liability of any such incorporator, member,
officer, employee, director, agent or trustee as such is hereby expressly waived
and released as a condition of and consideration for the execution of this
Indenture or the Agreement and the issuance of the Bonds.
[Remainder of page left intentionally blank]
<PAGE>
IN WITNESS WHEREOF, the Mississippi Business Finance Corporation and Deposit
Guaranty National Bank, have caused this Indenture of Trust to be executed in
their respective corporate names and the Mississippi Business Finance
Corporation has caused its corporate seal to be hereunto affixed and attested by
its duly authorized officer, all as of the day first above written.
MISSISSIPPI BUSINESS FINANCE CORPORATION
By: ______________________________
Executive Director
ATTEST:
By: ________________________
Secretary
(SEAL)
DEPOSIT GUARANTY NATIONAL BANK,
as Trustee
By: ______________________________
Authorized Officer
ATTEST:
By: _______________________
Title:
<PAGE>
EXHIBIT 10.6
Credit Agreement
Among
Mississippi Chemical Corporation
And
The Lenders Party Hereto
And
Harris Trust and Savings Bank,
as Administrative Agent
And
Bank of Montreal, Chicago Branch,
as Syndication Agent
And
Credit Agricole Indosuez
as Co-Agent
Dated as of November 25, 1997
<PAGE>
TABLE OF CONTENTS
MISSISSIPPI CHEMICAL CORPORATION
CREDIT AGREEMENT
<TABLE>
<S> <C> <C>
Section 1. The Revolving Credit and Swing Line.............................................. 1
Section 1.1. The Revolving Credit............................................................. 1
Section 1.2. Swingline Loans under the Revolving Credit....................................... 4
(a) Swingline Commitment............................................................. 4
(b) Refunding Loans.................................................................. 4
(c) Participations................................................................... 5
Section 1.3. Interest Rates................................................................... 5
(a) Base Rate Loans.................................................................. 5
(b) Eurodollar Loans................................................................. 5
(c) Fed Funds Rate Loans............................................................. 5
(d) Default Rate..................................................................... 5
Section 1.4. Conversion and Continuation of Loans............................................. 6
Section 1.5. Letters of Credit................................................................ 6
Section 1.6. Reimbursement Obligation......................................................... 8
Section 1.7. Manner of Borrowing Revolving Credit Loans and Swingline Loans................... 8
Section 1.8. Participation in L/Cs............................................................ 10
Section 1.9. Capital Adequacy................................................................. 10
Section 2. The Bid Facility................................................................. 11
Section 2.1. The Bid Loans.................................................................... 11
Section 2.2. Requests for Bid Loans........................................................... 11
(a) Requests and Confirmations....................................................... 11
(b) Invitation to Bid................................................................ 12
(c) Bids............................................................................. 12
Section 2.3. Notice of Bids................................................................... 12
Section 2.4. Acceptance or Rejection of Bids.................................................. 13
Section 2.5. Notice of Acceptance or Rejection of Bids........................................ 13
(a) Notice to Banks Making Successful Bids........................................... 13
(b) Notice to all Banks.............................................................. 14
(c) Disbursement of Bid Loans........................................................ 14
(d) Interest on Bid Loans............................................................ 14
Section 2.6. Telephonic Notice................................................................ 14
Section 3. The Notes, Fees, Prepayments, Terminations and Application of Payments........... 15
Section 3.1. The Notes........................................................................ 15
Section 3.2. Facility Fee..................................................................... 15
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
Section 3.3. Agent's Fees..................................................................... 16
Section 3.4 ................................................................................. 16
(a) Optional Prepayments of Base Rate Loans.......................................... 16
(b) Optional Prepayments of Swingline Loans.......................................... 16
(c) Optional Prepayments of Eurodollar Loans......................................... 16
(d) Mandatory Prepayments of Excess Borrowings....................................... 16
Section 3.5. Revolving Credit Termination..................................................... 17
Section 3.6. Place and Application of Payments................................................ 17
Section 4. Definitions...................................................................... 17
Section 4.1. Certain Definitions.............................................................. 17
Section 4.2. Accounting Terms................................................................. 28
Section 5. Representations and Warranties................................................... 28
Section 5.1. Organization and Qualification; Non-Contravention................................ 28
Section 5.2. Financial Reports................................................................ 29
Section 5.3. Litigation; Tax Returns; Approvals............................................... 29
Section 5.4. Regulation U..................................................................... 29
Section 5.5. No Default....................................................................... 30
Section 5.6. ERISA............................................................................ 30
Section 5.7. Debt and Security Interests...................................................... 30
Section 5.8. Subsidiaries..................................................................... 30
Section 5.9. Accurate Information............................................................. 30
Section 5.10. Enforceability................................................................... 30
Section 5.11. Restrictive Agreements........................................................... 30
Section 5.12. No Violation of Law.............................................................. 31
Section 5.13. No Default Under Other Agreements................................................ 31
Section 5.14. Status Under Certain Laws........................................................ 31
Section 5.15. Pari Passu....................................................................... 31
Section 6. Conditions Precedent............................................................. 31
Section 6.1. Initial Extension of Credit...................................................... 31
Section 6.2. Each Extension of Credit......................................................... 32
Section 6.3. Legal Matters.................................................................... 33
Section 6.4. Documents........................................................................ 33
Section 7. Covenants........................................................................ 33
Section 7.1. Maintenance of Property.......................................................... 33
Section 7.2. Taxes............................................................................ 34
Section 7.3. Maintenance of Insurance......................................................... 34
Section 7.4. Financial Reports................................................................ 34
Section 7.5. Inspection....................................................................... 35
Section 7.6. Consolidation and Merger......................................................... 35
Section 7.7. Transactions with Affiliates..................................................... 36
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
Section 7.8. Dividends and Certain Other Restricted Payments.................................. 36
Section 7.9. Liens............................................................................ 36
Section 7.10. Borrowings and Guaranties........................................................ 38
Section 7.11. Investments, Loans, Advances and Acquisitions.................................... 39
Section 7.12. Sale of Property................................................................. 40
Section 7.13. Notice of Suit or Adverse Change in Business or Default.......................... 41
Section 7.14. ERISA............................................................................ 41
Section 7.15. Use of Proceeds.................................................................. 41
Section 7.16. Compliance with Laws, etc........................................................ 42
Section 7.17. Sale and Leaseback Transactions.................................................. 42
Section 7.18. Fiscal Quarters.................................................................. 42
Section 7.19. New Subsidiaries................................................................. 42
Section 7.20. Maximum Leverage Ratio........................................................... 42
Section 7.21. Minimum Interest Coverage Ratio.................................................. 42
Section 7.22. Minimum Tangible Net Worth....................................................... 42
Section 7.23. Operating Leases................................................................. 43
Section 7.24. No Restrictions on Subsidiaries.................................................. 43
Section 8. Events of Default and Remedies................................................... 43
Section 8.1. Definitions...................................................................... 43
Section 8.2. Remedies for Non-Bankruptcy Defaults............................................. 45
Section 8.3. Remedies for Bankruptcy Defaults................................................. 45
Section 8.4. L/Cs............................................................................. 45
Section 9. Change in Circumstances Regarding Fixed Rate Loans............................... 45
Section 9.1. Change of Law.................................................................... 45
Section 9.2. Unavailability of Deposits or Inability to Ascertain the Adjusted Eurodollar Rate 46
Section 9.3. Taxes and Increased Costs........................................................ 46
Section 9.4. Funding Indemnity................................................................ 47
Section 9.5. Lending Branch................................................................... 48
Section 9.6. Discretion of Bank as to Manner of Funding....................................... 48
Section 9.7. Mitigation of Circumstances...................................................... 48
Section 10. The Agents....................................................................... 49
Section 10.1. Appointment and Powers........................................................... 49
Section 10.2. Powers........................................................................... 49
Section 10.3. General Immunity................................................................. 49
Section 10.4. No Responsibility for Loans, Recitals, etc....................................... 50
Section 10.5. Right to Indemnity............................................................... 50
Section 10.6. Action Upon Instructions of Banks................................................ 50
Section 10.7. Employment of Agents and Counsel................................................. 50
Section 10.8. Reliance on Documents; Counsel................................................... 50
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
Section 10.9. May Treat Payee as Owner......................................................... 50
Section 10.10. Agents' Reimbursement............................................................ 51
Section 10.11. Rights as a Bank................................................................. 51
Section 10.12. Bank Credit Decision............................................................. 51
Section 10.13. Resignation of Agent............................................................. 51
Section 10.14. Duration of Agency............................................................... 51
Section 10.15. Syndication Agent and Co-Agent.................................................. 52
Section 11. Miscellaneous.................................................................... 52
Section 11.1. Amendments and Waivers........................................................... 52
Section 11.2. Waiver of Rights................................................................. 52
Section 11.3. Several Obligations.............................................................. 53
Section 11.4. Non-Business Day................................................................. 53
Section 11.5. Documentary Taxes................................................................ 53
Section 11.6. Representations.................................................................. 53
Section 11.7. Notices.......................................................................... 53
Section 11.8. Costs and Expenses; Indemnity.................................................... 53
Section 11.9. Counterparts..................................................................... 55
Section 11.10. Successors and Assigns........................................................... 55
Section 11.11. No Joint Venture................................................................. 55
Section 11.12. Severability..................................................................... 55
Section 11.13. Table of Contents and Headings................................................... 55
Section 11.14. Sharing of Payments.............................................................. 55
Section 11.15. Jurisdiction..................................................................... 56
Section 11.16. Participants and Note Assignees.................................................. 56
Section 11.17. Assignment of Commitments by Banks............................................... 56
Signature Page.......................................................................................... 58
Exhibit A Revolving Credit Note
Exhibit B Application and Agreement for Letter of Credit
Exhibit C Bid Loan Request Confirmation
Exhibit D Invitation to Bid
Exhibit E Confirmation of Bid
Exhibit F Notice of Acceptance of Bid
Exhibit G Schedule of Subsidiaries
Exhibit H Compliance Certificate
Exhibit I Form of Legal Opinion of Borrowers' Counsel
Exhibit J Farmland MissChem Project Contingent Obligations
Exhibit K Pricing Ratio Certificate
Exhibit L Existing Letters of Credit
Schedule 5.3. Litigation
Schedule 7.24. Existing Restrictions
</TABLE>
<PAGE>
MISSISSIPPI CHEMICAL CORPORATION
CREDIT AGREEMENT
Harris Trust and Savings Bank
Chicago, Illinois
The from time to time lenders parties hereto
Ladies and Gentlemen:
The undersigned Mississippi Chemical Corporation, a Mississippi corporation
(the "Borrower"), applies to you for your several commitments, subject to all
the terms and conditions hereof and on the basis of the representations and
warranties hereinafter set forth, to make a revolving credit (the "Revolving
Credit"), a swing line credit (the "Swing Line") and a competitive bid facility
(the "Bid Facility") available to the Borrower, all as more fully hereinafter
set forth. Each of you is hereinafter referred to individually as "Bank" and
collectively as "Banks." Harris Trust and Savings Bank in its individual
capacity is sometimes referred to herein as "Harris", and in its capacity as
Administrative Agent for the Banks is hereinafter in such capacity called the
"Administrative Agent." Bank of Montreal in its capacity as Syndication Agent
for the Banks is hereinafter in such capacity called the "Syndication Agent."
Credit Agricole Indosuez, in its capacity as Co-Agent for the Banks is
hereinafter in such capacity collectively called the "Co-Agent." All
capitalized terms not defined in the text of this Agreement are defined in
Section 4 hereof.
Section 1. The Revolving Credit and Swing Line.
Section 1.1. The Revolving Credit. (a) Subject to all of the terms
and conditions hereof, the Banks agree, severally and not jointly, to extend a
Revolving Credit to the Borrower which may be utilized by the Borrower in the
form of loans (individually a "Revolving Credit Loan" and collectively the
"Revolving Credit Loans") and L/Cs (as hereinafter defined). The aggregate
principal amount of all Loans (as hereinafter defined) plus the maximum amount
available for drawing under all L/Cs and the aggregate principal amount of all
unpaid Reimbursement Obligations (as hereinafter defined) at any time
outstanding (collectively the "Revolving Credit Obligations") may not exceed the
sum of the Revolving Credit Commitments (as hereinafter defined) at any time.
The Revolving Credit shall be available to the Borrower, and may be availed of
by the Borrower from time to time, be repaid (subject to the restrictions on
prepayment set forth herein) and used again, during the period from the date
hereof to and including November 25, 2002 (as the same may be extended from time
to time in accordance with the provisions of Section 1.1(d) hereof, the
"Termination Date"), at which time the entire outstanding principal amount of
all Revolving Credit Obligations, together with all accrued and unpaid interest
thereon, shall be due and payable.
<PAGE>
(b) The respective maximum aggregate principal amounts of the Revolving
Credit at any one time outstanding and the percentage (the "Commitment
Percentage") of the Revolving Credit available at any time which each Bank by
its acceptance hereof severally agrees to make available to the Borrower are as
follows (collectively, the "Revolving Credit Commitments" and individually, a
"Revolving Credit Commitment"):
<TABLE>
<S> <C> <C>
Harris Trust and Savings Bank $ 35,000,000.00 17.5%
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Credit Agricole Indosuez 32,500,000.00 16.25%
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Banque Nationale de Paris, Houston Agency 20,000,000.00 10%
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The Fuji Bank, Limited 20,000,000.00 10%
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Bank of America National Trust and Savings 17,500,000.00 8.75%
Association
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The Bank of Nova Scotia, Atlanta Agency 15,000,000.00 7.5%
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SunTrust Bank, Atlanta 15,000,000.00 7.5%
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First Union National Bank 15,000,000.00 7.5%
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ABN AMRO Bank N.V. 10,000,000.00 5%
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The Dai-Ichi Kangyo Bank, Ltd. 10,000,000.00 5%
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Deposit Guaranty National Bank 10,000,000.00 5%
---------------
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Total $200,000,000.00 100%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
(c) Loans under the Revolving Credit may be Eurodollar Loans or Base Rate
Loans. Each Borrowing under the Revolving Credit shall be made by each Bank in
an amount equal to its Commitment Percentage of the amount of such Borrowing.
Each Borrowing of Base Rate Loans under the Revolving Credit shall be in an
amount not less than $5,000,000 or such greater amount which is an integral
multiple of $1,000,000 and each Borrowing of Eurodollar Loans shall be in an
amount not less than $10,000,000 or such greater amount which is an integral
multiple of $1,000,000.
(d) At any time not earlier than 120 days prior to, nor later than 90
days prior to, each annual anniversary of the date hereof (each an "Anniversary
Date"), the Borrower may request that the Banks extend the then scheduled
Termination Date to the date one year from such Termination Date. Each such
request by the Borrower shall be deemed to be a representation and warranty by
the Borrower to the Banks that no material adverse change in the financial
condition of the Borrower and its Subsidiaries, taken as a whole, has occurred
since the date of the most recent financial reports delivered to the Banks in
accordance with Section 7.4(b) hereof. If such request is made by the Borrower
each Bank shall inform the Administrative Agent of its willingness to extend the
Termination Date no later than 30 days after the Banks receive such request.
Any Bank's failure to respond by such date shall indicate its unwillingness
<PAGE>
to agree to such requested extension. At any time more than 30 days before such
Anniversary Date Banks having aggregate Commitment Percentages of at least 80%
of the Revolving Credit Commitments then in effect (the "Extending Banks") may
propose, by written notice to the Borrower, an extension of this Agreement to
the date one year from the applicable Termination Date on such terms and
conditions as the Extending Banks may then require. If the extension of this
Agreement to the date one year from the Applicable Termination Date is
acceptable to the Borrower on the terms and conditions proposed by the Extending
Banks, the Borrower shall notify the Extending Banks of its acceptance of such
terms and conditions no later than the Anniversary Date, and such later date
will become the Termination Date hereunder and this Agreement shall otherwise be
amended in the manner described in the Extending Banks' notice proposing the
extension of this Agreement upon the Agent's receipt of (i) an amendment to this
Agreement signed by the Borrower and all of the Extending Banks, (ii)
resolutions of the Borrower's Board of Directors authorizing such extension and
(iii) an opinion of counsel to the Borrower equivalent in form and substance to
the form of opinion attached hereto as Exhibit I and otherwise acceptable to the
Extending Banks. If the Borrower and the Extending Banks agree upon the terms
of an extension of the Termination Date, the Borrower may elect either (i) to
terminate the Revolving Credit Commitments of each Bank that is not an Extending
Bank (each a "Nonextending Bank") in whole on such Anniversary Date, at which
time all Loans and other amounts payable under the Loan Documents to the
Nonextending Banks shall become immediately due and payable, or (ii) to replace
such Nonextending Banks with one or more financial institutions acceptable to
the Borrower and the Administrative Agent (each a "Replacement Bank"). If the
Borrower elects to replace a Nonextending Bank, such replacement shall become
effective as of the date the Nonextending Banks' Revolving Credit Commitments
terminate (which shall be no later than the Anniversary Date) and all of the
following conditions are satisfied:
(A) the unpaid principal amount of all Loans and Reimbursement
Obligations made by each Nonextending Bank whose Revolving Credit
Commitment is to terminate, together with accrued interest thereon and all
other amounts payable under the Loan Documents to such Nonextending Bank,
including any facility fee accrued through the date of such termination,
shall have been paid in full and all of such Nonextending Banks'
participations in L/Cs shall have been reallocated among the Extending
Banks;
(B) such Replacement Bank shall agree in writing to be bound by all
of the terms and provisions of this Agreement, such agreement to specify
the amount of the Revolving Credit Commitment of such Replacement Bank and
to be otherwise in form and substance satisfactory to the Administrative
Agent, and shall make Loans to the Borrower in principal amounts which bear
the same ratio to the amounts of the Loans made by the other Extending
Banks then outstanding as the Revolving Credit Commitment of such
Replacement Bank bears to the then Revolving Credit Commitments of all
other Extending Banks; and
<PAGE>
(C) a copy of such agreement and of evidence satisfactory to the
Administrative Agent of the making of such Loans shall be furnished to the
Administrative Agent and the Extending Banks.
Section 1.2. Swingline Loans under the Revolving Credit. (a) Swingline
Commitment. Subject to the terms and conditions hereof and in reliance on the
obligations of the Banks to Harris under this Section 1.2, Harris agrees to
advance one or more swingline loans (each a "Swingline Loan") to the Borrower
from time to time before the Termination Date on a revolving basis up to
$25,000,000 in aggregate principal amount at any time outstanding; provided that
Harris shall have no obligation to advance any Swingline Loan if the Total
Outstandings would thereby exceed the sum of the Revolving Credit Commitments
then in effect. All Swingline Loans will be Fed Funds Rate Loans or Offered Rate
Loans and will be in an amount not less than $250,000 or an integral multiple of
$100,000 in excess thereof. Swingline Loans may be repaid and their principal
amount reborrowed before the Termination Date, subject to the terms and
conditions hereof. Each Swingline Loan shall have a maturity of up to the
seventh day after such Swingline Loan was made. No more than 5 Swingline Loans
may be outstanding at any time.
The Borrower may elect that each Swingline Loan shall bear interest
(computed on the basis of a year of 365/366 days and actual days elapsed) on the
unpaid principal amount thereof from the date such Swingline Loan is made until
the last day of the Interest Period applicable thereto at the rate per annum
quoted to the Borrower by Harris for the Interest Period applicable thereto,
billable on the last day of each month (each such Swingline Loan is hereinafter
referred to as an "Offered Rate Loan"); provided, however, that the Borrower
understands and agrees that Harris has no obligation to quote rates or to make
any such Offered Rate Loan and may refuse to make any such Offered Rate Loan
after receiving a request therefor from the Borrower. The Borrower acknowledges
and agrees that the interest rate quoted by Harris for any Offered Rate Loan may
not be the best or lowest rate offered to other customers of Harris and may not
be the same rate offered to other customers of Harris for loans of similar
amounts and maturities, but is the rate at which Harris in its sole and
exclusive discretion is willing to make such Loan to the Borrower for the
specified amount and maturity.
(b) Refunding Loans. In its sole and absolute discretion, Harris may at
any time, on behalf of the Borrower (which hereby irrevocably authorizes Harris
to act on its behalf for such purpose), request each Bank to make a Base Rate
Loan under the Revolving Credit in an amount equal to such Bank's Commitment
Percentage of the amount of the Swingline Loans outstanding on the date such
notice is given. Unless any of the conditions of Section 6.2 are not fulfilled
on such date, each Bank shall make the proceeds of its requested Base Rate Loan
available to Harris, in immediately available funds, at the principal office of
Harris in Chicago, Illinois, before 12:00 Noon (Chicago time) on the Business
Day following the day such notice is given. The proceeds of such Base Rate
Loans shall be immediately applied to repay the outstanding Swingline Loans.
The Borrower authorizes Harris to charge the Borrower's accounts with Harris (up
to the amount available in such accounts) to pay the amount of any such
outstanding Swingline Loans to the extent amounts received from the Banks are
not sufficient to repay in full such Swingline Loans.
<PAGE>
(c) Participations. If any Bank refuses or otherwise fails to make a
Revolving Credit Loan when requested by Harris pursuant to Section 1.2(b) above
(because the conditions in Section 6.2 are not satisfied or otherwise), such
Bank will, by the time and in the manner such Revolving Credit Loan was to have
been funded to Harris, purchase from Harris an undivided participating interest
in the outstanding Swingline Loans in an amount equal to its Commitment
Percentage of the aggregate principal amount of Swingline Loans that were to
have been repaid with such Revolving Credit Loans. Each Bank that so purchases
a participation in a Swingline Loan shall thereafter be entitled to receive its
Commitment Percentage of each payment of principal received on the Swingline
Loan and of interest received thereon accruing from the date such Bank funded to
Harris its participation in such Loan. The obligation of the Banks to Harris
shall be absolute and unconditional and shall not be affected or impaired by any
Event of Default or Potential Default which may then be continuing hereunder.
Section 1.3. Interest Rates. (a) Base Rate Loans. Each Base Rate
Loan shall bear interest (computed on the basis of a year of 365/366 days and
actual days elapsed) on the unpaid principal amount thereof from the date such
Loan is made until maturity (whether by acceleration, upon prepayment or
otherwise) at a rate per annum equal to the sum of the Applicable Margin and the
Base Rate from time to time in effect, payable monthly in arrears on the last
day of each calendar month, commencing on the first of such dates occurring
after the date hereof and at maturity (whether by acceleration, upon prepayment
or otherwise).
(b) Eurodollar Loans. Each Eurodollar Loan under the Revolving Credit
shall bear interest (computed on the basis of a year of 360 days and actual days
elapsed) on the unpaid principal amount thereof from the date such Loan is made
until the last day of the Interest Period applicable thereto or, if earlier,
until maturity (whether by acceleration or otherwise) at a rate per annum equal
to the sum of the Applicable Margin and the Adjusted Eurodollar Rate, payable on
the last day of each Interest Period applicable thereto or at maturity (whether
by acceleration or otherwise) and, with respect to Eurodollar Loans with an
Interest Period in excess of three months, on the date occurring every three
months from the first day of the Interest Period applicable thereto.
(c) Fed Funds Rate Loans. Each Fed Funds Rate Loan shall bear interest
(computed on the basis of a year of 365/366 days and actual days elapsed) on the
principal amount thereof from the date such Loan is made until maturity (whether
by acceleration, upon prepayment or otherwise) at a rate per annum equal to the
sum of the Applicable Margin and the Fixed Fed Funds Rate from time to time in
effect, billable on the last day of each month.
(d) Default Rate. If any Event of Default shall have occurred, all Loans
and Reimbursement Obligations shall bear interest from the date such Event of
Default occurred, payable on demand, at a rate per annum equal to:
<PAGE>
(i) with respect to any Base Rate Loan, the sum of 2% plus the Base
Rate (computed on the basis of a year of 365/366 days and actual days
elapsed) from time to time in effect; and
(ii) with respect to any Fixed Rate Loan, the sum of 2% plus the
rate of interest in effect thereon at the time of such default (computed on
the basis of a year of 360 days and actual days elapsed) until the end of
the Interest Period then applicable thereto, and, thereafter, at a rate per
annum equal to the sum of 2% plus the Base Rate (computed on the basis of a
year of 365/366 days and actual days elapsed) from time to time in effect.
Section 1.4. Conversion and Continuation of Loans. (a) Provided that
no Event of Default or Potential Default has occurred and is continuing, the
Borrower shall have the right, subject to the other terms and conditions of this
Agreement, to continue in whole or in part (but, if in part, in the minimum
amount specified for Eurodollar Loans in Section 1.1 hereof) any Eurodollar Loan
from any current Interest Period into a subsequent Interest Period, provided
that the Borrower shall give the Administrative Agent notice of the continuation
of any such Loan as provided in Section 1.7 hereof.
(b) In the event that the Borrower fails to give notice pursuant to
Section 1.7 hereof of the continuation of any Eurodollar Loan or fails to
specify the Interest Period applicable thereto, or an Event of Default or
Potential Default has occurred and is continuing at the time any such Loan is to
be continued hereunder, then such Loan shall be automatically converted as (and
the Borrower shall be deemed to have given notice requesting) a Base Rate Loan,
subject to Sections 8.2 and 8.3 hereof, unless paid in full on the last day of
the then applicable Interest Period.
(c) Provided that no Event of Default or Potential Default has occurred
and is continuing, the Borrower shall have the right, subject to the terms and
conditions of this Agreement, to convert Revolving Credit Loans of one type (in
whole or in part) into Revolving Credit Loans of another type from time to time
provided that: (i) the Borrower shall give the Administrative Agent notice of
each such conversion as provided in Section 1.7 hereof, (ii) the principal
amount of any Revolving Credit Loan converted hereunder shall be in an amount
not less than the minimum amount specified for the type of Loan in Section 1.1
hereof, (iii) after giving effect to any such conversion in part, the principal
amount of any Eurodollar Loan then outstanding shall not be less than the
minimum amount specified for a Eurodollar Loan in Section 1.1 hereof, (iv) any
conversion of a Loan hereunder shall only be made on a Business Day, and (v) any
Eurodollar Loan may be converted only on the last day of the Interest Period
then applicable thereto.
Section 1.5. Letters of Credit. (a) Subject to all the terms and
conditions hereof, satisfaction of all conditions precedent to borrowing under
this Agreement and so long as no Potential Default or Event of Default is in
existence, at the Borrower's request Harris may in its discretion issue letters
of credit (an "L/C" and collectively the "L/Cs") for the account of the Borrower
subject to availability under the Revolving Credit, and the Banks hereby agree
to participate therein as more fully
<PAGE>
described in Section 1.8 hereof. Each L/C shall be issued pursuant to an
application for letter of credit (the "L/C Agreement") in the form of Exhibit B
hereto. The L/Cs shall consist of standby and commercial letters of credit in an
aggregate face amount not to exceed $30,000,000. Each L/C shall have an expiry
date not more than one year from the date of issuance thereof (but in no event
later than the Termination Date). The amount available to be drawn under each
L/C issued pursuant hereto shall be deducted from the credit otherwise available
under the Revolving Credit. In consideration of the issuance of L/Cs the
Borrower agrees to pay Harris for the benefit of the Banks a fee (the "L/C
Participation Fee") in the amount per annum equal to the Applicable Margin for
Eurodollar Loans (computed on the basis of a 360-day year and actual days
elapsed) of the face amount for each L/C issued for the account of the Borrower
hereunder. In addition, the Borrower shall pay Harris (x) a fee (the "L/C
Issuance Fee") in the amount per annum equal to (i) for standby L/Cs, eight-
hundredths of one percent (0.08%) of the stated amount of each standby L/C
issued hereunder and (ii) for commercial L/Cs, the customary issuance fee for
commercial L/Cs as may be established by Harris from time to time, and (y) such
drawing, negotiation, amendment and other administrative fees in connection with
each L/C as may be established by Harris from time to time (the "L/C
Administrative Fee"). All L/C Issuance Fees and L/C Participation Fees shall be
payable quarterly in arrears on the last day of each March, June, September and
December commencing December 31, 1997 and on the Termination Date, and all L/C
Administrative Fees shall be payable on the date of issuance of each L/C
hereunder and on the date required by Harris.
Upon satisfaction of all conditions precedent to the initial Loan
hereunder, without any further action on the part of the Borrower, Harris, the
Administration Agent or any Bank, (i) each of the letters of credit listed on
Exhibit L hereto (the "Existing L/Cs") previously issued by Harris for the
account of the Borrower or Triad Nitrogen, Inc. under the Existing Agreements
shall be deemed for all purposes of this Agreement to be an L/C issued
hereunder, (ii) each application and agreement for a letter of credit pursuant
to which each Existing L/C was issued shall be deemed for all purposes of this
Agreement to be an L/C Agreement, and (iii) all of the Borrower's or Triad
Nitrogen, Inc.'s indebtedness, obligations and liabilities to Harris with
respect to the Existing L/Cs shall be deemed to be Reimbursement Obligations of
the Borrower for all purposes of this Agreement.
(b) Notwithstanding anything contained in any L/C Agreement to the
contrary: (i) the Borrower shall pay fees in connection with each L/C as set
forth in Section 1.5(a) hereof, (ii) except as otherwise provided in Section
3.4(c) hereof, before the occurrence of a Potential Default or an Event of
Default, Harris will not call for the funding by the Borrower of any amount
under an L/C issued for the Borrower's account, or for any other form of
collateral security for the Borrower's obligations in connection with such L/C,
before being presented with a drawing thereunder, and (iii) if Harris is not
timely reimbursed for the amount of any drawing under an L/C on the date such
drawing is paid, the Borrower's obligation to reimburse Harris for the amount of
such drawing shall bear interest as specified in Section 1.6 hereof. If Harris
issues any L/C with an expiration date that is automatically extended unless
Harris gives written notice that the expiration date will not so extend beyond
its then scheduled
<PAGE>
expiration date, Harris will give such written notice of non-renewal before the
time necessary to prevent such automatic extension if before such required
notice date (i) the expiration date of such L/C if so extended would be more
than one year from the then scheduled expiration date of such L/C or after the
Termination Date, (ii) the Revolving Credit Commitments have been terminated, or
(iii) an Event of Default exists and the Required Banks have given Harris
instructions not to so permit the extension of the expiration date of such L/C.
(c) The Administrative Agent shall give prompt telephone, telex, or
telecopy notice to each Bank of each issuance of, or amendment to, an L/C
specifying the effective date of the L/C or amendment, the amount, the
beneficiary, and the expiration date of the L/C, in each case as established
originally or through the relevant amendment, as applicable, the account party
or parties for the L/C, each Bank's pro rata participation in such L/C and
whether the Administrative Agent has classified the L/C as a commercial,
performance, or financial letter of credit for regulatory reporting purposes.
Section 1.6. Reimbursement Obligation. The Borrower is obligated, and
hereby unconditionally agrees, to pay in immediately available funds to Harris
for the account of Harris and the Banks who are participating in L/Cs pursuant
to Section 1.8 hereof the face amount of each draft drawn and presented under an
L/C issued by Harris hereunder for the Borrower's account (the obligation of the
Borrower under this Section 1.6 with respect to any L/C is a "Reimbursement
Obligation"). If at any time the Borrower fails to pay any Reimbursement
Obligation when due, the Borrower shall be deemed to have automatically
requested a Revolving Credit Loan from the Banks hereunder, as of the maturity
date of such Reimbursement Obligation, the proceeds of which Loan shall be used
to repay such Reimbursement Obligation. Such Loan shall only be made if all of
the conditions precedent set forth in Section 6.2 of this Agreement have been
satisfied. If such Loan is not made by the Banks for any reason, the unpaid
amount of such Reimbursement Obligation shall be due and payable to Harris for
the pro rata benefit of the Banks upon demand and shall bear interest at the
rate of interest specified in Section 1.3(a), unless an Event of Default has
occurred then the rate of interest specified in Section 1.3(d)(i) hereof.
Section 1.7. Manner of Borrowing Revolving Credit Loans and Swingline
Loans. (a) The Borrower shall give telephonic, telex or telecopy notice to the
Administrative Agent (which notice, if telephonic, shall be promptly confirmed
in writing) no later than (i) 12:00 Noon (Chicago time) on the date the Banks
are requested to make each Borrowing of Base Rate Loans, (ii) 12:00 Noon
(Chicago time) on the date at least three (3) Business Days prior to the date of
(A) each Borrowing of Eurodollar Loans which the Banks are requested to make or
continue, and (B) the conversion of any Borrowing of Base Rate Loans into a
Borrowing of Eurodollar Loans, and (iii) 12:00 Noon (Chicago time) on the date
the Borrower requests the Administrative Agent to make a Swingline Loan
hereunder. Each such notice shall be irrevocable and shall specify the date of
the Borrowing requested (which shall be a Business Day), the amount of such
Borrowing, whether the Borrowing is to be made available by means of Base Rate
Loans or Eurodollar Loans and, with respect to a Borrowing of Eurodollar Loans,
the Interest Period applicable thereto; provided, that in no event shall the
principal amount of any requested Revolving Credit Loan plus the aggregate
principal or face amount, as appropriate, of all Loans, L/Cs, and unpaid
Reimbursement Obligations outstanding hereunder exceed the Revolving Credit
Commitments as such
<PAGE>
amounts may be reduced pursuant to Section 3.5 of this Agreement. The Borrower
agrees that the Administrative Agent may rely on any such telephonic, telex or
telecopy notice given by any person who the Administrative Agent reasonably
believes is authorized to give such notice without the necessity of independent
investigation and in the event any notice by such means conflicts with the
written confirmation, such notice shall govern if the Administrative Agent or
any Bank has acted in reliance thereon. The Administrative Agent shall, on the
day any such notice is received by it, give prompt telephonic, telex or telecopy
(if telephonic, to be confirmed in writing within one Business Day) notice of
the receipt of notice from the Borrower hereunder to each of the Banks.
(b) Subject to the provisions of Section 6 hereof, the proceeds of each
Borrowing of Revolving Credit Loans and of each Swingline Loan shall be made
available to the Borrower at the principal office of the Administrative Agent in
Chicago, Illinois, by depositing immediately available funds into an account
maintained by the Borrower with the Administrative Agent, on the date such
Borrowing is requested to be made, except to the extent such Borrowing
represents (i) a refinancing of a Reimbursement Obligation, in which case the
proceeds of such Borrowing shall be applied to the payment of the relevant
unpaid Reimbursement Obligation, or (ii) a refunding loan, in which case the
proceeds of such Borrowing shall be applied to the payment of the relevant
Swingline Loans pursuant to Section 1.2(b) hereof. Not later than 3:00 p.m.
Chicago time, on the date specified for any Borrowing of Revolving Credit Loans
to be made hereunder, each Bank shall make its Loan comprising part of such
Borrowing available to the Borrower in immediately available funds at the
principal office of the Administrative Agent, except as otherwise provided above
with respect to paying any outstanding Reimbursement Obligation or Swingline
Loan.
(c) Unless the Administrative Agent shall have been notified by a Bank
prior to the date of a Revolving Credit Loan to be made by such Bank (which
notice shall be effective upon receipt) that such Bank does not intend to make
the proceeds of such Revolving Credit Loan available to the Administrative
Agent, the Administrative Agent may assume that such Bank has made such proceeds
available to the Administrative Agent on such date and the Administrative Agent
may in reliance upon such assumption (but shall not be required to) make
available to the Borrower a corresponding amount. If such corresponding amount
is not in fact made available to the Administrative Agent by such Bank, the
Administrative Agent shall be entitled to receive such amount on demand from
such Bank (or, if such Bank fails to pay such amount forthwith upon such demand,
to recover such amount, together with interest thereon at the rate otherwise
applicable thereto under Section 1.3 hereof, from the Borrower) together with
interest thereon in respect of each day during the period commencing on the date
such amount was made available to the Borrower and ending on the date the
Administrative Agent recovers such amount, at a rate per annum equal to the
effective rate charged to the Administrative Agent for overnight Federal funds
transactions with member banks of the Federal Reserve System for each day, as
determined by the Administrative Agent (or, in the case of a day which is not a
Business Day, then for the preceding Business Day) (the "Fed Funds Rate").
Nothing in this Section 1.7(c) shall be deemed to permit any Bank to breach its
obligations to make Revolving Credit Loans under the Revolving Credit, or to
limit the Borrower's claims against any Bank for such breach.
<PAGE>
Section 1.8. Participation in L/Cs. (a) Each of the Banks will
acquire, without recourse, representation or warranty, a risk participation in
each L/C upon the issuance thereof ratably in accordance with its Commitment
Percentage. In the event any Reimbursement Obligation is not immediately paid
by the Borrower pursuant to Section 1.6 hereof, each Bank will pay to Harris
funds in an amount equal to such Bank's Commitment Percentage of the unpaid
amount of such Reimbursement Obligation. If the Banks fund Harris with respect
to any Reimbursement Obligation that is not paid when due by the Borrower as
described above, all of the Banks may elect to treat such funding as additional
Revolving Credit Loans to the Borrower hereunder rather than a purchase of
participations by the Banks in the related L/Cs held by Harris. The obligation
of the Banks to Harris under this Section 1.8 shall be absolute and
unconditional and shall not be affected or impaired by any Event of Default or
Potential Default which may then be continuing hereunder. Harris shall notify
each Bank by telephone of its Commitment Percentage of such unpaid Reimbursement
Obligation. If such notice has been given to each Bank by 12:00 Noon, Chicago
time, each Bank agrees to put Harris in immediately available and freely
transferable funds on the same Business Day. Funds shall be so made available
at the account designated by Harris in such notice to the Banks. Upon the
election by the Banks to treat such funding as additional Revolving Credit Loans
hereunder and payment by each Bank, such Loans shall bear interest in accordance
with Section 1.3(a) hereof. Harris shall share with each Bank its Commitment
Percentage of each payment of a Reimbursement Obligation (whether of principal
or interest) and any L/C Participation Fee payable by the Borrower. Any such
amount shall be promptly remitted to the Banks when and as received by Harris
from the Borrower. The L/C Issuance Fee and L/C Administration Fee shall be
solely for Harris' account and shall not be shared by the other Banks.
(b) The Banks shall, ratably in accordance with their respective
Commitment Percentages, indemnify Harris (to the extent not reimbursed by the
Borrower) against any cost, expense (including reasonable counsel fees and
disbursements), claim, demand, action, loss or liability (except such as result
from Harris' gross negligence or willful misconduct) that Harris may suffer or
incur in connection with any L/C. The obligations of the Banks under this
Section 1.8(b) and all other parts of this Section 1.8 shall survive termination
of this Agreement and of all L/C Agreements, and all drafts or other documents
presented in connection with drawings thereunder.
Section 1.9. Capital Adequacy. If, after the date hereof, any Bank
or the Administrative Agent shall have determined in good faith that the
adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change therein (including, without limitation, any revision in the Final
Risk-Based Capital Guidelines of the Board of Governors of the Federal Reserve
System (12 CFR Part 208, Appendix A; 12 CFR Part 225, Appendix A) or of the
Office of the Comptroller of the Currency (12 CFR Part 3, Appendix A), or in any
other applicable capital rules heretofore adopted and issued by any governmental
authority), or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank (or its
Lending Office) with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on such Bank's capital, or
<PAGE>
on the capital of any corporation controlling such Bank, in each case as a
consequence of its obligations hereunder, to a level below that which such Bank
would have achieved but for such adoption, change or compliance (taking into
consideration such Bank's policies with respect to capital adequacy) by an
amount deemed by such Bank to be material, then from time to time if such Bank
is generally imposing payments for such reduction on its similarly situated
customers, within thirty (30) days after demand by such Bank (with a copy to the
Administrative Agent), the Borrower shall pay to such Bank such additional
amount or amounts as will compensate such Bank for such reduction.
Section 2. The Bid Facility.
Section 2.1. The Bid Loans. At any time before the Termination Date, the
Borrower may request the Banks to offer to make uncommitted loans (each such
loan being hereinafter referred to as a "Bid Loan" and collectively as the "Bid
Loans") in the manner set forth in Sections 2.1 through 2.6 hereof and in
amounts such that the aggregate principal amount of the Total Outstandings
hereunder shall not exceed the sum of the Revolving Credit Commitments then in
effect after taking into account any Loans to be paid with such Bid Loans. The
Banks may, but shall have no obligation to, make such offers and the Borrower
may, but shall have no obligation to, accept any such offers in the manner set
forth in Sections 2.1 through 2.6 hereof. Each Bank may offer to make Bid Loans
in any amount (whether greater than, equal to, or less than its Revolving Credit
Commitment), subject to the limitation that the aggregate principal amount of
the Total Outstandings under this Agreement may not at any time exceed the sum
of the Revolving Credit Commitments then in effect. Bid Loans may either bear
interest at a stated rate per annum ("Stated Rate Bid Loans") or at a margin
(the "Bid Margin") over or under the Adjusted Eurodollar Rate ("Eurodollar Bid
Loans"); provided that there may be no more than five different Interest Periods
for Bid Loans outstanding at the same time and that no Bid Loan may mature after
the Termination Date.
Section 2.2. Requests for Bid Loans.
(a) Requests and Confirmations. In order to request a Borrowing of Bid
Loans (a "Bid Loan Request") the Borrower shall give telephonic, telex or
telecopy notice to the Administrative Agent by no later than 1:00 p.m. (Chicago
time) on the date at least one Business Day in the case of Stated Rate Bid
Loans, and three Business Days in the case of Eurodollar Bid Loans, before the
date of the requested Bid Borrowing (the "Borrowing Date"). Each such request
shall be followed on the same day by a duly completed Bid Loan Request
Confirmation, delivered by telecopier or other means of facsimile communication,
substantially in the form of Exhibit C hereto or otherwise containing the
information required by this Section, to be received by the Administrative Agent
no later than 1:30 p.m. (Chicago time). Bid Loan Request Confirmations that do
not conform substantially to the format of Exhibit C may be rejected by the
Administrative Agent, and the Administrative Agent shall give telephonic notice
to the Borrower of such rejection promptly after it determines that the Bid Loan
Request Confirmation does not substantially conform to the format of Exhibit C.
Bid Loan Requests shall in each case refer to this
<PAGE>
Agreement and specify (i) the proposed Borrowing Date (which must be a Business
Day), (ii) the aggregate principal amount thereof (which shall not be less than
$5,000,000 and thereafter in integral multiples of $1,000,000) and (iii) the
proposed Interest Period thereof.
(b) Invitation to Bid. Upon receipt by the Administrative Agent of a Bid
Loan Request Confirmation that conforms substantially to the format of Exhibit C
hereto or is otherwise acceptable to the Administrative Agent, the
Administrative Agent shall, by telephone, promptly confirmed by a telecopy or
other form of facsimile communication in the form of Exhibit D hereto, invite
each Bank to bid, on the terms and conditions of this Agreement, to make Bid
Loans pursuant to the Bid Loan Request no later than 3:00 p.m. (Chicago time) on
the date the Administrative Agent receives such Bid Loan Request.
(c) Bids. Each Bank may, in its sole discretion, offer to make a Bid
Loan or Bid Loans (a "Bid") to the Borrower responsive to the Bid Loan Request.
Each Bid by a Bank must be received by the Administrative Agent by telephone not
later than 8:45 a.m. (Chicago time) on the Business Day following the date the
Administrative Agent receives a Bid Loan Request from the Borrower (the "Auction
Date"), promptly confirmed in writing by a duly completed Confirmation of Bid
delivered by telecopier or other means of facsimile communication substantially
in the form of Exhibit E hereto, to be received by the Administrative Agent on
the same day; provided, however, that any Bid made by the Administrative Agent
must be made by telephone to the Borrower by no later than fifteen minutes prior
to the time that Bids from the other Banks are required to be received. Each
Bid and each Confirmation of Bid shall refer to this Agreement and specify (i)
the principal amount of each Bid Loan that the Bank is willing to make to the
Borrower and the type of Bid Loan (i.e., Stated Rate or Eurodollar), (ii) the
interest rate (which shall be computed on the basis of a 360-day year and actual
days elapsed and, in the case of a Eurodollar Bid Loan, shall be expressed in
terms of the Bid Margin to be added to or subtracted from the Adjusted
Eurodollar Rate for the Interest Period to be applicable to such Eurodollar Bid
Loan) at which the Bank is prepared to make each Bid Loan and (iii) the Interest
Period applicable thereto. The Administrative Agent shall reject any Bid if
such Bid (i) does not specify all of the information specified in the
immediately preceding sentence, (ii) contains any qualifying, conditional, or
similar language, (iii) proposes terms other than or in addition to those set
forth in the Bid Loan Request to which it responds, or (iv) is received by the
Administrative Agent later than the times provided for above. Any Bid submitted
by a Bank pursuant to this Section 2.2 shall be irrevocable and shall be
promptly confirmed by a telecopy or other form of facsimile communication in the
form of Exhibit E, provided that in all events the telephone Bid received by the
Administrative Agent shall be binding on the relevant Bank and shall not be
altered, modified, or in any other manner affected by any inconsistent terms
contained in, or terms missing from, the Bank's Confirmation of Bid. Each offer
contained in a Bid to make a Bid Loan in a certain amount, at a certain interest
rate, and for a certain Interest Period is referred to herein as an "Offer".
Section 2.3. Notice of Bids; Advice of Rate. The Administrative Agent
shall give telephonic notice to the Borrower of the number of Bids made, the
terms of the Offers contained in such Bids (including the interest rate(s) and
Interest Period(s) applicable to each Bid, the maximum principal amount bid at
each interest rate for each Interest Period, and the identity of the Bank making
such Bid),
<PAGE>
such notice to be given by 9:15 a.m. (Chicago time) on the Auction Date. The
Administrative Agent shall send a written summary of all Bids received by it to
the Borrower by 2:00 p.m. (Chicago time) on the same day. The interest rates
quoted for Eurodollar Bid Loans shall be expressed in terms of the Bid Margin to
be added to or subtracted from the Adjusted Eurodollar Rate to be applicable to
such Bid Loan.
Section 2.4. Acceptance or Rejection of Bids. The Borrower may in its
sole and absolute discretion, subject only to the provisions of this Section,
irrevocably accept or reject any Offer contained in a Bid. No later than the
later of 9:45 a.m. (Chicago time) or 30 minutes after receipt of telephonic
notice of bids on the Auction Date, the Borrower shall give telephonic notice to
the Administrative Agent of whether and to what extent it has decided to accept
or reject any or all of the Offers contained in the Bids made in response to the
related Bid Loan Request, which notice shall be promptly confirmed by telecopier
or other form of facsimile communication to be received by the Administrative
Agent on the proposed Borrowing Date; provided, however, that (a) the Borrower
shall accept Offers for any of the maturities specified by the Borrower in the
related Bid Loan Request Confirmation solely on the basis of ascending interest
rates for each such Interest Period for each Stated Rate Bid Loan or Eurodollar
Bid Loan as the case may be for such Interest Period, (b) if the Borrower
declines to borrow, or if it is restricted by any other condition hereof from
borrowing, the maximum principal amount of Bid Loans in respect of which Offers
at a particular interest rate for a particular Interest Period have been made,
then the Borrower shall accept a pro rata portion of each such Offer, based as
nearly as possible on the ratio of the maximum aggregate principal amounts of
Bid Loans for which each such Offer was made by each Bank (provided that, if the
available principal amount of Bid Loans to be so allocated is not sufficient to
enable Bid Loans to be so allocated to each relevant Bank in integral multiples
of $1,000,000, then the Borrower may round allocations up or down in integral
multiples not less than $100,000 as it shall deem appropriate), (c) the
aggregate principal amount of all Offers accepted by the Borrower shall not
exceed the maximum amount contained in the related Bid Loan Request
Confirmation, and (d) no Offer of a Bid Loan shall be accepted in a principal
amount less than $1,000,000 and thereafter in integral multiples of $500,000
(provided that such Offer may be rounded up or down as provided for in (b)
above). Any telephone notice given by the Borrower pursuant to this Section
shall be irrevocable and shall not be altered, modified, or in any other manner
affected by any inconsistent terms contained in, or terms missing from, any
written confirmation of such notice.
Section 2.5. Notice of Acceptance or Rejection of Bids.
(a) Notice to Banks Making Successful Bids. The Administrative Agent
shall give telephonic notice to each Bank if any of the Offers contained in its
Bid have been accepted (including the amount, the applicable interest rate and
Interest Period for each accepted Offer) no later than 10:15 a.m. (Chicago time)
on the Auction Date, and each successful bidder will thereupon become bound,
subject to Section 6 and the other applicable conditions hereof, to make the Bid
Loan(s) in respect of which its Offer has been accepted. As soon as practicable
thereafter the Administrative Agent shall send a Notice of Acceptance
<PAGE>
of Bid substantially in the form of Exhibit F hereto to each such successful
bidder; provided, however, that failure to give such Notice of Acceptance shall
not affect the obligation of such successful bidder to disburse its Bid Loans as
herein required.
(b) Notice to all Banks. As soon as practicable after each Borrowing
Date for Bid Loans, the Administrative Agent shall notify each Bank (whether or
not its Bid or its Bids were successful) of the aggregate amount of Bid Loans
advanced pursuant to the relevant Bid Loan Request on such Borrowing Date, the
maturities thereof, and the lowest and highest interest rates at which Bid Loans
were made for each maturity.
(c) Disbursement of Bid Loans. Not later than 1:30 p.m. (Chicago time)
on the Borrowing Date for each Borrowing of a Bid Loan(s), each Bank bound to
make a Bid Loan(s) in accordance with Section 2.5(a) shall, subject to Section 6
and the other applicable conditions hereof, make available to the Administrative
Agent the principal amount of each such Bid Loan in immediately available funds
at the Administrative Agent's principal office in Chicago, Illinois. The
Administrative Agent shall promptly thereafter make available to the Borrower
like funds as received from each Bank, at such office of the Administrative
Agent in Chicago, Illinois.
(d) Interest on Bid Loans. The Borrower shall pay interest on the unpaid
principal amount of each Bid Loan from the applicable Borrowing Date to the
maturity thereof at the rate of interest applicable to such Bid Loan as
determined pursuant to the above provisions (calculated on the basis of a 360
day year and the actual number of days elapsed) payable on the last day of the
Interest Period applicable to such Bid Loan and at maturity (whether by
acceleration or otherwise), and, if the applicable Interest Period is longer
than 90 days, on each day occurring every 90 days after the date such Loan is
made.
Section 2.6. Telephonic Notice. Each Bank's telephonic notice to the
Administrative Agent of its Bid pursuant to Section 2.2(c) hereof, and the
Borrower's telephonic acceptance of any Offer contained in a Bid pursuant to
Section 2.4 hereof, shall be irrevocable and binding on such Bank and the
Borrower and shall not be altered, modified, or in any other manner affected by
any inconsistent terms contained in, or missing from, any telecopy or other
confirmation of such telephonic notice. It is understood and agreed by the
parties hereto that the Administrative Agent shall be entitled to act (or to
fail to act) hereunder in reasonable reliance on its records of any telephonic
notices provided for herein and that the Administrative Agent shall not incur
any liability to any Person in so doing if its records conflict with any
telecopy or other confirmation of a telephone notice or otherwise, provided that
the Administrative Agent has acted (or failed to act) in good faith. It is
further understood and agreed by the parties hereto that the times of day as set
forth in this Section 2.6 are for the convenience of all the parties for
providing notices and that no party shall incur any liability or other
responsibility for any failure to provide such notices within the specified
times; provided, however, that the Administrative Agent shall have no obligation
to notify the Borrower of any Bid received by it later than 8:45 a.m. (Chicago
time) on the Auction Date, and no acceptance by the Borrower of any Offer
contained in such a Bid shall be effective to bind any Bank to make a Bid Loan,
nor shall the Administrative Agent be under any
<PAGE>
obligation to notify any Person of an acceptance, if notice of such acceptance
is received by the Administrative Agent later than the later of 9:45 a.m.
(Chicago time) or 30 minutes after receipt of telephonic notice of bids on the
Auction Date.
Section 3. The Notes, Fees, Prepayments, Terminations and Application of
Payments.
Section 3.1. The Notes. All Loans made by each Bank to the Borrower
hereunder shall be evidenced by a single Revolving Credit Note of the Borrower
substantially in the form of Exhibit A hereto (individually, a "Revolving Note"
or "Note" and together, the "Revolving Notes" or "Notes") payable to the order
of such Bank, but the aggregate principal amount of indebtedness evidenced by
such Revolving Note at any time shall be, and the same is to be determined by,
the aggregate principal amount of all Loans made by such Bank to the Borrower
pursuant hereto on or prior to the date of determination less the aggregate
amount of principal repayments on such Loans received by or on behalf of such
Bank on or prior to such date of determination. Each Revolving Note shall be
dated as of the execution date of this Agreement, shall be delivered
concurrently herewith, and shall be expressed to mature on the Termination Date
and to bear interest as provided in Sections 1.2, 1.3 and 2 hereof. Each Bank
shall record on its books or records or on a schedule to its Revolving Note the
amount of each Loan made by it hereunder and all payments of principal and
interest and the principal balance from time to time outstanding, provided that
prior to any transfer of such Revolving Note all such amounts shall be recorded
on a schedule to such Revolving Note. The record thereof, whether shown on such
books or records or on a schedule to the Revolving Note, shall be prima facie
evidence as to all such amounts; provided, however, that the failure of any Bank
to record any of the foregoing shall not limit or otherwise affect the
obligation of the Borrower to repay all Loans made hereunder together with
accrued interest thereon. Upon the request of any Bank, the Borrower will
furnish a new Revolving Note to such Bank to replace its outstanding Revolving
Note and at such time the first notation appearing on the schedule on the
reverse side of, or attached to, such Revolving Note shall set forth the
aggregate unpaid principal amount of all Loans then outstanding from such Bank.
Such Bank will cancel the outstanding Revolving Credit Note upon receipt of the
new Revolving Note.
Section 3.2. Facility Fee. For the period from the date hereof to
and including the Termination Date, or such earlier date on which the Revolving
Credit is terminated in whole pursuant to Section 3.5 hereof, the Borrower shall
pay to the Administrative Agent for the account of the Banks a facility fee with
respect to the Revolving Credit at the rate per annum (computed on a basis of a
year of 365/366 days for the actual number of days elapsed) equal to the
Applicable Margin in effect from time to time of the maximum amount of the
Revolving Credit Commitments, calculated without regard to whether any credit is
available or outstanding under the Revolving Credit (determined in each case
after giving effect to any reductions thereof as specified in Section 3.5
hereof). Such fee shall be payable quarterly in arrears on the last day of each
March, June, September and December commencing on the last day of December,
1997, and on the Termination Date, unless the Revolving Credit is terminated in
<PAGE>
whole on an earlier date, in which event the fees for the period from the date
of the last payment made pursuant to this Section 3.2 through the effective date
of such termination in whole shall be paid on the date of such earlier
termination in whole.
Section 3.3. Agent's Fees. The Borrower shall pay to and for the
sole account of the appropriate Agent such fees as the Borrower and such Agent
may agree upon in writing from time to time. Such fees shall be in addition to
any fees and charges the Agents may be entitled to receive under the other Loan
Documents.
Section 3.4. (a) Optional Prepayments of Base Rate Loans. The
Borrower shall have the privilege of prepaying without premium or penalty and in
whole or in part (but if in part, then in a minimum principal amount of
$5,000,000 or such greater amount which is an integral multiple of $1,000,000)
any Borrowing of Base Rate Loans at any time upon prior telecopy or telephonic
notice from the Borrower to the Administrative Agent on or before 11:00 a.m.
(Chicago time) on the Business Day of such prepayment. Any amount prepaid under
the Revolving Credit may, subject to the terms and conditions of this Agreement,
be borrowed, repaid and borrowed again.
(b) Optional Prepayments of Swingline Loans. The Borrower may prepay any
borrowing of Swingline Loans, upon telephonic notice (which shall be promptly
confirmed in writing by facsimile communication, telex or telegraph) by no later
than 11:00 a.m. (Chicago time) on the date of such prepayment from the Borrower
to the Administrative Agent, such prepayment to be made by the payment of the
principal amount to be prepaid and accrued interest thereon and any compensation
required by Section 9.4 hereof, if applicable; provided, however, that any such
prepayment shall be in a principal amount of no less than $250,000 or such
greater amount which is an integral multiple of $100,000, and after giving
effect to any such prepayment the outstanding principal amount of any such
borrowing of Swingline Loans prepaid in part shall not be less than $250,000 or
such greater amount which is an integral multiple of $100,000.
(c) Optional Prepayments of Eurodollar Loans. The Borrower may prepay
any borrowing of Eurodollar Loans, upon telephonic notice (which shall be
promptly confirmed in writing by facsimile communication, telex or telegraph) by
no later than 11:00 a.m. (Chicago time) on the date of such prepayment from the
Borrower to the Administrative Agent, such prepayment to be made by the payment
of the principal amount to be prepaid and accrued interest thereon and any
compensation required by Section 9.4 hereof, if applicable; provided, however,
that any such prepayment shall be in a principal amount of no less than
$10,000,000 or such greater amount which is an integral multiple of $1,000,000,
and after giving effect to any such prepayment the outstanding principal amount
of any such borrowing of Eurodollar Loans prepaid in part shall not be less than
$10,000,000 or such greater amount which is an integral multiple of $1,000,000.
(d) Mandatory Prepayments of Excess Borrowings. If at any time the Total
Outstandings hereunder shall exceed the Revolving Credit Commitments, the
Borrower shall immediately prepay Loans and Reimbursement Obligations
outstanding for the Borrower's account and, if necessary, pledge cash collateral
to the Administrative Agent to secure outstanding L/Cs issued for the Borrower's
account, in an amount equal to such excess.
<PAGE>
Section 3.5. Revolving Credit Termination. The Borrower shall have
the right at any time upon 5 days' prior notice to the Banks to terminate the
Revolving Credit in whole or in part (but if in part in a minimum principal
amount of $10,000,000 or such greater amount which is an integral multiple of
$5,000,000); provided, however, that the Borrower may not terminate any portion
of the Revolving Credit which represents outstanding Revolving Credit
Obligations unless the Borrower contemporaneously prepays the same or, with
respect to any outstanding L/Cs, pledges cash collateral to the Administrative
Agent to secure the same.
Section 3.6. Place and Application of Payments. All payments by the
Borrower hereunder shall be made to the Administrative Agent at its office at
111 West Monroe Street, Chicago, Illinois 60690 and in immediately available
funds, prior to 12:00 noon on the date of such payment. All such payments shall
be made without setoff or counterclaim and without reduction for, and free from,
any and all present and future levies, imposts, duties, fees, charges,
deductions withholdings, restrictions or conditions of any nature imposed by any
government or any political subdivision or taxing authority thereof. Any
payments received after 12:00 noon Chicago time (or after any later time the
Banks may otherwise direct) shall be deemed received upon the following Business
Day. The Administrative Agent shall remit to each Bank its proportionate share
of each payment of principal, interest and facility fees received by the
Administrative Agent by 3:00 P.M. Chicago time on the same day of its receipt
and its proportionate share of each such payment received by the Administrative
Agent after 12:00 noon on the Business Day following its receipt by the
Administrative Agent. In the event the Administrative Agent does not remit any
amount to any Bank when required by the preceding sentence, the Administrative
Agent shall pay to such Bank interest on such amount until paid at a rate per
annum equal to the Fed Funds Rate. The Borrower hereby authorizes the
Administrative Agent to automatically debit its designated account with Harris
for any principal, interest and fees when due under the Notes, any L/C
Agreements or this Agreement and to transfer the amount so debited from such
account to the Administrative Agent for application as herein provided.
Section 4. Definitions.
Section 4.1. Certain Definitions. The terms hereinafter set forth
when used herein shall have the following meanings:
"Adjusted Eurodollar Rate" means a rate per annum determined pursuant to
the following formula:
Adjusted Eurodollar Rate = Eurodollar Rate
-----------------------------------
100% - Reserve Percentage
"Administrative Agent" shall have the meaning specified in the first
paragraph of this Agreement.
"Affiliate" shall mean, for any Person, any other Person (including all
directors and officers of such Person) that directly or indirectly controls, or
is under common control with, or is controlled by,
<PAGE>
such Person. As used in this definition, "control" means the power, directly or
indirectly, to direct or cause the direction of management or policies of a
Person (through ownership of voting securities, by contract or otherwise),
provided that, in any event for purposes of the definition any Person that owns
directly or indirectly 10% or more of the securities having ordinary voting
power for the election of directors of a corporation or 10% or more of the
partnership or other ownership interests of any other Person will be deemed to
control such corporation or other Person.
"Agents" shall mean the Administrative Agent and the Syndication Agent.
"Agreement" shall mean this Credit Agreement as supplemented and amended
from time to time.
"Annualized Average EBIT" shall mean with reference to any fiscal quarter,
an amount equal to the EBIT of the Borrower and its Subsidiaries, each
calculated on a consolidated basis in accordance with generally accepted
accounting principles, for the eight consecutive fiscal quarters ending with
such fiscal quarter divided by two; provided, that if the Borrower or any of its
Subsidiaries shall have acquired any business, Property or Person during such
eight fiscal quarters (whether before, on or after the date hereof), EBIT shall,
to the extent the Borrower shall have delivered audited financial statements
(or, if audited financial statements are not available to the Borrower,
unaudited financial statements in form reasonably satisfactory to the
Administrative Agent) for the acquired business, Property or Person for such
period, be adjusted to reflect on a pro forma basis EBIT for such business,
Property or Person as if such business, Property or Person had been acquired at
the beginning of such period.
"Applicable Margin" shall mean, with respect to the Facility Fee and each
type of Loan described below, the rate of interest per annum shown below for the
range of Pricing Ratio specified below:
<TABLE>
<CAPTION>
Level I Level II Level III Level IV Level V
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Pricing *0.75x ***0.75x and ***1.50x and ***2.25x and **3.00x
Ratio *1.50x *2.25x ***3.00x
- --------------------------------------------------------------------------------------------------------------------------
Fed Funds Rate .15% .25% .475% .675% 1.00%
Loans
- --------------------------------------------------------------------------------------------------------------------------
Base Rate Loans 0% 0% 0% 0% .25%
- --------------------------------------------------------------------------------------------------------------------------
Eurodollar Loans .15% .25% .475% .675% 1.00%
- --------------------------------------------------------------------------------------------------------------------------
Facility Fee .10% .12% .15% .20% .25%
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------------------------
* Less than
** More than
*** Less than or equal to
The Applicable Margins will be adjusted upon receipt of the Borrower's
quarterly Compliance Certificate or Pricing Ratio Certificate for the fiscal
quarter ended December 31, 1997 and at the close of
<PAGE>
every fiscal quarter thereafter. Not later than 5 Business Days after receipt by
the Administrative Agent of the certificates called for by Section 7.4(c) or (f)
hereof for each fiscal quarter, the Administrative Agent shall determine the
Pricing Ratio for the applicable period and shall promptly notify the Borrower
and the Banks of such determination and of any change in the Applicable Margins
resulting therefrom. Any such change in the Applicable Margins shall be
effective as of the forty-fifth (45th) day following the close of each fiscal
quarter with respect to all Revolving Credit Loans and Swingline Loans
outstanding on such date, and such new Applicable Margins shall continue in
effect until the forty-fifth (45th) day following the close of the next
succeeding fiscal quarter. Each determination of the Pricing Ratio and
Applicable Margins by the Administrative Agent in accordance with this Section
shall be conclusive and binding on the Borrower and the Banks absent manifest
error. From the date hereof until the Applicable Margins are first adjusted
pursuant hereto, the Applicable Margins shall be those set forth in Level III
above.
"Bank" and "Banks" shall have the meanings specified in the first paragraph
of this Agreement.
"Base Rate" means for any day the rate of interest announced by Harris from
time to time as its prime commercial rate in effect on such day, with any change
in the Base Rate resulting from a change in said prime commercial rate to be
effective as of the date of the relevant change in said prime commercial rate
(the "Harris Prime Rate"), provided that if the rate per annum determined by
adding 1/2 of 1% to the rate at which Harris would offer to sell federal funds
in the interbank market on or about 10:00 A.M. (Chicago time) on any day (the
"Adjusted Fed Funds Rate") shall be higher than the Harris Prime Rate on such
day, then the Base Rate for such day and for the succeeding day which is not a
Business Day shall be such Adjusted Fed Funds Rate. The determination of the
Adjusted Fed Funds Rate by the Administrative Agent shall be final and
conclusive provided it has acted in good faith in connection therewith.
"Base Rate Loan" shall mean a Revolving Credit Loan which bears interest as
provided in Section 1.3(a) hereof.
"Bid Loan" shall have the meaning specified in Section 2.1 hereof.
"Borrower" shall have the meaning specified in the first paragraph of this
Agreement.
"Borrowing" means the total of Loans (other than Swingline Loans) of a
single type made by the Banks to the Borrower on a single date and for a single
Interest Period. Borrowings of Revolving Credit Loans are made ratably from the
Banks according to their Revolving Credit Commitments. Borrowings of a Bid Loan
or Bid Loans are made from a Bank or Banks in accordance with the procedures of
Section 2 hereof.
"Business Day" shall mean any day except Saturday or Sunday on which banks
are open for business in Chicago, Illinois, and, with respect to Eurodollar
Loans and Eurodollar Bid Loans, dealing in United States dollar deposits in
London, England and Nassau, Bahamas.
<PAGE>
"Capitalized Lease" shall mean any lease or obligation for rentals which is
required to be capitalized on a consolidated balance sheet of a Person and its
Subsidiaries in accordance with generally accepted accounting principles,
consistently applied.
"Capitalized Lease Obligation" shall mean the present discounted value of
the rental obligations under any Capitalized Lease.
"Change of Control" shall mean the occurrence, after the date hereof, of
(i) any Person or two or more Persons acting in concert acquiring beneficial
ownership (within the meaning of Rule 13d-3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended), directly or
indirectly, of securities of the Borrower (or other securities convertible into
such securities) representing more than 20% of the combined voting power of all
securities of the Borrower entitled to vote in the election of directors; or
(ii) commencing after the date hereof, individuals who as of the date hereof
were directors of the Borrower ceasing for any reason to constitute a majority
of the Board of Directors of the Borrower unless the Persons replacing such
individuals were nominated by the Board of Directors of the Borrower; or (iii)
any Person or two or more Persons acting in concert acquiring by contract or
otherwise, or entering into a contract or arrangement which upon consummation
will result in its or their acquisition of, or control over, securities of the
Borrower (or other securities convertible into such securities) representing
more than 20% of the combined voting power of all securities of the Borrower
entitled to vote in the election of directors.
"Commitment Percentage" shall have the meaning set forth in Section 1.1(b)
hereof.
"Compliance Certificate" shall mean a Compliance Certificate in the form of
Exhibit H attached hereto.
"Debt" of any Person shall mean as of any time the same is to be
determined, the aggregate (without duplication) of:
(a) all indebtedness, obligations and liabilities with respect to
borrowed money;
(b) all guaranties, endorsements (other than any liability arising
out of the endorsement of items for deposit or collection in the ordinary
course of business) and other contingent obligations in respect of, or any
obligations to purchase or otherwise acquire, indebtedness or securities of
others or to purchase Property of others at the request or demand of any
creditor of such Person;
(c) all reimbursement and other obligations with respect to letters
of credit (whether drawn or undrawn), banker's acceptances, customer
advances and other extensions of credit whether or not representing
obligations for borrowed money;
<PAGE>
(d) the aggregate amount of Capitalized Lease Obligations;
(e) all indebtedness and liabilities secured by any lien or any
security interest on any Property or assets of such Person, whether or not
the same would be classified as a liability on a balance sheet; and
(f) all indebtedness, obligations and liabilities representing the
deferred purchase price of Property, excluding trade payables incurred in
the ordinary course of business not more than 90 days past due;
all computed and determined on a consolidated basis for such Person and its
Subsidiaries after the elimination of intercompany items in accordance with
generally accepted accounting principles consistent with those used in the
preparation of the audit report referred to in Section 5.2 hereof.
"EBIT" means, for any Person and with reference to any period, Net Income
for such period plus all amounts deducted in arriving at such Net Income amount
in respect of (i) Interest Expense for such period, plus (ii) federal, state and
local income taxes for such period.
"EBITDA" means, for any Person and with reference to any period, Net Income
for such period plus all amounts deducted in arriving at such Net Income amount
in respect of (i) Interest Expense for such period, plus (ii) federal, state and
local income taxes for such period, plus (iii) all amounts properly charged for
depreciation of fixed assets and amortization of intangible assets during such
period on the books of such Person and its Subsidiaries.
"Environmental Laws" shall mean all federal, state and local environmental,
health and safety statutes and regulations, including without limitation all
statutes and regulations establishing quality criteria and standards for air,
water, land and toxic or hazardous wastes and substances.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Eurodollar Bid Loan" shall have the meaning specified in Section 2.1
hereof.
"Eurodollar Loan" shall mean a Revolving Credit Loan which bears interest
as provided in Section 1.3(b) hereof.
"Eurodollar Rate" shall mean for each Interest Period applicable to a
Eurodollar Loan or Eurodollar Bid Loan, (a) the LIBOR Index Rate for such
Interest Period, if such rate is available, and (b) if the LIBOR Index Rate
cannot be determined, the arithmetic average of the rates of interest per annum
(rounded upwards, if necessary, to nearest one hundred-thousandth of a
percentage point) at which deposits in U.S. dollars in immediately available
funds are offered to the Administrative Agent at 11:00 a.m. (London, England
time) two (2) Business Days before the beginning of such Interest Period by
three
<PAGE>
(3) or more major banks in the interbank eurodollar market selected by the
Administrative Agent for a period equal to such Interest Period and in an amount
equal or comparable to the principal amount of the Eurodollar Loan or Eurodollar
Bid Loan scheduled to be made by the Administrative Agent or, in the case of a
Eurodollar Bid Loan, the applicable Bank (if other than the Administrative
Agent) during such Interest Period.
"Event of Default" shall mean any event or condition identified as such in
Section 8.1 hereof.
"Existing Agreements" shall have the meaning specified in Section 7.15
hereof.
"Existing Banks" shall mean the lenders under each of the Existing
Agreements.
"Farmland MissChem, Ltd." means that certain Trinidad limited liability
company equally owned by the Borrower and Farmland Industries, Inc. which was
formed to develop the Farmland MissChem Project.
"Farmland MissChem Project" means that certain project commenced by
Farmland MissChem, Ltd. to develop an ammonia plant in Trinidad.
"Farmland MissChem Project Contingent Obligations" means the contingent
obligations described on Exhibit J hereto.
"Fed Funds Rate" shall have the meaning specified in Section 1.7(c) hereof.
"Fed Funds Rate Loan" shall mean a Swingline Loan that bears interest as
provided in Section 1.3(c) hereof.
"Fixed Fed Funds Rate" means with respect to each Interest Period
applicable to a Fed Funds Loan, the rate of interest per annum as determined by
the Administrative Agent at which term federal funds would be offered by the
Administrative Agent on the first day of such Interest Period to major banks in
the interbank market upon request by such major banks for a period equal to such
Interest Period and in an amount equal to the principal amount of the Fed Funds
Loan scheduled to be outstanding during such Interest Period. Each
determination of the Fed Funds Rate made by the Administrative Agent in
accordance with this paragraph shall be conclusive and binding on the Borrower
except in the case of manifest error or willful misconduct.
"Fixed Rate Loan" shall mean any Offered Rate Loan, Eurodollar Loan, Bid
Loan or Fed Funds Rate Loan.
"Harris" shall have the meaning specified in the first paragraph of this
Agreement.
<PAGE>
"Interest Coverage Ratio" shall mean, with reference to each fiscal quarter
of the Borrower and its Subsidiaries, the ratio of (x) Annualized Average EBIT
to (y) Interest Expense for the preceding four fiscal quarters.
"Interest Expense" shall mean, for any Person and with reference to any
period, the sum of all interest charges (including imputed interest charges with
respect to Capitalized Lease Obligations, all amortization of debt discount and
expense and all fees relating to letters of credit accrued and all net
obligations pursuant to interest rate hedging agreements) of such Person and its
Subsidiaries for such period determined on a consolidated basis in accordance
with generally accepted accounting principles, consistently applied; provided,
that if the Borrower or any of its Subsidiaries shall have acquired any
business, Property or Person during such period (whether before, on or after the
date hereof), Interest Expense shall, to the extent the Borrower shall have
delivered audited financial statements (or, if audited financial statements are
not available to the Borrower, unaudited financial statements in form reasonably
satisfactory to the Administrative Agent) for the acquired business, Property or
Person for such period, be adjusted to reflect on a pro forma basis Interest
Expense for such business, Property or Person as if such business, Property or
Person had been acquired at the beginning of such period.
"Interest Period" shall mean with respect to (a) any Eurodollar Loan, the
period used for the computation of interest commencing on the date the relevant
Eurodollar Loan is made, continued or effected by conversion and concluding on
the date one, two, three, six or twelve months thereafter as selected by the
Borrower in its notice as provided herein, (b) any Eurodollar Bid Loan, the
period used for the computation of interest commencing on the date the relevant
Eurodollar Bid Loan is made, continued or effected by conversion and concluding
on the date one, two, three, four, five or six months thereafter as selected by
the Borrower in its notice as provided herein, (c) any Offered Rate Loan, the
period used for the computation of interest commencing on the date of the
relevant Offered Rate Loan is made and concluding on the date 1 to 7 days
thereafter as agreed by the Administrative Agent and the Borrower, (d) any Fed
Funds Rate Loan, the period used for the computation of interest commencing on
the date of the relevant Fed Funds Rate Loan and concluding on the date 1 to 7
days thereafter as agreed by the Administrative Agent and the Borrower, and (e)
any Stated Rate Bid Loan, the period commencing on, as the case may be, the
creation, continuation or conversion date with respect to such Stated Rate Bid
Loan and ending one (1) to one hundred eighty (180) days thereafter as selected
by the Borrower in its notice as provided herein; provided that all of the
foregoing provisions relating to Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day which is not
a Business Day, that Interest Period shall be extended to the next
succeeding Business Day, unless in the case of an Interest Period for a
Eurodollar Loan or Eurodollar Bid Loan the result of such extension would
be to carry such Interest Period into another calendar month in which event
such Interest Period shall end on the immediately preceding Business Day;
(ii) no Interest Period may extend beyond the Termination Date; and
<PAGE>
(iii) the interest rate to be applicable to each Loan for each
Interest Period shall apply from and including the first day of such
Interest Period to but excluding the last day thereof.
For purposes of determining an Interest Period, a month means a period starting
on one day in a calendar month and ending on a numerically corresponding day in
the next calendar month, provided, however, if an Interest Period begins on the
last day of a month or if there is no numerically corresponding day in the month
in which an Interest Period is to end, then such Interest Period shall end on
the last Business Day of such month.
"Inventory" shall mean all raw materials, work in process, finished goods,
and goods held for sale or lease or furnished or to be furnished under contracts
of service in which any Borrower or any Subsidiary now has or hereafter acquires
any right.
"L/C" shall have the meaning set forth in Section 1.5 hereof.
"L/C Agreement" shall have the meaning set forth in Section 1.5 hereof.
"L/C Administrative Fee" has the meaning specified in Section 1.5(a)
hereof.
"L/C Issuance Fee" has the meaning specified in Section 1.5(a) hereof.
"L/C Participation Fee" shall have the meaning specified in Section 1.5(a)
hereof.
"Leverage Ratio" shall mean, as of any date of determination, the ratio of
(x) the sum of all Debt of the Borrower and its Subsidiaries (determined on a
consolidated basis) to (y) an amount equal to the EBITDA of the Borrower and its
Subsidiaries, each calculated on a consolidated basis in accordance with
generally accepted accounting principles, for the eight consecutive fiscal
quarters ending with such fiscal quarter divided by two; provided, that if the
Borrower or any of its Subsidiaries shall have acquired any business, Property
or Person during such eight fiscal quarters (whether before, on or after the
date hereof), EBITDA shall, to the extent the Borrower shall have delivered
audited financial statements (or, if audited financial statements are not
available to the Borrower, unaudited financial statements in form reasonably
satisfactory to the Administrative Agent) for the acquired business, Property or
Person for such period, be adjusted to reflect on a pro forma basis EBITDA for
such business, Property or Person as if such business, Property or Person had
been acquired at the beginning of such period.
"LIBOR Index Rate" shall mean, for any Interest Period applicable to a
Eurodollar Loan, the rate per annum (rounded upwards, if necessary, to the next
higher one hundred-thousandth of a percentage point) for deposits in U.S.
Dollars for a period equal to such Interest Period, which appears on the
Telerate Page 3750 as of 11:00 a.m. (London, England time) on the day two
Business Days before the commencement of such Interest Period.
"Loan" shall mean Revolving Credit Loans, Swingline Loans and Bid Loans,
and each of them singly, and the term "type" of Loan refers to its status as a
Fed Funds Rate Loan, an Offered Rate Loan, a Eurodollar Loan, Eurodollar Bid
Loan, a Base Rate Loan or Stated Rate Bid Loan.
<PAGE>
"Loan Documents" shall mean this Agreement and any and all exhibits hereto,
the Notes and the L/C Agreements.
"Net Income" means, for any Person and with reference to any period, the
net income of such Person and its Subsidiaries for such period determined on a
consolidated basis in accordance with generally accepted accounting principles,
consistently applied, but excluding in any event any items of extraordinary gain
or loss.
"Net Tangible Assets" of the Borrower means, at any date, the gross book
value as shown by the accounting books and records of the Borrower of all
Property both real and personal of the Borrower and its Subsidiaries, determined
on a consolidated basis in accordance with generally accepted accounting
principles, (including appropriate deductions for any minority interests in
property of Subsidiaries of the Borrower) less (a) the gross book value of all
its licenses, patents, patent applications, copyrights, trademarks, trade names,
goodwill, non-compete agreements or organizational expenses and other like
intangibles, (b) unamortized Debt discount and expense, (c) all reserves for
depreciation, obsolescence, depletion and amortization of its Properties, and
(d) all other proper reserves against assets which in accordance with generally
accepted accounting principles should be provided in connection with the
business conducted by the Borrower or its Subsidiaries.
"Note" and "Notes" shall have the meanings specified in Section 3.1 hereof.
"Offered Rate Loan" shall mean a Swingline Loan that bears interest as
provided in Section 1.2(a) hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Person" shall mean and include any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust, unincorporated
organization, association, corporation, institution, entity, party or government
(whether national, federal, state, county, city, municipal, or otherwise,
including, without limitation, any instrumentality, division, agency, body or
department thereof).
"Plan" shall mean any employee benefit plan covering any officers or
employees of a Borrower or any Subsidiary, any benefits of which are, or are
required to be, guaranteed by the PBGC.
"Potential Default" shall mean any event or condition specified in Section
8.1 hereof which, with the lapse of time, or giving of notice, or both, would
constitute an Event of Default.
"Pricing Ratio" shall mean, as of any date or determination, the ratio of
(x) the sum of all Debt of the Borrower and its Subsidiaries (determined on a
consolidated basis) to (y) EBITDA of the Borrower
<PAGE>
and its Subsidiaries, each determined on a consolidated basis in accordance with
generally accepted accounting principles, for the four fiscal quarters ending on
such date of determination; provided, that if the Borrower or any of its
Subsidiaries shall have acquired any business, Property or Person during such
four fiscal quarters (whether before, on or after the date hereof), EBITDA
shall, to the extent the Borrower shall have delivered audited financial
statements (or, if audited financial statements are not available to the
Borrower, unaudited financial statements in form reasonably satisfactory to the
Administrative Agent) for the acquired business, Property or Person for such
period, be adjusted to reflect on a pro forma basis EBITDA for such business,
Property or Person as if such business, Property or Person had been acquired at
the beginning of such period.
"Pricing Ratio Certificate" has the meaning specified in Section 7.4(f)
hereof.
"Property" shall mean all assets and properties of any nature whatsoever,
whether real or personal, tangible or intangible, including without limitation
intellectual property.
"Reimbursement Obligations" has the meaning specified in Section 1.6
hereof.
"Rentals" shall mean and include all fixed rents (including as such all
payments which the lessee is obligated to make to the lessor on termination of
the lease or surrender of the Property to the extent such termination or
surrender occurs during the relevant period) payable by the Borrower or a
Subsidiary, as lessee or sublessee under a lease of real or personal property,
but shall be exclusive of any amounts required to be paid by the Borrower or a
Subsidiary (whether or not designated as rents or additional rents) on account
of maintenance, repairs, insurance, taxes and similar charges. Fixed rents
under any so-called "percentage leases" shall be computed solely on the basis of
the minimum rents, if any, required to be paid by the lessee regardless of sales
volume or gross revenues. Capitalized Lease Obligations shall be excluded from
the definition of Rentals for all purposes hereunder other than the use of the
term "rentals" in the definitions of Capitalized Lease and Capitalized Lease
Obligations.
"Required Banks" shall mean any Bank or Banks which in the aggregate have
more than 50% of the Revolving Credit Commitments or, if at the time no
Revolving Credit Commitments are in effect, any Bank or Banks which in the
aggregate hold more than 50% of the aggregate unpaid principal balance of the
Loans and Reimbursement Obligations then outstanding.
"Reserve Percentage" means the daily arithmetic average maximum rate at
which reserves (including, without limitation, any supplemental, marginal and
emergency reserves) are imposed on member banks of the Federal Reserve System
during the applicable Interest Period by the Board of Governors of the Federal
Reserve System (or any successor) under Regulation D on "eurocurrency
liabilities" (as such term is defined in Regulation D), subject to any
amendments of such reserve requirement by such Board or its successor, taking
into account any transitional adjustments thereto. For purposes of this
definition, the Eurodollar Loans shall be deemed to be eurocurrency liabilities
as defined in Regulation D without benefit or credit for any prorations,
exemptions or offsets under Regulation D. As of the date hereof, the Reserve
Percentage is zero.
<PAGE>
"Restricted Payments" shall have the meaning specified in Section 7.8
hereof.
"Revolving Credit" shall have the meaning specified in the first paragraph
of this Agreement.
"Revolving Credit Commitment" and "Revolving Credit Commitments" shall have
the meanings specified in Section 1.1(b) hereof.
"Revolving Credit Loan" and "Revolving Credit Loans" shall have the
meanings specified in Section 1.1(a) hereof.
"Revolving Credit Obligations" shall have the meaning specified in Section
1.1(a) hereof.
"Revolving Note" or "Revolving Notes" shall have the meanings specified in
Section 3.1 hereof.
"Senior Notes" shall mean the Borrower's 7.25% Senior Notes due 2017 in the
original aggregate principal amount of $200,000,000, and Borrower's Senior Notes
to be hereafter issued in the original aggregate principal amount of up to
$100,000,000, to be governed by the same Indenture as the other Senior Notes
herein described.
"Subsidiary" shall mean, for any Person, any corporation or other entity of
which more than fifty percent (50%) of the outstanding stock or comparable
equity interests having ordinary voting power for the election of the Board of
Directors of such corporation or similar governing body in the case of a non-
corporation (irrespective of whether or not, at the time, stock or other equity
interests of any other class or classes of such corporation or other entity
shall have or might have voting power by reason of the happening of any
contingency) is at the time directly or indirectly owned by such Person or by
one or more of its Subsidiaries.
"Syndication Agent" shall have the meaning specified in the first paragraph
of this Agreement.
"Tangible Net Worth" means, for any Person and at any time the same is to
be determined, the total shareholders' equity (including capital stock,
additional paid-in capital and retained earnings after deducting treasury stock
and excluding minority interests in Subsidiaries) which would appear on the
balance sheet of such Person and its Subsidiaries determined on a consolidated
basis in accordance with generally accepted accounting principles, consistently
applied, less the sum of the aggregate book value of all assets which would be
classified as intangible assets under generally accepted accounting principles,
consistently applied, including, without limitation, goodwill, patents,
trademarks, trade names, copyrights, franchises and deferred charges (including,
without limitation, unamortized debt discount and expense, organization costs
and deferred research and development expense, but excluding deferred taxes) and
similar assets and the write-up of assets above cost.
<PAGE>
"Telerate Page 3750" shall mean the display designated as "Page 3750" on
the Telerate Service (or such other page as may replace Page 3750 on that
service or such other service as may be nominated by the British Bankers'
Association as the information vendor for the purpose of displaying British
Bankers' Association Interest Settlement Rates for U.S. Dollar deposits).
"Termination Date" shall have the meaning set forth in Section 1.1(a)
hereof.
"Total Assets" shall mean, at any time the same is to be determined, the
aggregate of all items which would be listed as an asset on a balance sheet of a
Person and its Subsidiaries determined on a consolidated basis in accordance
with generally accepted accounting principles.
"Total Outstandings" shall mean the aggregate principal amount of all Loans
plus the aggregate principal amount of all unpaid Reimbursement Obligations plus
the maximum amount available to be drawn under all L/Cs outstanding under this
Agreement.
Section 4.2. Accounting Terms. Any accounting term not otherwise
specifically defined in this Agreement shall have the meaning customarily given
to such term in accordance with generally accepted accounting principles,
consistently applied. Where the character or amount of any asset or liability
or item of income or expense is required to be determined or any consolidation
or other accounting computation is required to be made for the purpose of this
Agreement, it shall be done in accordance with generally accepted accounting
principles, to the extent applicable, except where such principles are
inconsistent with the requirements of this Agreement.
Section 5. Representations and Warranties.
The Borrower represents and warrants to the Banks as follows:
Section 5.1. Organization and Qualification; Non-Contravention.
The Borrower is duly organized, validly existing and in good standing under the
laws of the state of its incorporation, has full and adequate corporate power to
carry on its business as now conducted, is duly licensed or qualified in all
jurisdictions wherein the nature of its activities requires such licensing or
qualifying, except where the failure to be so licensed or qualified would not
result in a material adverse change in the Properties, business or operations of
the Borrower and its Subsidiaries taken as a whole, has full right, power and
authority to enter into this Agreement and the other Loan Documents to which it
is a party, to make the borrowings herein provided for, to execute and issue its
Notes in evidence thereof, and to perform each and all of the matters and things
herein and therein provided for; and this Agreement and the other Loan Documents
do not, nor does the performance or observance by the Borrower of any of the
matters or things provided for in the Loan Documents, contravene any provision
of law or any charter or by-law provision or any material covenant, indenture or
agreement of or affecting the Borrower or its Properties.
<PAGE>
Section 5.2. Financial Reports. The Borrower has heretofore delivered to
each Bank a copy of the annual audit report as of June 30, 1997, and the
accompanying financial statements of the Borrower and its Subsidiaries and
unaudited financial statements of the Borrower and its Subsidiaries as of, and
for the interim period ending September 30, 1997. Such financial statements
have been prepared in accordance with generally accepted accounting principles
(except for the omission of footnotes and subject to normal year-end audit
adjustments with respect to such unaudited statements) on a basis consistent,
except as otherwise noted therein, with that of the previous fiscal year or
period and fairly reflect in all material respects the financial position of the
Borrower and its Subsidiaries as of the dates thereof, and the results of its
operations for the periods covered thereby. The Borrower and its Subsidiaries
have no material contingent liabilities other than as indicated on said
financial statements and since said date of September 30, 1997, there has been
no material adverse change in the condition, financial or otherwise, of the
Borrower or any Subsidiary, except those disclosed in writing to the Banks prior
to the date of this Agreement.
Section 5.3. Litigation; Tax Returns; Approvals. Except as disclosed on
Schedule 5.3 hereto, there is no litigation, labor controversy or governmental
proceeding pending, nor to the knowledge of the Borrower threatened, against the
Borrower or any Subsidiary which could reasonably be expected to result in any
material adverse change in the Properties, business or operations of the
Borrower and its Subsidiaries taken as a whole. All federal, state and local
income tax returns for the Borrower and its Subsidiaries required to be filed
have been filed on a timely basis, and all amounts required to be paid as shown
by said returns have been paid. There are no pending or, to the Borrower's
knowledge, material threatened objections to or controversies in respect of the
United States federal, state or local income tax returns of the Borrower and its
Subsidiaries for any fiscal year. No authorization, consent, license, exemption
or filing or registration with any court or governmental department, agency or
instrumentality, is or will be necessary to the valid execution, delivery or
performance by the Borrower of the Loan Documents to which it is a party, except
such as have been previously obtained or where the failure to obtain such
authorization, consent, license, exemption or make such filing or registration
would not result in a material adverse change in the Properties, business or
operations of the Borrower and its Subsidiaries taken as a whole.
Section 5.4. Regulation U. Neither the Borrower nor any Subsidiary
is engaged in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System) and no part of the proceeds of any Loan
or other extension of credit hereunder will be used to purchase or carry any
margin stock (other than the Borrower's common stock) or to extend credit to
others for such a purpose.
<PAGE>
Section 5.5. No Default. The Borrower is in full compliance with all
of the terms and conditions of this Agreement, and no Potential Default or Event
of Default is existing under this Agreement.
Section 5.6. ERISA. The Borrower and its Subsidiaries are in
compliance in all material respects with ERISA to the extent applicable to it
and neither the Borrower nor any Subsidiary has received any notice to the
contrary from the PBGC or any other governmental entity or agency. No steps
have been taken to terminate any Plan, and no contribution failure has occurred
with respect to any Plan sufficient to give rise to a lien under Section 302(f)
of ERISA. No condition exists or event or transaction has occurred with respect
to any Plan which might result in the incurrence by the Borrower or any
Subsidiary of any material liability, fine or penalty. Neither the Borrower nor
any Subsidiary has any contingent liability with respect to any post-retirement
benefit under a Plan, other than liability for continuation coverage described
in Part 6 of Title I of ERISA.
Section 5.7. Debt and Security Interests. The Borrower and its
Subsidiaries have no Debt except Debt permitted by Section 7.10 hereof, and
there are no security interests, liens or encumbrances on any of the assets or
Property of the Borrower or any Subsidiary except for those permitted by Section
7.9 hereof.
Section 5.8. Subsidiaries. The Borrower's only Subsidiaries as of
the date hereof are identified on Exhibit G hereof. Each of said Subsidiaries
is duly organized and validly existing under the laws of the state or country of
its incorporation or formation, has full and adequate corporate power to carry
on its business as now conducted, and is duly licensed or qualified to do
business in all jurisdictions wherein the nature of its activities requires such
licensing or qualification, except where the failure to be so licensed or
qualified would not result in a material adverse change in the Properties,
business or operations of the Borrower and its Subsidiaries taken as a whole.
Section 5.9. Accurate Information. No information, exhibit or report
furnished by the Borrower or any Subsidiary to the Banks in connection with the
negotiation or performance of the Loan Documents contains any material
misstatement of fact or omitted to state a material fact or any fact necessary
to make the statements contained therein not misleading in light of the
circumstances in which made.
Section 5.10. Enforceability. This Agreement is and the other Loan
Documents to which the Borrower is a party are the legal, valid and binding
agreements of the Borrower, enforceable against it in accordance with its terms,
except as may be limited by (a) bankruptcy, insolvency, reorganization,
fraudulent transfer, moratorium or other similar laws or judicial decisions for
the relief of debtors or the limitation of creditors' rights generally; and (b)
any equitable principles relating to or limiting the rights of creditors
generally or any equitable remedy which may be granted to cure any defaults.
Section 5.11. Restrictive Agreements. The Borrower is not a party to
any contract or agreement, or subject to any charge or other corporate
restriction, which affects its ability to execute, deliver and perform the Loan
Documents to which it is a party and repay its indebtedness, obligations and
liabilities under the Loan Documents or which materially and adversely affects
the financial condition or results of operations of the Borrower and its
Subsidiaries taken as a whole, or would materially and adversely affect the
Borrower's legal ability to repay the indebtedness, obligations and liabilities
under the Loan Documents, or any Bank's or the Agent's rights under the Loan
Documents to which the Borrower is a party.
<PAGE>
Section 5.12. No Violation of Law. Neither the Borrower nor any
Subsidiary is in violation of any law, statute, regulation, ordinance, judgment,
order or decree applicable to it which violation would materially and adversely
affect any Bank's or any Agent's rights under the Loan Documents or the
financial condition or results of operations of the Borrower and its
Subsidiaries taken as a whole.
Section 5.13. No Default Under Other Agreements. Neither the Borrower nor
any Subsidiary is in default with respect to any note, indenture, loan
agreement, mortgage, lease, deed, or other agreement to which it is a party or
by which it or its Property is bound, which default would materially and
adversely affect any Bank's or any Agent's rights under the Loan Documents or
the financial condition or results of operations of the Borrower and its
Subsidiaries taken as a whole.
Section 5.14. Status Under Certain Laws. Neither the Borrower nor
any of its Subsidiaries is an "investment company" or a person directly or
indirectly controlled by or acting on behalf of an "investment company" within
the meaning of the Investment Company Act of 1940, as amended, or a "holding
Company," or a "subsidiary company" of a "holding company", or an "affiliate" of
a "holding company" or a "subsidiary company" of a "holding company," within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
Section 5.15. Pari Passu. All payment obligations of the Borrower
arising under or pursuant to this Agreement and the Notes will at all times rank
pari passu with the Borrower's indebtedness evidenced by the Senior Notes.
Section 6. Conditions Precedent.
The obligation of the Banks or the Administrative Agent to make any Loan
pursuant hereto shall be subject to the following conditions precedent:
Section 6.1. Initial Extension of Credit. Prior to the initial Loan
hereunder, the following conditions precedent shall have been satisfied:
(a) the Borrower shall have delivered to the Administrative Agent for the
benefit of the Banks in sufficient counterparts for distribution to the Banks:
(i) the Notes (one for each Bank);
<PAGE>
(ii) good standing certificates for the Borrower issued by the
states of Louisiana, New Mexico and Mississippi, as applicable, issued not
more than 30 days before the date of this Agreement;
(iii) copies of the Articles of Incorporation, and all amendments
thereto, of the Borrower, certified by the Secretary of State of its state
of incorporation not more than 30 days before the date of this Agreement;
(iv) copies of the By-Laws, and all amendments thereto, of the
Borrower, certified as true, correct and complete on the date hereof by the
Secretary or Assistant Secretary of the Borrower;
(v) copies, certified as true, correct and complete by the Secretary
or Assistant Secretary of the Borrower, of resolutions regarding the
transactions contemplated by this Agreement, duly adopted by the Board of
Directors of the Borrower and satisfactory in form and substance to the
Agents;
(vi) a pay-off letter from the Existing Banks under each of the
Existing Agreements;
(vii) an incumbency and signature certificate for the Borrower
satisfactory in form and substance to the Agents; and
(viii) copies (executed or certified, as may be appropriate) of all
legal documents or proceedings taken in connection with the execution and
delivery of this Agreement and the other Loan Documents to the extent the
Administrative Agent may reasonably request.
(b) the Agents shall have received all fees payable to them in connection
with the execution and delivery of this Agreement and the transactions
contemplated hereby;
(c) the Administrative Agent shall have received evidence of insurance
required by Section 7.3 hereof; and
(d) the Administrative Agent shall have received copies, certified as
true, correct and complete by the secretary or assistant secretary of the
Borrower, of the indenture, prospectus and underwriting agreement relating to
the Borrower's Senior Notes.
Section 6.2. Each Extension of Credit. As of the time of the
making of each Loan hereunder (including the initial Loan):
(a) each of the representations and warranties set forth in Section 5
hereof shall be and remain true and correct as of said time, except that the
representations and warranties made under Section 5.2 shall be deemed to refer
to the most recent financial statements furnished to the Banks pursuant to
Section 7.4 hereof;
<PAGE>
(b) the Borrower shall be in full compliance with all of the terms and
conditions hereof, and no Potential Default or Event of Default shall have
occurred and be continuing;
(c) with respect to each Loan requested by the Borrower, the aggregate
amount of the Total Outstandings shall not exceed the Revolving Credit
Commitments;
(d) immediately after giving effect thereto, not more than 25% of the
value of the Borrower's and its Subsidiaries' assets that are subject to
Sections 7.9 and 7.12 hereof shall constitute margin stock (as defined in
Regulation U promulgated by the Board of Governors of the Federal Reserve
System); and
(e) with respect to each Swingline Loan requested by the Borrower, the
aggregate principal amount of all Swingline Loans outstanding after giving
effect to the requested Swingline Loans shall not exceed $25,000,000;
and the request by the Borrower, for any Loan pursuant hereto shall be and
constitute a warranty to the foregoing effects.
Section 6.3. Legal Matters. Legal matters incident to the execution
and delivery of the Loan Documents shall be satisfactory to each of the Banks
and their legal counsel; and prior to the initial Loan hereunder, the
Administrative Agent shall have received the favorable written opinion of Hughes
& Luce, L.L.P., counsel for the Borrower, substantially in the form of Exhibit
I, in substance satisfactory to each of the Banks and their respective legal
counsel.
Section 6.4. Documents. The Administrative Agent shall have received
copies (executed or certified, as may be appropriate) of all documents or
proceedings taken in connection with the execution and delivery of the Loan
Documents to the extent the Required Banks or their respective legal counsel
reasonably request.
Section 7. Covenants.
It is understood and agreed that so long as credit is in use or available
under this Agreement or any amount remains unpaid on any Note, Reimbursement
Obligation or L/C except to the extent compliance in any case or cases is waived
in writing by the Required Banks:
Section 7.1. Maintenance of Property. The Borrower will, and will
cause each Subsidiary to, keep and maintain all of its Properties necessary or
useful in its business in good condition, and make all necessary renewals,
replacements, additions, betterments and improvements thereto; provided,
however, that nothing in this Section shall prevent the Borrower or any
Subsidiary from discontinuing the operating and maintenance of any of its
properties if such discontinuance is, in the judgment of the Borrower, desirable
in the conduct of its business and not disadvantageous in any material respect
to the Banks as holders of the Notes.
<PAGE>
Section 7.2. Taxes. The Borrower will, and will cause each
Subsidiary to, duly pay and discharge all taxes, rates, assessments, fees and
governmental charges upon or against the Borrower or any Subsidiary or against
its Properties in each case before the same becomes delinquent and before
penalties accrue thereon unless and to the extent that the same is being
contested in good faith and by appropriate proceedings and for which adequate
reserves have been established in accordance with generally accepted accounting
principles, consistently applied.
Section 7.3. Maintenance of Insurance. The Borrower will, and will
cause each Subsidiary to, maintain insurance with insurers recognized as
financially sound and reputable by prudent business persons in such forms and
amounts and against such risks as is usually carried by companies engaged in
similar business and owning similar Properties in the same general areas in
which the Borrower or such Subsidiary operates. The Borrower shall provide the
Administrative Agent with evidence of insurance maintained by it upon the
Administrative Agent's request.
Section 7.4. Financial Reports. The Borrower will, and will cause
each Subsidiary to, maintain a system of accounting in accordance with sound
accounting practice and will furnish promptly to each of the Banks and their
duly authorized representatives such information respecting the business and
financial condition of the Borrower and its Subsidiaries as may be reasonably
requested and, without any request, will furnish each Bank:
(a) as soon as available, and in any event within 45 days after the close
of the first three fiscal quarters of each fiscal year of the Borrower a copy of
consolidated and consolidating balance sheets and income statements and
consolidated cash flow statements for the Borrower and its Subsidiaries for such
quarterly period and the year to date and for the corresponding periods of the
preceding fiscal year, all in reasonable detail, prepared by the Borrower and
certified by the chief financial officer of the Borrower;
(b) as soon as available, and in any event within 90 days after the close
of each fiscal year of the Borrower, a copy of the audit report for such year
and accompanying financial statements, including consolidated balance sheets and
statements of income for the Borrower and its Subsidiaries showing in
comparative form the figures for the previous fiscal year of the Borrower, all
in reasonable detail, prepared and certified by Arthur Andersen LLP or other
independent public accountants of nationally recognized standing selected by the
Borrower and reasonably satisfactory to the Administrative Agent and copies of
unaudited consolidating balance sheets and statements of income for the Borrower
and its Subsidiaries;
(c) together with the financial statements required by (a) and (b) above,
a Compliance Certificate in the form of Exhibit H attached hereto, prepared and
signed by the President or Chief Financial Officer of the Borrower;
(d) promptly upon their becoming available, copies of all registration
statements and regular periodic reports, if any, which the Borrower shall have
filed with the Securities and Exchange Commission or any governmental agency
substituted therefor, or any national securities exchange, including copies of
the Borrower's form 10-K annual report, including financial statements audited
by Arthur Andersen LLP or other independent public accountants of nationally
recognized standing selected by the Borrower and reasonably satisfactory to the
Required Banks, its form 10-Q quarterly report to the Securities and Exchange
Commission and any Form 8-K filed by the Borrower with the Securities and
Exchange Commission;
<PAGE>
(e) promptly upon the mailing thereof to the shareholders of the Borrower
generally, copies of all financial statements, reports and proxy statements so
mailed; and
(f) as soon as available, and in any event within 45 days after the close
of the last fiscal quarter of each fiscal year of the Borrower and its
Subsidiaries either (i) a Compliance Certificate in the form required by
subsection (c) above or (ii) a certificate in the form of Exhibit K attached
hereto (the "Pricing Ratio Certificate") prepared and signed by the President or
Chief Financial Officer of the Borrower showing the calculation of the Pricing
Ratio as of the last day of the fiscal quarter of the Borrower and its
Subsidiaries then ended.
Section 7.5. Inspection. The Borrower shall, and shall cause each
Subsidiary to, permit each of the Banks, by their representatives and
Administrative Agents, to inspect any of the Properties, corporate books and
financial records of the Borrower, and each Subsidiary, to examine and make
copies of the books of accounts and other financial records of the Borrower and
its Subsidiaries and to discuss the affairs, finances and accounts of the
Borrower and its Subsidiaries with, and to be advised as to the same by, its
officers at such reasonable times and reasonable intervals as the Required Banks
may reasonably request. The Borrower shall pay the reasonable costs and
expenses of the Administrative Agent in connection with any inspection of the
Borrower's and its Subsidiaries' books and records.
Section 7.6. Consolidation and Merger. The Borrower will not, and
will not permit any Subsidiary to, consolidate with or merge into any Person, or
permit any other Person to merge into it, except that:
(a) any Person may merge into the Borrower or any Subsidiary so long as:
(i) the Borrower or Subsidiary shall be the surviving entity;
provided, however, that the Borrower or Subsidiary is not required to be
the surviving entity if the Borrower's or Subsidiary's board of directors
becomes a majority of the board of directors of the surviving entity
immediately upon completion of such transaction and such surviving Person
shall agree to assume each and every obligation of the Borrower or
Subsidiary pursuant to this Agreement and any other Loan Document;
(ii) the Person merging with or into the Borrower or a Subsidiary of
a Borrower shall be in the same line or a related line of business as the
Borrower or a Subsidiary of the Borrower;
<PAGE>
(iii) the board of directors (or equivalent governing body) of such
Person shall have given its prior effective written consent or approval of
such merger; and
(iv) no Potential Default or Event of Default shall exist before or
after giving effect to such merger; and
(b) any Subsidiary may be merged or consolidated with or into: (i) the
Borrower, if the Borrower should be the continuing or surviving corporation, or
(ii) any other Subsidiary.
Section 7.7. Transactions with Affiliates. The Borrower will not,
and will not permit any Subsidiary to, enter into any transaction, including
without limitation, the purchase, sale, lease or exchange of any Property, or
the rendering of any service, with any Affiliate of the Borrower except in the
ordinary course of, and pursuant to the reasonable requirements of, the
Borrower's or such Subsidiary's business and upon fair and reasonable terms no
less favorable to the Borrower or such Subsidiary than would be obtained in a
comparable arm's-length transaction with a Person not an Affiliate of the
Borrower, provided that the Borrower may continue to engage in the following
practices: (i) allocation of overhead expenses among the Borrower and its
Subsidiaries, (ii) special product pricing among the Borrower and one or more
Subsidiaries and Mississippi Chemical Company, L.P., and (iii) the floor price
provision of the ammonia purchase agreements between the Borrower and Farmland
MissChem Limited.
Section 7.8. Dividends and Certain Other Restricted Payments. The
Borrower will not (a) declare or pay any dividends or make any distribution on
any class of its capital stock (other than dividends payable solely in its
capital stock) or (b) directly or indirectly purchase, redeem or otherwise
acquire or retire any of its capital stock (except out of the proceeds of, or in
exchange for, a substantially concurrent issue and sale of capital stock) or (c)
make any other distributions with respect to its capital stock (collectively,
"Restricted Payments"); unless no Potential Default or Event of Default shall
exist before and after giving effect thereto.
Section 7.9. Liens. The Borrower will not, and will not permit any
Subsidiary to, pledge, mortgage or otherwise encumber or subject to or permit to
exist upon or be subjected to any lien, charge or security interest of any kind
(including any conditional sale or other title retention agreement and any lease
in the nature thereof), on any of its Properties of any kind or character at any
time owned by the Borrower or any Subsidiary, other than:
(a) liens, pledges or deposits for worker's compensation, unemployment
insurance, old age benefits or social security obligations, taxes, assessments,
statutory obligations or other similar charges, good faith deposits made in
connection with tenders, contracts or leases to which the Borrower or any
Subsidiary is a party or other deposits required to be made in the ordinary
course of business, provided in each case the obligation secured is not overdue
or, if overdue, is being contested in good faith by appropriate proceedings and
adequate reserves have been provided therefor in accordance with generally
accepted accounting principles and that the obligation is not for borrowed
money, customer advances, trade payables, or obligations to agricultural
producers;
<PAGE>
(b) the pledge of assets for the purpose of securing an appeal or stay or
discharge in the course of any legal proceedings, provided that the aggregate
amount of liabilities of the Borrower or any Subsidiary so secured by a pledge
of property permitted under this subsection (b) including interest and penalties
thereon, if any, shall not be in excess of $10,000,000 at any one time
outstanding;
(c) liens, pledges, mortgages, security interests or other charges
existing on the date hereof and disclosed in the audited financial statements
referred to in Section 5.2 hereof;
(d) liens for property taxes and assessments or governmental charges or
levies which are not yet due and payable;
(e) liens incidental to the conduct of business or the ownership of
properties and assets (including warehousemen's and attorneys' liens and
statutory landlords' liens) or other liens of like general nature incurred in
the ordinary course of business and not in connection with the borrowing of
money, provided in each case, the obligation secured is not overdue or, if
overdue, is being contested in good faith by appropriate actions or proceedings
and adequate reserves have been provided therefor in accordance with generally
accepted accounting principles, consistently applied;
(f) minor survey exceptions or minor encumbrances, easements or
reservations, or rights of others for rights-of-way, utilities and other similar
purposes, or zoning or other restrictions as to the use of real properties,
which are necessary for the conduct of the activities of the Borrower and its
Subsidiaries or which customarily exist on properties of corporations engaged in
similar activities and similarly situated and which do not in any event
materially impair their use in the operation of the business of the Borrower and
its Subsidiaries;
(g) the interests of lessors under Capitalized Leases;
(h) liens (including the owner's interest in Property involved in Sale
and Leaseback transactions permitted by Section 7.17 of this Agreement to which
the Borrower or any Subsidiary is a party) not otherwise permitted under this
Section 7.9 on Property of the Borrower and its Subsidiaries securing Debt and
the indebtedness, obligations and liabilities of the Borrower and its
Subsidiaries under Sale and Leaseback transactions to which they are a party
that is in an aggregate outstanding principal amount not exceeding 15% of the
amount (determined in accordance with generally accepted accounting principles
consistently applied as shown on the most recent financial statements delivered
pursuant to Section 7.4 hereof) of the Borrower's Net Tangible Assets, provided
that the aggregate amount of all such indebtedness, obligations and liabilities
secured by liens and security interests on the Borrower's Subsidiaries' Property
shall not exceed $10,000,000 at any time;
<PAGE>
(i) liens upon tangible personal property acquired after the date hereof
(by purchase, construction or otherwise), or upon other Property acquired after
the date hereof as a capital expenditure, by the Borrower or any of its
Subsidiaries, each of which liens either (A) existed on such Property before the
time of its acquisition and was not created in anticipation thereof or (B) was
created solely for the purpose of securing indebtedness representing, or
incurred to finance, refinance or refund, the cost of such Property; provided
that (I) no such lien shall extend to or cover any Property of the Borrower or
any of its Subsidiaries other than the Property so acquired, (II) the principal
amount of indebtedness secured by any such lien shall not exceed the fair market
value of such Property at the time of acquisition, and (C) the aggregate
principal amount of all indebtedness secured by such liens shall not at any one
time exceed $10,000,000; and
(j) liens, mortgages and security interests securing the Borrower's and
its Subsidiaries' indebtedness, obligations and liabilities in connection with
industrial revenue bonds issued for their account which are permitted by Section
7.10(b), provided such liens, mortgages and security interests attach only to
the Property financed by such industrial revenue bonds.
Section 7.10. Borrowings and Guaranties. The Borrower will not, and
will not permit any Subsidiary to, issue, incur, assume, create or have
outstanding any Debt, nor be or remain liable, whether as endorser, surety,
guarantor or otherwise, for or in respect of any Debt of any other Person, other
than:
(a) indebtedness of the Borrower arising under or pursuant to this
Agreement or the other Loan Documents;
(b) indebtedness of the Borrower or the Borrower's Subsidiaries relating
to industrial revenue bonds issued for their account, and any indebtedness
issued or incurred to refinance such indebtedness, provided that the aggregate
principal amount of all such indebtedness shall not exceed $14,500,000 at any
time;
(c) the liability of the Borrower and its Subsidiaries arising out of the
endorsement for deposit or collection of commercial paper received in the
ordinary course of business;
(d) indebtedness of the Borrower and its Subsidiaries existing on the
date hereof and disclosed to the Banks in the financial statements referred to
in Section 5.2 hereof, except indebtedness outstanding under the Existing
Agreements, and any indebtedness issued or incurred to refinance any of the
foregoing permitted indebtedness, provided that the principal amount of such
refinancing indebtedness does not exceed the principal amount of the
indebtedness being refinanced;
(e) the liability of the Borrower with respect to the Farmland MissChem
Project Contingent Obligations disclosed on Exhibit J hereto;
(f) indebtedness of the Borrower evidenced by the Senior Notes;
<PAGE>
(g) indebtedness for borrowed money or Capitalized Lease Obligations of
the Borrower and its Subsidiaries not otherwise permitted by this Section 7.10;
provided that (i) the Borrower is in compliance with Section 7.20 hereof, and
(ii) the aggregate principal amount of all such indebtedness of the Borrower's
Subsidiaries permitted hereby shall not exceed $10,000,000 at any time;
(h) the indebtedness of any Subsidiary to the Borrower or any other
Subsidiary; and
(i) indebtedness of the Borrower to Deposit Guaranty National Bank in an
aggregate principal amount not to exceed $5,000,000 outstanding at any time.
Section 7.11. Investments, Loans, Advances and Acquisitions. The
Borrower will not, and will not permit any Subsidiary to, make or retain any
investment (whether through the purchase of stock, obligations or otherwise) in
or make any loan or advance to, any other Person, or acquire substantially as an
entirety the Property or business of any other Person, other than:
(a) investments in direct obligations of the United States of America or
of any agency or instrumentality thereof whose obligations constitute full faith
and credit obligations of the United States of America, provided that any such
obligations shall mature within one year of the date of issuance thereof;
(b) investments in commercial paper rated either P-1 by Moody's Investors
Services, Inc. or A-1 by Standard & Poor's Corporation maturing within 270 days
of the date of issuance thereof;
(c) investments in certificates of deposit issued by any United States
commercial bank or a branch located in the United States of a foreign commercial
bank in each case having capital and surplus of not less than $500,000,000 which
have a maturity of one year or less;
(d) investments in repurchase obligations with a term of not more than
thirty (30) days for underlying securities of the types described in subsection
(a) above entered into with any bank meeting the qualifications specified in
subsection (c) above, provided all such agreements require physical delivery of
the securities securing such repurchase agreement, except those delivered
through the Federal Reserve Book Entry System;
(e) investments in money market funds that invest solely, and which are
restricted by their respective charters to invest solely, in investments of the
type described in the immediately preceding subsections (a), (b), (c) and (d)
above;
(f) marketable general obligations of a state, a territory or a
possession of the United States, or any political subdivision of any of the
foregoing, or the District of Columbia, unconditionally secured by the full
faith and credit of such state, territory, possession, political subdivision or
district provided that such state, territory, possession, political subdivision
or district has general taxing authority and the power to levy such taxes as may
be required for the payment of principal and interest thereof; provided that
such obligations are rated in either of the two top rating categories
established by the national rating agencies for such obligations;
<PAGE>
(g) marketable corporate debt securities having an A credit rating or
better by Standard & Poor's Corporation or Moody's Investors Service;
(h) investments shown on the financial statements referred to in Section
5.2;
(i) investments by the Borrower or any Subsidiary in, and loans and
advances from the Borrower or any Subsidiary to, any Subsidiary;
(j) other investments by the Borrower in and acquisitions (other than by
merger or consolidation) by the Borrower of the Property or business of any
Person or a majority of the capital stock or other equity interests of any other
Person, provided that:
(i) such Person shall be in the same or a related line of business
as the Borrower or one or more Subsidiaries;
(ii) the board of directors (or equivalent governing body) of such
Person shall have given its prior effective written consent or approval of
such acquisition; and
(iii) no Potential Default or Event of Default shall exist before
or after giving effect to such acquisition;
(k) investments in or loans to Farmland MissChem Ltd. in connection with
the Farmland MissChem Project in an aggregate amount not exceeding $100,000,000
at any one time outstanding;
(l) investments, loans and advances by the Borrower not otherwise
permitted under this Section 7.11 in an aggregate amount not exceeding 10% of
the Tangible Net Worth of the Borrower at any one time outstanding; and
(m) loans and advances to employees in the ordinary course of business,
provided the aggregate principal amount of all such loans and advances made by
the Borrower's Subsidiaries shall not exceed $500,000 at any time.
Section 7.12. Sale of Property. The Borrower will not and will not
permit any Subsidiary to, sell, lease, assign, transfer or otherwise dispose of
(whether in one transaction or in a series of related transactions) all or a
material part of its Property to any other Person during each fiscal year of the
Borrower; provided, however, that the Borrower and its Subsidiaries may make:
(a) sales of its Inventory in the ordinary course of business,
<PAGE>
(b) sales or leases of its machinery and equipment that is obsolete,
unusable or not needed for the Borrower's or such Subsidiary's operations in the
ordinary course of its business,
(c) Sale and Leaseback transactions permitted by Section 7.17 hereof; and
(d) during each fiscal year, sales of Property having a fair market value
up to 10% of the Total Assets of the Borrower; provided, however, sales of
Property having a fair market value greater than 10% and up to 15% of the Total
Assets of the Borrower shall be permitted, so long as the amount of the net
proceeds of such sale in excess of 10% of the Total Assets of the Borrower are
applied to the payment of Debt or reinvested in a line of business of the
Borrower or one or more of its Subsidiaries.
For purposes of this Section, "material part" shall mean Property having
a fair market value in excess of an amount equal to 5% of the Total Assets of
the Borrower.
Section 7.13. Notice of Suit or Adverse Change in Business or Default.
The Borrower shall, as soon as possible, and in any event within five (5) days
after the Borrower learns of the following, give written notice to the Banks of
(a) any material proceeding(s) being instituted or threatened to be instituted
by or against the Borrower or any Subsidiary in any federal, state, local or
foreign court or before any commission or other regulatory body (federal, state,
local or foreign), (b) any material adverse change in the business, Property or
condition, financial or otherwise of the Borrower and (c) the occurrence of any
Potential Default or Event of Default.
Section 7.14. ERISA. The Borrower will, and will cause each Subsidiary
to, promptly pay and discharge all obligations and liabilities arising under
ERISA of a character which if unpaid or unperformed is likely to result in the
imposition of a lien against any of its Property and will promptly notify the
Administrative Agent of (a) the occurrence of any reportable event (as defined
in ERISA) which might result in the termination by the PBGC of any Plan, (b)
receipt of any notice from PBGC of its intention to seek termination of any such
Plan or appointment of a trustee therefor, and (c) its intention to terminate or
withdraw from any Plan. The Borrower will not, and will not permit any
Subsidiary to, terminate any such Plan or withdraw therefrom unless it shall be
in compliance with all of the terms and conditions of this Agreement after
giving effect to any liability to PBGC resulting from such termination or
withdrawal.
Section 7.15. Use of Proceeds. The Borrower shall use the proceeds
of the initial Revolving Credit Loans to pay all or part of the indebtedness,
obligations and liabilities of the Borrower and the other obligors under the
Credit Agreement dated as of December 23, 1996 by and among the Borrower,
Mississippi Phosphates Corporation, Mississippi Potash, Inc., Harris Trust and
Savings Bank, as Administrative Agent and the banks named therein, and that
certain agreement dated as of December 23, 1996, by and among Triad Nitrogen,
Inc. (formerly known as First Mississippi Corporation), Harris Trust and Savings
Bank, as administrative Agent, and the lenders named therein (collectively, the
"Existing Agreements"), and of all other Loans made hereunder and of all L/C's
issued hereby for general corporate purposes, including, without limitation,
financing acquisitions, capital expenditures, refinancing existing debt and
providing for ongoing working capital needs.
<PAGE>
Section 7.16. Compliance with Laws, etc. The Borrower will, and will
cause each of its Subsidiaries to, comply in all material respects with all
applicable laws, rules, regulations and orders, including Environmental Laws,
such compliance to include (without limitation) the maintenance and preservation
of its corporate or partnership existence and qualification as a foreign
corporation or partnership.
Section 7.17. Sale and Leaseback Transactions. Neither the Borrower
nor any of its Subsidiaries shall, directly or indirectly, enter into any
arrangement with any Person providing for the Borrower or a Subsidiary to lease
or rent Property that the Borrower or a Subsidiary has or will sell or otherwise
transfer to such Person (a "Sale and Leaseback"), unless the aggregate net cash
proceeds of any such sales in any 12-month period are less than 10% of the fair
market value of the Borrower's Total Assets; provided, that (a) the Borrower may
enter into Sale and Leaseback transactions in which the aggregate net cash
proceeds of such sales, together with the net cash proceeds of all sales
permitted by Section 7.12(d) of this Agreement, in any 12-month period exceeds
10% but not 15% of the fair market value of the Borrower's Total Assets so long
as the amount of the net proceeds of such sales in excess of 10% of the
Borrower's Total Assets are reinvested in a line of business of the Borrower or
any of its Subsidiaries, and (b) no Subsidiary may be a party to any Sale and
Leaseback transaction entered into after the date of this Agreement if the net
cash proceeds of such sales, together with the net cash proceeds of all sales of
such Subsidiaries' Property permitted by Section 7.12(d) of this Agreement,
would exceed $10,000,000.
Section 7.18. Fiscal Quarters. The Borrower shall not change its
fiscal quarters.
Section 7.19. New Subsidiaries. Neither the Borrower nor any
Subsidiary shall, directly or indirectly, organize or acquire any Subsidiary not
listed on Exhibit G attached hereto, except as permitted by Section 7.11(j)
hereof.
Section 7.20. Maximum Leverage Ratio. The Borrower will, as of the
last day of each fiscal quarter of the Borrower maintain a Leverage Ratio less
than or equal to 4.00 to 1.0.
Section 7.21. Minimum Interest Coverage Ratio. The Borrower will, as
of the last day of each fiscal quarter of the Borrower, maintain an Interest
Coverage Ratio of not less than 2.50 to 1.0.
Section 7.22. Minimum Tangible Net Worth. The Borrower will, as of
the last day of each fiscal quarter of the Borrower specified below, maintain
its Tangible Net Worth in an amount not less than:
(a) for the fiscal quarter ending September 30, 1997, $188,112,500;
and
<PAGE>
(b) for each fiscal quarter ending thereafter, the sum of (i) the
minimum amount of Tangible Net Worth the Borrower was required to maintain
during the immediately preceding fiscal quarter, plus (ii) 50% of the
Borrower's Net Income (but not less than zero) for such fiscal quarter then
ended.
Section 7.23. Operating Leases. The Borrower will not, and will not
permit any Subsidiary to, enter into any rental agreement or lease as lessee of
real or personal property, which is not a Capitalized Lease if the aggregate of
Rentals payable in any fiscal year under all such rental agreements or leases
would exceed the greater of 4% of the Borrower's Total Assets at the beginning
of such fiscal year or $25,000,000.
Section 7.24. No Restrictions on Subsidiaries. The Borrower shall not and
shall not permit any of its Subsidiaries directly or indirectly to create or
otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any Subsidiary (or the
Borrower, in the case of subsection (e) of this Section) to: (a) pay dividends
or make any other distribution on any of such Subsidiary's capital stock or
other equity interests owned by the Borrower or any Subsidiary of the Borrower;
(b) pay any indebtedness owed to the Borrower or any other Subsidiary; (c) make
loans or advances to the Borrower or any other Subsidiary; (d) transfer any of
its Property or assets to the Borrower or any other Subsidiary; or (e) merge or
consolidate with or into the Borrower or any other Subsidiary of the Borrower;
provided that (i) the foregoing shall not apply to restrictions and conditions
imposed by law or by this Agreement, (ii) the foregoing shall not apply to
restrictions and conditions existing on the date hereof identified on Schedule
7.24 (but shall apply to any extension or renewal of, or any amendment or
modification expanding the scope of, any such restriction or condition), (iii)
the foregoing shall not apply to customary restrictions and conditions contained
in agreements relating to the sale of a Subsidiary pending such sale, provided
such restrictions and conditions apply only to the Subsidiary that is to be sold
and such sale is permitted hereunder, and (iv) clause (d) of the foregoing shall
not apply to customary provisions in leases and other contracts restricting the
assignment thereof.
Section 8. Events of Default and Remedies.
Section 8.1. Definitions. Any one or more of the following shall
constitute an Event of Default:
(a) Default in the payment when due of (i) any principal of any Note or
any Reimbursement Obligation (ii) any interest on any Note or any Reimbursement
Obligation which continues unremedied for 5 Business Days, whether at the stated
maturity thereof or at any other time provided in this Agreement, or default in
the payment when due of any fee or other amount payable by the Borrower pursuant
to this Agreement, which continues unremedied for 5 Business Days;
(b) Default in the observance or performance of any covenant set forth in
Sections 7.3, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.10, 7.11, 7.12, 7.13, 7.15, 7.16,
7.18, 7.19, 7.20, 7.21, 7.22, 7.23 or 7.24 hereof;
<PAGE>
(c) Default in the observance or performance of any other covenant,
condition, agreement or provision hereof or any of the other Loan Documents and
such default shall continue for 30 days after written notice thereof to the
Borrower by any Bank;
(d) Default shall occur under any evidence of Debt in a principal amount
exceeding $10,000,000 issued or assumed or guaranteed by the Borrower or any
Subsidiary, or under any mortgage, agreement or other similar instrument under
which the same may be issued or secured and such default shall continue for a
period of time sufficient to permit the acceleration of maturity of any
indebtedness evidenced thereby or outstanding or secured thereunder;
(e) Any representation or warranty made by the Borrower herein or in any
Loan Document or in any statement or certificate furnished by it pursuant hereto
or thereto, proves untrue in any material respect as of the date made or deemed
made pursuant to the terms hereof;
(f) Any judgment or judgments, writ or writs, or warrant or warrants of
attachment, or any similar process or processes in an aggregate amount in excess
of $10,000,000 shall be entered or filed against the Borrower or any Subsidiary
or against any of their respective Property or assets and remain unstayed and
undischarged for a period of 30 days from the date of its entry;
(g) Any reportable event (as defined in ERISA) which constitutes grounds
for the termination of any Plan or for the appointment by the appropriate United
States District Court of a trustee to administer or liquidate any such Plan,
shall have occurred and be continuing thirty (30) days after written notice to
such effect shall have been given to the Borrower by any Bank; or any such Plan
shall be terminated; or a trustee shall be appointed by the appropriate United
States District Court to administer any such Plan; or the Pension Benefit
Guaranty Corporation shall institute proceedings to administer or terminate any
such Plan;
(h) The Borrower or any Subsidiary shall (i) have entered involuntarily
against it an order for relief under the Bankruptcy Code of 1978, as amended,
(ii) admit in writing its inability to pay, or not pay, its debts generally as
they become due, (iii) make an assignment for the benefit of creditors, (iv)
apply for, seek, consent to, or acquiesce in, the appointment of a receiver,
custodian, trustee, conservator, liquidator or similar official for it or any
substantial part of its property, (v) file a petition seeking relief or
institute any proceeding seeking to have entered against it an order for relief
under the Bankruptcy Code of 1978, as amended, to adjudicate it insolvent, or
seeking dissolution, winding up, liquidation, reorganization, arrangement,
marshaling of assets, adjustment or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors or
fail to file an answer or other pleading denying the material allegations of any
such proceeding filed against it, or (vi) fail to contest in good faith any
appointment or proceeding described in Section 8.1(i) hereof;
<PAGE>
(i) A custodian, receiver, trustee, conservator, liquidator or similar
official shall be appointed for the Borrower or any Subsidiary of the Borrower
or any substantial part of its respective Property, or a proceeding described in
Section 8.1(i)(v) shall be instituted against the Borrower or any Subsidiary of
the Borrower and such appointment continues undischarged or any such proceeding
continues undismissed or unstayed for a period of 90 days; or
(j) a Change of Control shall occur.
Section 8.2. Remedies for Non-Bankruptcy Defaults. When any Event of
Default, other than an Event of Default described in subsections (h) and (i) of
Section 8.1 hereof, has occurred and is continuing, the Administrative Agent, if
directed by the Required Banks, shall give written notice to the Borrower and
take any or all of the following actions: (a) terminate the remaining Revolving
Credit Commitments hereunder on the date (which may be the date thereof) stated
in such notice, (b) declare the principal of and the accrued interest on the
Notes and Reimbursement Obligations to be forthwith due and payable and
thereupon the Notes and Reimbursement Obligations including both principal and
interest, shall be and become immediately due and payable without further
demand, presentment, protest or notice of any kind, and (c) take any action or
exercise any remedy under any of the Loan Documents or exercise any other
action, right, power or remedy permitted by law. Any Bank may exercise the
right of set off with regard to any deposit accounts or other accounts or
investments maintained by the Borrower with any of the Banks.
Section 8.3. Remedies for Bankruptcy Defaults. When any Event of
Default described in subsections (h) or (i) of Section 8.1 hereof has occurred
and is continuing, then the Notes and Reimbursement Obligations shall
immediately become due and payable without presentment, demand, protest or
notice of any kind, and the obligation of the Banks to extend further credit
pursuant to any of the terms hereof shall immediately terminate.
Section 8.4. L/Cs. Promptly following the acceleration of the
maturity of the Notes pursuant to Section 8.2 or 8.3 hereof, the Borrower shall
immediately pay to the Administrative Agent for the benefit of the Banks the
full aggregate amount of all outstanding L/Cs issued for the Borrower's account
hereunder. The Administrative Agent shall hold all such funds and proceeds
thereof as additional collateral security for the obligations of the Borrower to
the Banks under the Loan Documents. The amount paid under any of the L/Cs for
which the Borrower has not reimbursed the Banks shall bear interest from the
date of such payment at the default rate of interest specified in Section
1.3(d)(i) hereof.
Section 9. Change in Circumstances Regarding Fixed Rate Loans.
Section 9.1. Change of Law. Notwithstanding any other provisions of
this Agreement or any Note to the contrary, if at any time after the date hereof
with respect to Fixed Rate Loans, any Bank shall determine in good faith that
any change in applicable law or regulation or in the interpretation thereof
makes it unlawful for such Bank to make or continue to maintain any Fixed Rate
Loan or to give
<PAGE>
effect to its obligations as contemplated hereby, such Bank shall promptly give
notice thereof to the Borrower describing in reasonable detail the basis for
such Bank's determination and to the Administrative Agent to such effect, and
such Bank's obligation to make, relend, continue or convert any such affected
Fixed Rate Loans under this Agreement shall terminate until it is no longer
unlawful for such Bank to make or maintain such affected Loan. The Borrower
shall prepay the outstanding principal amount of any such affected Fixed Rate
Loan made to it, together with all interest accrued thereon and all other
amounts due and payable to the Banks under Section 9.4 of this Agreement, on the
earlier of the last day of the Interest Period applicable thereto and the first
day on which it is illegal for such Bank to have such Loans outstanding;
provided, however, the Borrower may borrow a principal amount equal to the
principal amount of such affected Loan by means of another type of Loan
available hereunder, subject to all of the terms and conditions of this
Agreement.
Section 9.2. Unavailability of Deposits or Inability to Ascertain the
Adjusted Eurodollar Rate. Notwithstanding any other provision of this Agreement
or any Note to the contrary, if prior to the commencement of any Interest Period
any Bank shall determine (i) that deposits in the amount of any Eurodollar Loan
scheduled to be outstanding are not available to it in the relevant market by
reason of circumstances affecting the interbank Eurodollar market generally or
(ii) by reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Adjusted Eurodollar Rate,
then such Bank shall promptly give telephonic or telex notice thereof to the
Borrower, the Administrative Agent and the other Banks (such notice to be
confirmed in writing), and the obligation of the Banks to make, continue or
convert any such Fixed Rate Loan in such amount and for such Interest Period
shall terminate until deposits in such amount and for the Interest Period
selected by the Borrower shall again be readily available in the relevant market
and adequate and reasonable means exist for ascertaining the Adjusted Eurodollar
Rate. Upon the giving of such notice, the Borrower may elect to either (i) pay
or prepay, as the case may be, such affected Loan or (ii) reborrow such affected
Loan as another type of Loan available hereunder, subject to all terms and
conditions of this Agreement.
Section 9.3. Taxes and Increased Costs. With respect to the Fixed
Rate Loans, if any Bank shall determine in good faith that any change in any
applicable law, treaty, regulation or guideline (including, without limitation,
Regulation D of the Board of Governors of the Federal Reserve System) or any new
law, treaty, regulation or guideline, or any interpretation of any of the
foregoing by any governmental authority charged with the administration thereof
or any central bank or other fiscal, monetary or other authority having
jurisdiction over such Bank or its lending branch or the Fixed Rate Loans
contemplated by this Agreement (whether or not having the force of law) ("Change
in Law") shall:
(i) impose, modify or deem applicable any reserve, special deposit
or similar requirements against assets held by, or deposits in or for the
account of, or Loans by, or any other acquisition of funds or disbursements
by, such Bank (other than reserves included in the determination of the
Adjusted Eurodollar Rate);
<PAGE>
(ii) subject such Bank, any Fixed Rate Loan or any Note to any tax
(including, without limitation, any United States interest equalization tax
or similar tax however named applicable to the acquisition or holding of
debt obligations and any interest or penalties with respect thereto), duty,
charge, stamp tax, fee, deduction or withholding in respect of this
Agreement, any Fixed Rate Loan or any Note except such taxes as may be
measured by the overall net income of such Bank or its lending branch and
imposed by the jurisdiction, or any political subdivision or taxing
authority thereof, in which such Bank's principal executive office or its
lending branch is located;
(iii) change the basis of taxation of payments of principal and
interest due from the Borrower to such Bank hereunder or under any Note
(other than by a change in taxation of the overall net income of such
Bank); or
(iv) impose on such Bank any penalty with respect to the foregoing
or any other condition regarding this Agreement, any Fixed Rate Loan or any
Note;
and such Bank shall determine that the result of any of the foregoing is to
increase the cost (whether by incurring a cost or adding to a cost) to such Bank
of making or maintaining any Fixed Rate Loan hereunder or to reduce the amount
of principal or interest received by such Bank, then, if such Bank is generally
imposing payments for increased costs on its similarly situated customers, the
Borrower shall pay to such Bank from time to time as specified by such Bank such
additional amounts as such Bank shall reasonably determine are sufficient to
compensate and indemnify it for such increased cost or reduced amount. If any
Bank makes such a claim for compensation, it shall provide to the Borrower a
certificate setting forth such increased cost or reduced amount as a result of
any event mentioned herein specifying such Change in Law, and such certificate
shall be conclusive and binding on the Borrower as to the amount thereof except
in the case of manifest error. Upon the imposition of any such cost, the
Borrower may prepay any affected Loan, subject to the provisions of Sections 3.4
and 9.4 hereof.
Section 9.4. Funding Indemnity. (a) In the event any Bank shall incur any
loss, cost, expense or premium (including, without limitation, any loss, cost,
expense or premium incurred by reason of the liquidation or re-employment of
deposits or other funds acquired by such Bank to fund or maintain any Fixed Rate
Loan or the relending or reinvesting of such deposits or amounts paid or prepaid
to such Bank) as a result of:
(i) any payment or prepayment of a Fixed Rate Loan on a date other
than the last day of the then applicable Interest Period;
(ii) any failure by the Borrower to borrow, continue or convert any
Fixed Rate Loan on the date specified in the notice given pursuant to
Sections 1.7 or 2.4 hereof; or
(iii) the occurrence of any Event of Default;
<PAGE>
then, upon the demand of such Bank, the Borrower shall pay to such Bank such
amount as will reimburse such Bank for such actual loss, cost or expense (the
calculation of such loss or expense shall include a credit (not in excess of
such loss or expense) for the interest to be earned by such Bank as a result of
redepositing such amount in the relevant interbank market).
(b) If any Bank makes a claim for compensation under this Section 9.4, it
shall provide to the Borrower a certificate setting forth the amount of such
loss, cost or expense in reasonable detail and such certificate shall be
conclusive and binding on the Borrower as to the amount thereof except in the
case of manifest error.
Section 9.5. Lending Branch. Each Bank may, at its option, elect to
make, fund or maintain its Eurodollar Loans hereunder at the branch or office
specified opposite its signature on the signature page hereof or such other of
its branches or offices as such Bank may from time to time elect, subject to the
provisions of Section 1.7(b) hereof.
Section 9.6. Discretion of Bank as to Manner of Funding.
Notwithstanding any provision of this Agreement to the contrary, each Bank shall
be entitled to fund and maintain its funding of all or any part of its Loans in
any manner it sees fit, it being understood however, that for the purposes of
this Agreement all determinations hereunder shall be made as if the Banks had
actually funded and maintained each Fixed Rate Loan during each Interest Period
for such Loan through the purchase of deposits in the relevant interbank market
having a maturity corresponding to such Interest Period and bearing an interest
rate equal to the interest rate applicable thereto (exclusive of the Applicable
Margin) for such Interest Period.
Section 9.7. Mitigation of Circumstances; Replacement of Affected
Banks.
(a) Banks' Duty to Mitigate. Each Bank agrees that, as promptly as
practicable after it becomes aware of the occurrence of an event or the
existence of a condition that would cause it to be affected under Section 1.9,
9.1, 9.2 or 9.3 hereof, such Bank will, after written notice to the Borrower, to
the extent not inconsistent with such Bank's internal policies and customary
business practices, use its best efforts to make, fund or maintain the affected
Fixed Rate Loan or issue or participate in the affected L/C, as the case may be,
through another lending office of such Bank if as a result thereof the
unlawfulness which would otherwise require payment of such Fixed Rate Loan
pursuant to Section 9.1 or 9.2 hereof would cease to exist or the circumstances
which would otherwise terminate such Bank's obligation to make such Fixed Rate
Loan under Section 9.1 or 9.2 hereof would cease to exist or the increased costs
which would otherwise be required to be paid in respect of such Fixed Rate Loan
or L/C pursuant to Section 1.9 or 9.3 hereof would be materially reduced, and
if, as determined by such Bank, in its sole discretion, the making, funding or
maintaining of such Fixed Rate Loan, or issuance or participation in such L/C,
as the case may be, through such other lending office would not, in the judgment
of such Bank, be otherwise disadvantageous to such Bank. The Borrower hereby
agrees to pay all reasonable expenses incurred by each such Bank in utilizing
another lending office pursuant to this Section 9.7(a).
<PAGE>
(b) Replacement of Affected Banks. At any time any Bank is affected by any
condition or circumstance set forth in Section 1.9, 9.1, 9.2 or 9.3, and so long
as no Event of Default, or Potential Default exists, (i) the Borrower may
replace such affected Bank as a party to this Agreement with one or more other
banks or financial institutions reasonably acceptable to the Administrative
Agent, (and upon notice from the Borrower such affected Bank shall assign,
pursuant to Section 11.17, without recourse or warranty, its Commitment, its
Loans, its Notes and all of its other rights and obligations hereunder to such
replacement banks or other financial institutions for a purchase price equal to
the sum of the principal amount of the Loans so assigned, all accrued and unpaid
interest thereon, its ratable share of all accrued and unpaid facility fees and
its ratable share of the remaining unpaid Reimbursement Obligations owed to the
affected Bank and all other amounts owed to such Bank under the Loan Documents)
and/or (ii) the Borrower may (and, if the Borrower replaces any affected Bank in
part as provided in clause (i) above, concurrently with such replacement the
Borrower shall) cause such affected Bank to cease to be a party hereto by
terminating the Commitment of such Bank, paying the principal amount of such
affected Bank's Loans, all accrued and unpaid interest thereon, all accrued and
unpaid facility fees owed to such affected Bank and the remaining unpaid
Reimbursement Obligations owed to such affected Bank and any other amounts due
to such affected Bank under the Loan Documents, in each case to the extent not
assigned and purchased pursuant to clause (i) above, and such affected Bank
shall thereupon cease to be a party hereto.
Section 10. The Agents.
Section 10.1. Appointment and Powers. (a) Harris is hereby appointed
by the Banks as Administrative Agent under the Loan Documents and each of the
Banks hereby irrevocably authorizes the Administrative Agent to act as the
Administrative Agent of such Bank. The Administrative Agent agrees to act as
such upon the express conditions contained in the Loan Documents.
(b) Bank of Montreal is hereby appointed by the Administrative Agent as
Syndication Agent under the Loan Documents and the Administrative Agent hereby
irrevocably authorizes the Syndication Agent to act as the Syndication Agent for
the Banks. The Syndication Agent agrees to act as such upon the express
conditions contained in the Loan Documents.
Section 10.2. Powers. The Agents shall have and may exercise such
powers hereunder as are specifically delegated to the Agents by the terms of the
Loan Documents, together with such powers as are incidental thereto. The Agents
shall have no implied duties to the Banks nor any obligation to the Banks to
take any action under the Loan Documents except any action specifically provided
by the Loan Documents to be taken by the Agents.
Section 10.3. General Immunity. Neither any Agent nor any of such
Agent's directors, officers, agents or employees shall be liable to the Banks or
any Bank for any action taken or omitted to be taken by it or them under the
Loan Documents or in connection therewith except for its or their own gross
negligence or willful misconduct.
<PAGE>
Section 10.4. No Responsibility for Loans, Recitals, etc. No Agent
shall (i) be responsible to the Banks for any recitals, reports, statements,
warranties or representations contained in the Loan Documents or furnished
pursuant thereto, (ii) be responsible for any Loans by any other Bank hereunder,
or (iii) be bound to ascertain or inquire as to the performance or observance of
any of the terms of the Loan Documents. In addition, no Agent nor such Agent's
counsel shall be responsible to the Banks for the enforceability or validity of
any of the Loan Documents.
Section 10.5. Right to Indemnity. The Banks hereby indemnify each
Agent for any actions taken in accordance with this Section 10, and each Agent
shall be fully justified in failing or refusing to take any action hereunder
unless it shall first be indemnified to its satisfaction by the Banks pro rata
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action, other than any liability which
may arise out of such Agent's gross negligence or willful misconduct.
Section 10.6. Action Upon Instructions of Banks. Each Agent agrees,
upon the written request of the Required Banks, to take any action of the type
specified in the Loan Documents as being within such Agent's rights, duties,
powers or discretion. Each Agent shall in all cases be fully protected in
acting, or in refraining from acting, hereunder in accordance with written
instructions signed by the Required Banks (or all of the Banks, as applicable),
and such instructions and any action taken or failure to act pursuant thereto
shall be binding on all of the Banks and on all holders of the Notes. In the
absence of a request by the Required Banks, each Agent shall have authority, in
its sole discretion, to take or not to take any action, unless the Loan
Documents specifically require the consent of the Required Banks or all of the
Banks.
Section 10.7. Employment of Agents and Counsel. Each Agent may
execute any of its duties as Agent hereunder by or through employees, agents,
and attorneys-in-fact and shall not be answerable to the Banks, except as to
money or securities received by it or its authorized agents, for the default or
misconduct of any such agents or attorneys-in-fact selected by it in good faith
and with reasonable care. Each Agent shall be entitled to advice and opinion of
legal counsel concerning all matters pertaining to the duties of the agencies
hereby created.
Section 10.8. Reliance on Documents; Counsel. Each Agent shall be
entitled to rely upon any note, notice, consent, certificate, affidavit, letter,
telegram, statement, paper or document believed by it to be genuine and correct
and to have been signed or sent by the proper person or persons, and, in respect
to legal matters, upon the opinion of legal counsel selected by such Agent.
Section 10.9. May Treat Payee as Owner. Each Agent may deem and
treat the payee of any Note as the owner thereof for all purposes hereof unless
and until a written notice of the assignment or transfer thereof shall have been
filed with such agent. Any request, authority or consent of any person, firm or
corporation who at the time of making such request or giving such authority or
consent is the holder of any such Note shall be conclusive and binding on any
subsequent holder, transferee or assignee of such Note or of any Note issued in
exchange therefor.
<PAGE>
Section 10.10. Agents' Reimbursement. Each Bank agrees to reimburse
each Agent pro rata in accordance with its Commitment Percentage for any
reasonable out-of-pocket expenses (including fees and charges for inspections)
not reimbursed by the Borrower (a) for which such Agent is entitled to
reimbursement by the Borrower under the Loan Documents and (b) for any other
reasonable expenses incurred by such Agent on behalf of the Banks, in connection
with the preparation, execution, delivery, administration and enforcement of the
Loan Documents.
Section 10.11. Rights as a Bank. With respect to its commitment,
Loans made by it, L/Cs issued by it, and the Notes issued to it, each Agent
shall have the same rights and powers hereunder as any Bank and may exercise the
same as though it were not such Agent, and the term "Bank" or "Banks" shall,
unless the context otherwise indicates, include each Agent in its individual
capacity to the extent, if any, of its Revolving Credit Commitment. Each Agent
may accept deposits from, lend money to, and generally engage in any kind of
banking or trust business with the Borrower as if it were not such Agent.
Section 10.12. Bank Credit Decision. Each Bank acknowledges that it
has, independently and without reliance upon any Agent or any other Bank and
based on the financial statements referred to in Section 5.2 and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into the Loan Documents. Each Bank also
acknowledges that it will, independently and without reliance upon any Agent or
any other Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Loan Documents.
Section 10.13. Resignation of Agent. Subject to the appointment of a
successor Agent, each Agent may resign as Agent for the Banks under this
Agreement and the other Loan Documents at any time by thirty days' notice in
writing to the Banks. Such resignation shall take effect upon appointment of
such successor. The Required Banks shall have the right to appoint a successor
Agent, subject to the prior consent of the Borrower (which consent shall not be
unreasonably withheld or delayed), who shall be entitled to all of the rights
of, and vested with the same powers as, the original Agent under the Loan
Documents. In the event a successor Agent shall not have been appointed within
the sixty day period following the giving of notice by any Agent, such Agent may
appoint its own successor. Resignation by any Agent shall not affect or impair
the rights of such Agent under Sections 10.5 and 10.10 hereof with respect to
all matters preceding such resignation. Any successor Agent must be either a
Bank or a national banking association or a bank chartered in any State of the
United States, in each case having capital and surplus of not less than
$500,000,000.
Section 10.14. Duration of Agency. The agency established by Section
10.1 hereof shall continue, and Sections 10.1 through and including this Section
10.14 shall remain in full force and effect, until the Notes and all other
amounts due hereunder and thereunder shall have been paid in full and the Banks'
commitments to extend credit to or for the benefit of the Borrower shall have
terminated or expired.
<PAGE>
Section 10.15. Syndication Agent and Co-Agent. Nothing in this
Agreement shall impose any obligation on Bank of Montreal in its capacity as
Syndication Agent or on Credit Agricole Indosuez as Co-Agent.
Section 11. Miscellaneous.
Section 11.1. Amendments and Waivers. Any term, covenant, agreement
or condition of this Agreement and the other Loan Documents may be amended only
by a written amendment executed by the Borrower, the Required Banks and, if the
rights or duties of the Administrative Agent are materially affected thereby,
the Administrative Agent, or compliance therewith only may be waived (either
generally or in a particular instance and either retroactively or
prospectively), if the Borrower shall have obtained the consent in writing of
the Required Banks and, if the rights or duties of the Administrative Agent are
materially affected thereby, the Administrative Agent, provided, however, that
without the consent in writing of the holders of all outstanding Notes and
unpaid Reimbursement Obligations, or all Banks if no Notes or Obligations are
outstanding, no such amendment or waiver shall (a) change the amount or postpone
the date of payment of any scheduled payment or required prepayment of
principal of the Notes or Reimbursement Obligations or extend the term of any
L/C at a time that the Borrower would not be able to obtain a Loan or L/C
hereunder or reduce the rate or extend the time of payment of interest on the
Notes or Reimbursement Obligations, or reduce the amount of principal thereof,
or modify any of the provisions of the Notes with respect to the payment or
prepayment thereof, (b) give to any Note or Reimbursement Obligations any
preference over any other Notes or Reimbursement Obligations, (c) amend the
definition of Required Banks, (d) alter, modify or amend the provisions of this
Section 11.1, (e) change the amount or term of any of the Banks' Revolving
Credit Commitments or the fees required under Section 3.2 or the L/C
Participation Fee required under Section 1.5(a) hereof, or (f) alter, modify or
amend any Bank's right hereunder to consent to any action, make any request or
give any notice. Any such amendment or waiver shall apply equally to all Banks
and the holders of the Notes and Reimbursement Obligations and shall be binding
upon them, upon each future holder of any Note and Reimbursement Obligation and
upon the Borrower, whether or not such Note shall have been marked to indicate
such amendment or waiver. No such amendment or waiver shall extend to or affect
any obligation not expressly amended or waived.
Section 11.2. Waiver of Rights. No delay or failure on the part of
the Administrative Agent or any Bank or on the part of the holder or holders of
any Note or Reimbursement Obligation in the exercise of any power or right shall
operate as a waiver thereof, nor as an acquiescence in any Potential Default or
Event of Default, nor shall any single or partial exercise of any power or right
preclude any other or further exercise thereof, or the exercise of any other
power or right, and the rights and remedies hereunder of the Administrative
Agent, the Banks and of the holder or holders of any Notes are cumulative to,
and not exclusive of, any rights or remedies which any of them would otherwise
have.
<PAGE>
Section 11.3. Several Obligations. The commitments of each of the
Banks hereunder shall be the several obligations of each Bank and the failure on
the part of any one or more of the Banks to perform hereunder shall not affect
the obligation of the other Banks hereunder, provided that nothing herein
contained shall relieve any Bank from any liability for its failure to so
perform. In the event that any one or more of the Banks shall fail to perform
its commitment hereunder, all payments thereafter received by the Administrative
Agent on the principal of Loans and Reimbursement Obligations hereunder, shall
be distributed by the Administrative Agent to the Banks making such additional
Loans ratably as among them in accordance with the principal amount of
additional Loans made by them until such additional Loans shall have been fully
paid and satisfied. All payments on account of interest shall be applied as
among all the Banks ratably in accordance with the amount of interest owing to
each of the Banks as of the date of the receipt of such interest payment.
Section 11.4. Non-Business Day. If any payment of principal or
interest on any Loan shall fall due on a day which is not a Business Day,
interest at the rate such Loan bears for the period prior to maturity shall
continue to accrue on such principal from the stated due date thereof to and
including the next succeeding Business Day on which the same is payable.
Section 11.5. Documentary Taxes. The Borrower agrees to pay any
documentary or similar taxes with respect to the Loan Documents, including
interest and penalties, in the event any such taxes are assessed irrespective of
when such assessment is made and whether or not any credit is then in use or
available hereunder.
Section 11.6. Representations. All representations and warranties
made herein or in certificates given pursuant hereto shall survive the execution
and delivery of this Agreement and of the Notes, and shall continue in full
force and effect with respect to the date as of which they were made and as
reaffirmed on the date of each borrowing, request for L/C and as long as any
credit is in use or available hereunder.
Section 11.7. Notices. Unless otherwise expressly provided herein,
all communications provided for herein shall be in writing or by telecopy and
shall be deemed to have been given or made when served personally, when an
answer back is received in the case of notice by telecopy or 3 Business Days
after the date when deposited in the United States mail addressed if to the
Borrower to P.O Box 388, Yazoo City, Mississippi, 39194, Attention: Corporate
Secretary; if to the Administrative Agent or Harris at 111 West Monroe Street,
Chicago, Illinois 60690, Attention: Agribusiness Group; and if to any of the
Banks, at the address for each Bank set forth under its signature hereon; or at
such other address as shall be designated by any party hereto in a written
notice to each other party pursuant to this Section 11.7.
Section 11.8. Costs and Expenses; Indemnity. (a) The Borrower
agrees to pay on demand and upon receipt of supporting statements, all
reasonable costs and expenses of the Administrative Agent, in connection with
the negotiation, preparation, execution and delivery of this Agreement, the
Notes and the other instruments and documents to be delivered hereunder or in
connection with the transactions contemplated hereby, including the reasonable
fees and expenses of Messrs. Chapman and Cutler, special
<PAGE>
counsel to the Administrative Agent (such fees and expenses of such special
counsel shall not exceed the amount previously agreed to by the Borrower and the
Administrative Agent); all reasonable costs and expenses of the Administrative
Agent, the Banks and any other holder of any Note or any Reimbursement
Obligation (including reasonable attorneys' fees) incurred while any Potential
Default or Event of Default shall have occurred and be continuing, all
reasonable costs and expenses incurred by the Administrative Agent in connection
with any consents or waivers hereunder or amendments hereto, and all reasonable
costs and expenses (including reasonable attorneys' fees), if any, incurred by
the Administrative Agent, the Banks or any other holders of a Note or any
Reimbursement Obligation in connection with the enforcement of this Agreement or
the Notes and the other instruments and documents to be delivered hereunder. The
Borrower agrees to indemnify and save harmless the Banks and the Administrative
Agent from any and all liabilities, losses, reasonable costs and expenses
incurred by the Banks or the Administrative Agent in connection with any action,
suit or proceeding brought against the Administrative Agent or any Bank by any
Person which arises out of the transactions contemplated or financed hereby or
by the Notes, or out of any action or inaction by the Administrative Agent or
any Bank hereunder or thereunder, except for such thereof as is caused by the
gross negligence or willful misconduct of the party indemnified.
(b) Without limiting the generality of the foregoing, the Borrower
unconditionally agrees to forever indemnify, defend and hold harmless, the Agent
and each Bank, and covenant not to sue for any claim for contribution against,
the Agent or any Bank for any damages, reasonable costs, loss or reasonable
expense, including without limitation, response, remedial or removal costs,
arising out of any of the following: (i) any presence, release, threatened
release or disposal of any hazardous or toxic substance or petroleum by the
Borrower or any Subsidiary or otherwise occurring on or with respect to its
Property, (ii) the operation or violation of any Environmental Law, whether
federal, state, or local, and any regulations promulgated thereunder, by the
Borrower or any Subsidiary or otherwise occurring on or with respect to its
Property, (iii) any claim for personal injury or property damage in connection
with the Borrower or any Subsidiary or otherwise occurring on or with respect to
its Property, and (iv) the inaccuracy or breach of any environmental
representation, warranty or covenant by the Borrower made herein or in any loan
agreement, promissory note, mortgage, deed of trust, security agreement or any
other instrument or document evidencing or securing any indebtedness,
obligations or liabilities of the Borrower owing to the Agent or any Bank or
setting forth terms and conditions applicable thereto or otherwise relating
thereto, except for damages arising from the Agent's or such Bank's willful
misconduct or gross negligence. This indemnification shall survive the payment
and satisfaction of all indebtedness, obligations and liabilities of the
Borrower owing to the Agent and the Banks and the termination of this Agreement,
and shall remain in force beyond the payment or satisfaction in full of any
single claim under this indemnification. This indemnification shall be binding
upon the successors and assigns of the Borrower and shall inure to the benefit
of Agent and the Banks and their respective directors, officers, employees,
agents, and collateral trustees, and their successors and assigns.
<PAGE>
(c) The provisions of this Section 11.8 shall survive payment of the
Notes and Reimbursement Obligations and the termination of the Revolving Credit
Commitments hereunder.
Section 11.9. Counterparts. This Agreement may be executed in any
number of counterparts and all such counterparts taken together shall be deemed
to constitute one and the same instrument. One or more of the Banks may execute
a separate counterpart of this Agreement which has also been executed by the
Borrower, and this Agreement shall become effective as and when all of the Banks
have executed this Agreement or a counterpart thereof and lodged the same with
the Administrative Agent.
Section 11.10. Successors and Assigns; Governing Law; Entire
Agreement. This Agreement shall be binding upon the Borrower, the
Administrative Agent and the Banks and their respective successors and assigns,
and shall inure to the benefit of the Borrower, the Administrative Agent and
each of the Banks and the benefit of their respective successors and assigns,
including any subsequent holder of any Note or Reimbursement Obligation. This
Agreement and the rights and duties of the parties hereto shall be construed and
determined in accordance with the internal laws of the State of Illinois. This
Agreement constitutes the entire understanding of the parties with respect to
the subject matter hereof and any prior agreements, whether written or oral,
with respect thereto are superseded hereby. The Borrower may not assign any of
its rights or obligations hereunder without the written consent of the Banks.
Section 11.11. No Joint Venture. Nothing contained in this Agreement
shall be deemed to create a partnership or joint venture among the parties
hereto.
Section 11.12. Severability. In the event that any term or provision
hereof is determined to be unenforceable or illegal, it shall be deemed severed
herefrom to the extent of the illegality and/or unenforceability and all other
provisions hereof shall remain in full force and effect.
Section 11.13. Table of Contents and Headings. The table of contents
and section headings in this Agreement are for reference only and shall not
affect the construction of any provision hereof.
Section 11.14. Sharing of Payments. Each Bank agrees with each other
Bank that if such Bank shall receive and retain any payment, whether by set-off
or application of deposit balances or otherwise ("Set-Off"), on any Loan,
Reimbursement Obligation or other amount outstanding under this Agreement or the
other Loan Documents in excess of its ratable share of payments on all Loans,
Reimbursement Obligations and other amounts then outstanding to the Banks, then
such Bank shall purchase for cash at face value, but without recourse (except
for defects in title), ratably from each of the other Banks such amount of the
Loans held by each such other Bank (or interest therein) as shall be necessary
to cause such Bank to share such excess payment ratably with all the other
Banks; provided, however, that if any such purchase is made by any Bank, and if
such excess payment or part thereof is
<PAGE>
thereafter recovered from such purchasing Bank, the related purchases from the
other Banks shall be rescinded ratably and the purchase price restored as to the
portion of such excess payment so recovered, but without interest. Each Bank's
ratable share of any such Set-Off shall be determined by the proportion that the
aggregate principal amount of Loans and Reimbursement Obligations and other
amounts then due and payable to such Bank bears to the total aggregate principal
amount of Loans and Reimbursement Obligations and other amounts then due and
payable to all the Banks.
Section 11.15. Jurisdiction; Venue. The Borrower hereby submits to
the nonexclusive jurisdiction of the United States District Court for the
Northern District of Illinois and of any Illinois court sitting in Chicago for
purposes of all legal proceedings arising out of or relating to this Agreement
or the transactions contemplated hereby. The Borrower irrevocably waives, to
the fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such proceeding brought in such a court
and any claim that any such proceeding brought in such a court has been brought
in an inconvenient forum.
Section 11.16. Participants and Note Assignees. Each Bank shall have
the right at its own cost to grant participations (to be evidenced by one or
more agreements or certificates of participation) in the Loans made, and/or
Reimbursement Obligations, participations in L/Cs and Revolving Credit
Commitment held, by such Bank at any time and from time to time, and to assign
its rights under such Reimbursement Obligations, participations, Loans or the
Notes evidencing such Loans to one or more other Persons; provided that (i) no
such participation or assignment shall relieve any Bank of any of its
obligations under this Agreement, (ii) no such assignee or participant shall
have any rights under this Agreement except as provided in this Section 11.16,
and (iii) the Administrative Agent shall have no obligation or responsibility to
such participant or assignee, except that nothing herein is intended to affect
the rights of an assignee of a Note to enforce the Note assigned. Any party to
which such a participation or assignment has been granted shall have the
benefits of Section 1.9 and Section 9.3, but shall not be entitled to receive
any greater payment under either such Section than the Bank granting such
participation or assignment would have been entitled to receive in connection
with the rights transferred. Any agreement pursuant to which any Bank may grant
such a participating interest shall provide that such Bank shall retain the sole
right and responsibility to enforce the obligations of the Borrower hereunder,
including, without limitation, the right to approve any amendment, modification
or waiver of any provision of this Agreement; provided that such participation
agreement may provide that such Bank will not agree to any modification,
amendment or waiver of this Agreement that would (A) increase any Revolving
Credit Commitment of such Bank if such increase would also increase the
participant's obligations, (B) forgive any amount of or postpone the date for
payment of any principal of or interest on any Loan or Reimbursement Obligation
or of any fee payable hereunder in which such participant has an interest or (C)
reduce the stated rate at which interest or fees in which such participant has
an interest accrue hereunder.
Section 11.17. Assignment of Commitments by Banks. Each Bank shall
have the right at any time, with the written consent of the Borrower and the
Administrative Agent (which consent will not be
<PAGE>
unreasonably withheld) to assign all or any part of its Revolving Credit
Commitment to one or more other Persons; provided that (i) each such assignment
shall be of a constant, and not a varying, percentage of all such rights and
obligations, (ii) unless both parties to the assignment are Banks immediately
prior to giving effect to the assignment, the amount of the Revolving Credit
Commitment of the assigning Bank being assigned pursuant to each such assignment
(determined as of the date of such assignment) shall not be less than
$10,000,000 (or if less, the entire amount of such Bank's Revolving Credit
Commitment, or $1,000,000 if such assignment is from one Bank to another) and
shall be an integral multiple of $1,000,000, (iii) the parties to each such
assignment shall execute and deliver to the Administrative Agent, for its
acceptance and recording, an assignment and acceptance, together with any Notes
subject to such assignment, and (iv) neither the consent of the Borrower nor of
the Administrative Agent shall be required for any Bank to assign all or part of
its Revolving Credit Commitment to any affiliate of the assigning Bank or to any
Bank; provided further, however, that each such assigning Bank, unless assigning
all of its Revolving Credit Commitment hereunder, maintains a minimum Revolving
Credit Commitment hereunder in an amount not less than $10,000,000. Upon any
such assignment (except any assignment made pursuant to Sections 1.1(d) or
9.7(b) hereof), its notification to the Administrative Agent and the payment of
a $3,000 recordation fee to the Administrative Agent, the assignee shall become
a Bank hereunder, all Loans and the Revolving Credit Commitment it thereby holds
shall be governed by all the terms and conditions hereof, and the Bank granting
such assignment shall have its Revolving Credit Commitment, and its obligations
and rights in connection therewith, reduced by the amount of such assignment and
Section 1.1(b) hereof shall be automatically amended, without further action, to
reflect the addition of such assignee as a Bank and the reduction of the
Revolving Credit Commitment of the assignor as described in such assignment.
<PAGE>
Upon your acceptance hereof in the manner hereinafter set forth, this
Agreement shall be a contract between us for the purposes hereinabove set forth.
Dated as of November 25, 1997.
Mississippi Chemical Corporation
By /s/ Timothy A. Dawson
Its
<PAGE>
Accepted and Agreed to as of the day and year last above written.
Harris Trust And Savings Bank individually and as
Administrative Agent
By /s/ Brian J. Moeller
Its Senior Vice President
Address: 111 West Monroe Street
Chicago, Illinois 60690
Attention: Agribusiness Division
Eurodollar Lending Office:
Nassau Branch
111 West Monroe Street
Chicago, Illinois 60603
Credit Agricole Indosuez
By /s/ Dean Balice
Its Senior Vice President
Branch Manager
By /s/ David Bouhl, F.V.P.
Its Head of Corporate Banking
Chicago
Address: 55 East Monroe
Chicago, Illinois 60603-5702
Attention: Mr. Ted Tice
Eurodollar Lending Office:
_______________________
_______________________
<PAGE>
Banque Nationale de Paris, Houston Agency
By /s/ David P. Camp
Its Banking Officer
Address: 717 North Harwood Street
Suite 2630
Dallas, Texas 75201
Attention: David P. Camp
Eurodollar Lending Office:
333 Clay Street, Suite 3400
Houston, Texas 77002
The Fuji Bank, Limited
By /s/ Toshihiro Mitsui
Its Senior Vice President & Senior Manager
Address: Suite 2100
The Marquis One Tower
245 Peachtree Center Ave. NE
Atlanta, Georgia 30303
Attention: ____________________
Eurodollar Lending Office:
_______________________
_______________________
<PAGE>
Bank of America National Trust and Savings Association
By /s/ W. Thomas Barnett
Its Managing Director
Address: 231 South LaSalle Street
Chicago, Illinois 60697
Attention: W. Tom Barnett
Eurodollar Lending Office:
231 South LaSalle Street
Chicago, Illinois 60697
The Bank of Nova Scotia, Atlanta Agency
By /s/ F. C. H. Asby
Its Senior Manager
Loan Operations
Address: Suite 2700
600 Peachtree St., N.E.
Atlanta, Georgia 30308
Attention: _____________________
Eurodollar Lending Office:
Suite 2700
600 Peachtree St., N.E.
Atlanta, Georgia 30308
<PAGE>
SunTrust Bank, Atlanta
By /s/ Gregory L. Cannon
Its Vice President
By /s/ William McCaleb
Its Banking Officer
Address: 25 Park Place
25th Floor
Atlanta, Georgia 30303
Attention: Greg Cannon
Eurodollar Lending Office:
_______________________
_______________________
First Union National Bank
By /s/ David Hall
Its SVP/Credit
Address: 301 South College Street
Fifth Floor
Charlotte, North Carolina
28288-0745
Attention: Mr. David Hall
Eurodollar Lending Office:
_______________________
_______________________
<PAGE>
ABN AMRO Bank N.V.
By /s/ Scott D. Austensen
Its VP
By L. K. Kelley
Its GVP
Address: 1 Ravinia Drive
Suite 1200
Atlanta, Georgia 30346
Attention: Michael VanCranenburgh
Eurodollar Lending Office:
_______________________
_______________________
The Dai-Ichi Kangyo Bank, Ltd.
By /s/ T. Kurita
Its
Address: ____________________
1100 Louisiana Street
Suite 4940
Houston, Texas 77002
Attention: Warren Ross
Eurodollar Lending Office:
One World Trade Center
Suite 4911
New York, New York 10048
<PAGE>
Deposit Guaranty National Bank
By /s/ Stanley A. Herran
Its Senior Vice President
Address: 210 East Capital
Suite 1180
Jackson, Mississippi 39201
Attention: Stanley A. Herren
Eurodollar Lending Office:
_______________________
_______________________
<PAGE>
EXHIBIT A
MISSISSIPPI CHEMICAL CORPORATION
REVOLVING CREDIT NOTE
November 25, 1997
For Value Received, the undersigned, Mississippi Chemical Corporation, a
Mississippi corporation (the "Borrower"), hereby promises to pay to the order of
________________ (the "Bank") on the Termination Date (as defined in the Credit
Agreement hereinafter referred to), at the principal office of Harris Trust and
Savings Bank in Chicago, Illinois, the aggregate unpaid principal amount of all
Loans made by the Bank to the Borrower under the Credit Agreement hereinafter
mentioned and remaining unpaid on the Termination Date, together with interest
on the principal amount of each Loan from time to time outstanding hereunder at
the rates, and payable in the manner and on the dates specified in said Credit
Agreement.
The Bank shall record on its books or records or on a schedule to this Note
which is a part hereof the principal amount of each Loan made to the Borrower
under the Credit Agreement, all payments of principal and interest thereon and
the principal balances from time to time outstanding; provided that prior to the
transfer of this Note all such amounts shall be recorded on the schedule
attached to this Note. The record thereof, whether shown on such books or
records or on a schedule to this Note, shall be prima facie evidence as to all
such amounts; provided, however, that the failure of the Bank to record any of
the foregoing shall not limit or otherwise affect the obligation of the Borrower
to repay all Loans made to it under the Credit Agreement, together with accrued
interest thereon.
This Note is one of the Revolving Credit Notes referred to in and issued
under that certain Credit Agreement dated as of November 25, 1997, among the
Borrower, Harris Trust and Savings Bank, as Administrative Agent, and the Banks
named therein, as amended from time to time (the "Credit Agreement") and shall
be subject to the terms and conditions thereof. All defined terms used in this
Note, except terms otherwise defined herein, shall have the same meaning as such
terms have in said Credit Agreement.
Prepayments may be made, and are sometimes required to be made, on any Loan
evidenced hereby and this Note (and the Loans evidenced hereby) may be declared
due prior to the expressed maturity thereof, all in the events, on the terms and
in the manner as provided for in said Credit Agreement.
<PAGE>
The undersigned hereby waives presentment for payment and demand.
This Note is governed by and shall be construed in accordance with the
internal laws of the State of Illinois.
Mississippi Chemical Corporation
By
Its
<PAGE>
EXHIBIT B
APPLICATION AND AGREEMENT FOR LETTERS OF CREDIT
<PAGE>
EXHIBIT C
BID LOAN REQUEST CONFIRMATION
[Date]
Harris Trust and Savings Bank,
as Administrative Agent for the Banks party
to the Credit Agreement
referred to below
Attention: __________________
Dear ________________:
The undersigned, Mississippi Chemical Corporation (the "Borrower") refers
to the Credit Agreement dated as of November 25, 1997, as amended (the "Credit
Agreement"), among the Borrower, the Banks named therein, Harris Trust and
Savings Bank, as Administrative Agent for the Banks and Bank of Montreal, as
Syndication Agent. Capitalized terms used and not defined herein have the
meanings assigned to them in the Credit Agreement. The Borrower hereby confirms
that it has, on the date hereof, given you notice pursuant to Section 2.2 of the
Credit Agreement that it requests a Bid Loan Borrowing under the Credit
Agreement, and in that connection sets forth below the terms on which such Bid
Loan Borrowing is requested to be made:
(A) Type of Bid Loan Borrowing/1/ ________________
- --------------------------------------------------------------------------------
(B) Date of Bid Loan Borrowing/2/ ________________
- --------------------------------------------------------------------------------
(C) Aggregate Principal Amount of Bid Stated Rate Eurodollar
Loan Borrowing/3/ ----------- ----------
_______________ ______________
- --------------------------------------------------------------------------------
- ---------------
/1/ Stated Rate or Eurodollar.
/2/ The Bid Loan Request Confirmation must be received on a Business Day by the
Agent not later than 2:30 p.m. on the Business Day preceding the proposed
Auction Date.
/3/ Not less than $5,000,000 and in integral multiples of $1,000,000.
<PAGE>
(D) Maturities/4/ _______________ _______________
_______________ _______________
_______________ _______________
- -------------------------------------------------------------------------------
(E) If applicable, maximum amount _______________ _______________
requested for each maturity _______________ _______________
_______________ _______________
- -------------------------------------------------------------------------------
Upon acceptance of any or all of the Bids offered by Banks in response to
this request, the Borrower shall be deemed to affirm as of such date the
representations and warranties made in the Credit Agreement.
Mississippi Chemical Corporation
By
Its
- ---------------
/4/ 1 to 180 days in the case of Stated Rate Bid Loans and one, two, three,
four, five or six months in the case of Eurodollar Bid Loans, but never
beyond the Termination Date.
<PAGE>
EXHIBIT D
INVITATION TO BID
[Name of Bank] [Date]
[Address]
Attention:
Reference is made to the Credit Agreement dated as of November 25, 1997
(the "Credit Agreement") among Mississippi Chemical Corporation (the
"Borrower"), the Banks named therein, Harris Trust and Savings Bank, as
Administrative Agent for the Banks. Capitalized terms used and not defined
herein have the meanings assigned to them in the Credit Agreement. The Borrower
made a Bid Loan Request on __________, ________ pursuant to Section 2.2(a) of
the Credit Agreement, and in that connection you are invited to submit a Bid by
[Date]/1/. Your Bid must comply with Section 2.2(c) of the Credit Agreement and
the terms set forth below on which the Bid Loan Request was made.
(A) Type (Stated or Eurodollar) ______________
(B) Date of Proposed Bid Loan Borrowing ______________
Stated Eurodollar
------ ----------
(C) Aggregate Principal Amount
of Bid Loan ____________ ______________
(D) Maturities and maximum
amount, if different from
(C), for any maturity ____________ ______________
Very truly yours,
Harris Trust and Savings Bank,
as Administrative Agent
By
Its
- ---------------
/1/ The Bid must be received by the Administrative Agent by telephone not
later than 8:45 a.m. Chicago time, on the Auction Date.
<PAGE>
EXHIBIT E
CONFIRMATION OF BID
Harris Trust and Savings Bank, as [Date]
Administrative Agent for the Banks party to Credit
Agreement referred to below
Attention:
The undersigned [Name of Bank], refers to the Credit Agreement dated as of
November 25, 1997 (the "Credit Agreement") among Mississippi Chemical
Corporation (the "Borrower"), the Banks named therein, Harris Trust and Savings
Bank, as Administrative Agent for the Banks. Capitalized terms used and not
defined herein have the meanings assigned to them in the Credit Agreement. The
undersigned hereby confirms that on the date hereof it has made a Bid pursuant
to Section 2.2 of the Credit Agreement, in response to the Bid Loan Request made
by the Borrower on __________, 199____, and in that connection sets forth below
the terms on which such Bid is made:
Type (Stated Rate or Eurodollar): _____________________
Date of proposed Bid Loan Borrowing: ____________________/2/
Interest Rate or spread
Principal Amount/3/ Maturity/4/ over Adjusted LIBOR/5/
------------------- ----------- ----------------------
Very truly yours,
[Name of Bank]
By
Its
- ---------------
/2/ As specified in the related Invitation to Bid.
/3/ Principal amount of bid for each maturity may not exceed the principal
amount requested by the Company or the maximum amount requested for that
maturity, if less.
/4/ 1 to 180 days in the case of Stated Rate Bid Loans and one, two, three,
four, five or six months in the case of Eurodollar Bid Loans.
/5/ Specify rate of interest per annum computed on the basis of a year of 360
days and actual days elapsed for Stated Rate Bid Loans and percentage to be
added to Adjusted LIBOR for Eurodollar Bid Rate Loans.
<PAGE>
EXHIBIT F
NOTICE OF ACCEPTANCE OF BID
[Name of Bank] [Date]
[Address]
Attention:
Reference is made to the Credit Agreement dated as of November 25, 1997
(the "Credit Agreement") among Mississippi Chemical Corporation (the
"Borrower"), the Banks named therein, Harris Trust and Savings Bank, as
Administrative Agent for the Banks. Capitalized terms used and not defined
herein have the meanings assigned to them in the Credit Agreement. The Borrower
made a Bid Loan Request on __________, ______ pursuant to Section 2.2 of the
Credit Agreement, and in that connection you have submitted a Bid. Your Bid has
been accepted as set forth below.
(A) Type of Bid Loan _______________
(B) Date of Bid Loan Borrowing _______________
(C) Aggregate principal Principal
amount of each Bid Amount Maturity Interest Rate
maturity and interest rate --------- -------- -------------
__________ __________ __________
__________ __________ __________
__________ __________ __________
__________ __________ __________
Very truly yours,
Harris Trust and Savings Bank,
as Administrative Agent
By
Its
<PAGE>
EXHIBIT G
SUBSIDIARIES
Name of Company State of Incorporation
--------------- ----------------------
Mississippi Phosphates Corporation Delaware
Mississippi Potash, Inc. Mississippi
NSI Land Corporation Delaware
Mississippi Chemical Management Company Delaware
Mississippi Chemical Company, L.P. Delaware
MCC Investments, Inc. Delaware
Eddy Potash, Inc. Mississippi
Triad Nitrogen, Inc. Delaware
Triad Fertilizer, Inc. Mississippi
(a subsidiary of Triad Nitrogen, Inc.)
TNI, Inc. Mississippi
(a subsidiary of Triad Nitrogen, Inc.)
Triad Barge, Inc. Mississippi
(a subsidiary of Triad Nitrogen, Inc.)
TNI Barge, Inc. Delaware
(a subsidiary of Triad Barge, Inc.)
<PAGE>
EXHIBIT H
COMPLIANCE CERTIFICATE
This Compliance Certificate is furnished to Harris Trust and Savings Bank
and the other Banks (collectively, the "Banks") and Harris Trust and Savings
Bank as Administrative Agent (the "Administrative Agent") for the Banks,
pursuant to that certain Credit Agreement dated as of November 25, 1997, by and
among Mississippi Chemical Corporation, a Mississippi corporation (the
"Borrower"), the Administrative Agent and the Banks (the "Agreement"). Unless
otherwise defined herein, the terms used in this Compliance Certificate have the
meanings ascribed thereto in the Agreement.
The Undersigned Hereby Certifies That:
1. I am the duly elected [President] or [Chief Financial Officer] of the
Borrower;
2. I have reviewed the terms of the Agreement and I have made, or have
caused to be made under my supervision, a review of the transactions and
conditions of the Borrower and its Subsidiaries during the accounting period
covered by the attached financial statements sufficient for me to provide this
Certificate;
3. The examinations described in paragraph 2 did not disclose, and I have
no knowledge of, the existence of any condition or event which constitutes a
Potential Default or Event of Default during or at the end of the accounting
period covered by the attached financial statements or as of the date of this
Certificate, except as set forth below; and
4. If attached financial statements are being furnished pursuant to
Section 7.4(a) of the Agreement, Schedule I attached hereto sets forth financial
data and computations evidencing the Borrower's compliance with certain
covenants of the Agreement, all of which data and computations are true,
complete and correct.
Described below are the exceptions, if any, to paragraph 3 by listing, in
detail, the nature of the condition or event, the period during which it has
existed and the action which the Borrower has taken, is taking or proposes to
take with respect to each such condition or event:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The foregoing certifications, together with the computations set forth in
Schedule I hereto and the financial statements delivered with this Certificate
in support hereof, are made and delivered this _____ day of __________________,
19___.
[President] or [Chief Financial Officer of The
Borrower]
<PAGE>
SCHEDULE 1
TO COMPLIANCE CERTIFICATE
MISSISSIPPI CHEMICAL CORPORATION
COMPLIANCE CALCULATIONS FOR
CREDIT AGREEMENT DATED AS OF NOVEMBER 25, 1997
CALCULATIONS AS OF ____________________, 19__
I. Section 7.21 Maximum Leverage Ratio.
(a) ____________________.......................... $___________
(b) ____________________.......................... $___________
(c) ____________________.......................... $___________
(d) Leverage Ratio
((a) divided by (c)).......................... ______ to 1*
*Required to be not more than ___ to 1
Compliance.................. Yes____
No_____
II. Section 7.22 Minimum Interest Coverage Ratio.
(a) ____________________.......................... $___________
(b) ____________________.......................... $___________
(c) Interest Coverage Ratio
((a) divided by (b)).......................... ______ to 1*
*Required to be not less than ________ to 1
Compliance................... Yes____
No_____
III. Section 7.23 Minimum Tangible Net Worth.
(a) ____________________.......................... $___________
(b) ____________________.......................... $___________
(c) Net Worth ((a) plus (b))...................... $__________*
*Required to be not less than $_______________
Compliance................... Yes____
No_____
<PAGE>
IV. Pricing Ratio.
(a) ____________________.......................... $___________
(b) ____________________.......................... $___________
(c) ____________________.......................... $___________
(d) Pricing Ratio
((a) divided by (b)).......................... _________ to 1
<PAGE>
EXHIBIT I
[HUGHES & LUCE, L.L.P. LETTERHEAD]
November 25, 1997
Harris Trust and Savings Bank SunTrust Bank, Atlanta
Chicago, Illinois Atlanta, Georgia
Credit Agricole Indosuez First Union National Bank
Chicago, Illinois Charlotte, North Carolina
Banque Nationale de Paris, Houston Agency ABN AMRO Bank N.V.
Dallas, Texas Atlanta, Georgia
The Fuji Bank, Limited The Dai-Ichi Kangyo Bank, Ltd.
Atlanta, Georgia Houston, Texas
Bank of America National Trust and Savings Deposit Guaranty National Bank
Association Jackson, Mississippi
Chicago, Illinois
The Bank of Nova Scotia, Atlanta Agency
Atlanta, Georgia
Ladies and Gentlemen:
We have served as counsel to Mississippi Chemical Corporation, a
Mississippi corporation (the "Company"), in connection with a revolving credit
facility being made available by you to the Company. As such counsel, we have
reviewed the corporate proceedings taken to authorize the execution and delivery
of, and have examined executed originals of, the instruments and documents
identified on Exhibit A to this letter (collectively, the "Loan Documents",
individual Loan Documents hereinafter referred to by the designations appearing
on Exhibit A). Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Loan Documents. We have also reviewed the
articles of incorporation, charter, by-laws and any other agreements under which
the Company is organized. We have also reviewed such other instruments and
records and inquired into such other factual matters and matters of law as we
deem necessary or pertinent to the formulation of the opinions hereinafter
expressed.
In our examination, we have assumed the genuineness of all signatures
(other than those of the Company), the authenticity of all documents submitted
to us as originals and the conformity with authentic original documents of all
documents submitted to us as copies. When relevant facts were not independently
established, we have relied upon statements of governmental officials and upon
representations made in or pursuant to the Loan Documents and certificates of
appropriate representatives of the Company.
In rendering the opinions expressed below, we have assumed, with
respect to all of the documents referred to in this opinion letter, that
(except, to the extent set forth in the opinions expressed below, as to the
Company);
<PAGE>
(i) such documents have been duly authorized by, have been duly
executed and delivered by, and constitute legal, valid, binding and
enforceable obligations of, all of the parties to such documents;
(ii) all signatories to such documents have been duly authorized;
and
(iii) all of the parties to such documents are duly organized
and validly existing and have the power and authority (corporate or other)
to execute, deliver and perform such documents.
Based upon and subject to the foregoing and subject also to the
comments and qualifications set forth below, and having considered such
questions of law as we have deemed necessary as a basis for the opinions
expressed below, we are of the opinion that:
1. The Company is a corporation validly existing and in good standing
under the laws of its state of incorporation with full and adequate corporate
power and authority to carry on its business as now conducted and the Company is
duly licensed or qualified to do business and in good standing in each
jurisdiction listed on Exhibit B.
2. The Company has full right, power and authority to borrow from
you, to execute and deliver the Loan Documents executed by it and to observe and
perform all the matters and things therein provided for. The execution and
delivery of the Loan Documents executed by the Company does not, nor will the
observance or performance of any of the matters or things therein provided for,
contravene any provision of applicable law, except where such contravention
would not have a material adverse effect on the properties, business, operations
or financial condition of the Company and its Subsidiaries taken as a whole, or
of the articles of incorporation, charter or by-laws of the Company (there being
no other agreements under which the Company is organized) or, to our knowledge,
of any material covenant, indenture or agreement binding upon or affecting the
Company or any of its properties or assets.
3. The Loan Documents executed by the Company have been duly
authorized by all necessary corporate action, have been executed and delivered
by the proper officers of the Company and constitute valid and binding
agreements of the Company enforceable against it in accordance with their
respective terms, subject to bankruptcy, insolvency and other similar laws
affecting creditors' rights generally and to principles of equity.
4. Based solely upon our review of those statutes, rules and
regulations which in our experience are normally applicable to transactions of
the type provided for by the Loan Documents, no order known to us,
authorization, consent, license or exemption of, or filing or registration with,
any court or governmental department, agency, instrumentality or regulatory
body, whether local, state or federal, is or will be required in connection with
the lawful execution and delivery of the Loan Documents or the observance and
performance by the Company of any of the terms thereof, except such as have been
previously obtained or where the failure to obtain such order, authorization,
consent, license, exemption or make such filing or registration would not result
in a material adverse change in the properties, business, operations or
financial condition of the Company and its Subsidiaries taken as a whole.
5. Except as set forth in Schedule 5.3 of the Credit Agreement, to
our knowledge, there is no action, suit, proceeding or investigation at law or
in equity before or by any court or public body pending or threatened against or
affecting the Company or any of its assets and properties which, if adversely
determined, would result in any material adverse change in the properties,
business, operations or financial condition of the Company and its Subsidiaries
taken as a whole.
<PAGE>
November 25, 1997
Page 3
The foregoing opinions are subject to the following comments and
qualifications:
(A) The enforceability of Section 11.8 of the Credit Agreement (and
any similar provisions in any of the other Loan Documents) may be limited by
laws rendering unenforceable: (i) indemnification contrary to Federal or state
securities laws and the public policy underlying such laws and (ii) the release
of a party from, or the indemnification of a party against, liability for its
own wrongful or negligent acts under certain circumstances.
(B) The enforceability of provisions in the Loan Documents to the
effect that terms may not be waived or modified except in writing may be limited
under certain circumstances.
(C) We express no opinion as to (i) the effect of the laws of any
jurisdictions in which any Bank is located that limit the interest, fees or
other charges such Bank may impose, (ii) Section 11.14 of the Credit Agreement,
(iii) Section 11.15 of the Credit Agreement (and any similar provisions in any
of the other Loan Documents), insofar as such section relates to the subject
matter jurisdiction of the United States District Court for the Northern
District of Illinois to adjudicate any controversy related to the Loan
Documents, and (iv) the waiver of inconvenient forum set forth in Section 11.15
of the Credit Agreement (and any similar provisions in any of the other Loan
Documents) with respect to proceedings in the United States District Court for
the Northern District of Illinois.
(D) We express no opinion as to the applicability to the obligations
of the Company (or the enforceability of such obligations) of Section 548 of the
Bankruptcy Code or any other provision of law relating to fraudulent
conveyances, transfers or obligations.
(E) We express no opinion as to usury laws.
The entirety of the foregoing opinion is limited in all respects to
the existing laws of the State of Texas and the federal laws of the United
States. To the extent that the matters covered hereby are governed by laws of
states other than the State of Texas, for purposes of this opinion, we have
assumed with your consent that those laws are identical to the laws of the State
of Texas.
Our opinions are limited to the specific issues addressed herein and
are limited in all respects to documents, laws and facts existing on the date
hereof. By rendering our opinions, we do not undertake and hereby disavow any
obligation to advise you of any changes in such documents, laws or facts which
may occur after the date hereof.
<PAGE>
At the request of our clients, this opinion letter is, pursuant to
Section 6.3 of the Credit Agreement, provided to you by us in our capacity as
counsel to the Company and may not be relied upon by any Person (other than a
transferee of the Revolving Credit Commitments in accordance with Section 11.17
of the Credit Agreement) for any purpose other than in connection with the
transactions contemplated by the Credit Agreement without, in each instance, our
prior written consent.
Very truly yours,
<PAGE>
EXHIBIT A
---------
The Loan Documents
------------------
All Loan Documents are dated as of November 25, 1997.
1. Credit Agreement among the Company, Harris Trust and Savings Bank,
individually ("Harris") and as Administrative Agent (the "Administrative
Agent"), and Bank of Montreal, as Syndication Agent, and Credit Agricole
Indosuez, as Co-Agent (the "Credit Agreement").
2. Revolving Credit Note of the Company payable to the order of
Harris.
3. Revolving Credit Note of the Company payable to the order of Credit
Agricole Indosuez.
4. Revolving Credit Note of the Company payable to the order of Banque
Nationale de Paris, Houston Agency.
5. Revolving Credit Note of the Company payable to the order of The
Fuji Bank, Limited.
6. Revolving Credit Note of the Company payable to the order of Bank
of America National Trust and Savings Association.
7. Revolving Credit Note of the Company payable to the order of The
Bank of Nova Scotia, Atlanta Agency.
8. Revolving Credit Note of the Company payable to the order of
SunTrust Bank, Atlanta.
9. Revolving Credit Note of the Company payable to the order of First
Union National Bank.
10. Revolving Credit Note of the Company payable to the order of ABN
AMRO Bank N.V.
11. Revolving Credit Note of the Company payable to the order of The
Dai-Ichi Kangyo Bank, Ltd.
12. Revolving Credit Note of the Company payable to the order of
Deposit Guaranty National Bank.
<PAGE>
EXHIBIT B
---------
Jurisdictions in which Company is Qualified
-------------------------------------------
Louisiana
Mississippi
New Mexico
<PAGE>
EXHIBIT J
FARMLAND MISSCHEM PROJECT
CONTINGENT OBLIGATIONS
1. Cost Overrun Guarantee
As a condition precedent to the making of any disbursements by the lenders,
ABN AMRO Bank, N.V., as agent for the lenders, has required the execution
and delivery of a limited guaranty agreement whereby the Borrower agrees to
provide to the project, Farmland MissChem Limited, the amount necessary to
complete the construction of the project, up to $15 million (U.S.). In the
event that the conversion to the Ex-Im Bank loan does not occur, the
Borrower will provide up to an additional $10 million, if necessary to
complete the project conversion, if there are not sufficient funds
remaining under the Guaranty. The obligation begins at Funding and
terminates at Conversion to either the Ex-Im facility or the commercial
facility.
Under the EPC Contract with The M.W. Kellogg Company, the sponsors have
agreed to provide up to $30 million ($15 million each) in cost overrun
guaranties. The $15 million committed by the Borrower to cover cost
overrun guaranties provides satisfaction of the obligations created under
both the credit documents and the EPC Contract.
2. Floor Price Obligation Under Offtake Agreement
Each sponsor has agreed, pursuant to the terms of the Offtake Agreement, to
pay for each ton of ammonia produced by the project at either (a) market
price (determined by reference to an index) less 5 percent, or (b) a floor
price of $120 per ton (years 1-5) and $115 per ton (years 6-12). If the
conversion to the Ex-Im financing does not occur, the floor price is based
on the projected cash cost per ton of ammonia from the project at an
assumed operating rate. The obligation continues for two years beyond the
expiration of the term facility for 12 years to allow for any delays in the
retirement of the Term debt.
3. Take or Pay Obligation Under the Offtake Agreement
The Offtake Agreement requires that the sponsors take 100% (50% by each
sponsor) of all ammonia produced by the project. In the event that the
Borrower does not take its allocation of product when scheduled, the
Offtake Agreement requires that payment be made at the then-prevailing
price. Should the project temporarily stop producing product as a
consequence of the Borrower's failure to take product, the Borrower is
obligated to pay for the product and receive a credit against future
production.
4. Interest Rate Swap Guaranty Under Contingent Term Facility (Facility 2)
In the event that the project fails to convert to the Ex-Im facility, then
the commercial lenders will require of the project the execution of new
notes in substitution for the Facility 1 notes of each commercial lender.
During Facility 2, the interest rate increases to LIBOR plus a Eurodollar
margin ranging from 2% per annum in years 1-3, 2.25% per annum in years 4-
7, and 2.5% per annum in years 8-10. The lenders have required that the
project participate in an interest rate hedging program in order to reduce
the interest rate risk to the project. The Borrower is obligated
<PAGE>
to participate as a swap counterparty in any interest rate hedging
arrangement that may be required by the lenders of the project. The
Borrower's liability is limited to its pro rata share of its participation
as a swap counterparty.
5. Cost Overrun and Termination Payment Obligations Under EPC Contract
Under the EPC Contract, the sponsors have agreed to provide up to $30
million ($15 million each) in cost overrun guaranties. This obligation is
identical to the obligation created in the cost overrun guaranty to be
entered into by the Borrower for the benefit of the lenders. In addition,
the Borrower has agreed that in the event of a termination of the EPC
Contract, this $15 million guaranty will provide funds to pay termination
damages which may be due to Kellogg under the terms and conditions of the
EPC Contract.
6. Obligation to Pay Lender's Expenses
The sponsors have agreed to pay the expenses of the lenders in connection
with the financing of the project, which include, but are not limited to,
lenders' attorneys' fees, the fees for the independent engineer, the
environmental consultant and the economic analyst.
7. Debt Service Reserve
The sponsors have agreed to fund the project's debt service reserve account
with the posting of a letter of credit in an amount equal to nine months'
debt service. The obligation continues until the project's debt service
reserve account has been fully funded with cash and is equal to nine
months' debt service. The Borrower's obligation is 50% of the debt service
reserve account.
<PAGE>
EXHIBIT K
PRICING RATIO CERTIFICATE
This Pricing Ratio Certificate is furnished to Harris Trust and Savings
Bank and the other Banks (collectively, the "Banks") and Harris Trust and
Savings Bank as Administrative Agent (the "Administrative Agent") for the Banks,
pursuant to that certain Credit Agreement dated as of November 25, 1997, by and
among Mississippi Chemical Corporation, a Mississippi corporation (the
"Borrower") and the Banks (the "Agreement"). Unless otherwise defined herein,
the terms used in this Pricing Ratio Certificate have the meanings ascribed
thereto in the Agreement.
The Undersigned Hereby Certifies That:
1. I am the duly elected [President] or [Chief Financial Officer] of the
Borrower;
2. I have reviewed the terms of the Agreement and I have made, or have
caused to be made under my supervision, a review of the transactions and
conditions of the Borrower and its Subsidiaries during the accounting period
covered by the attached financial statements sufficient for me to provide this
Certificate; and
3. The examinations described in paragraph 2 did not disclose, and I have
no knowledge of, the existence of any condition or event which constitutes a
Potential Default or Event of Default during or at the end of the accounting
period covered by the attached financial statements or as of the date of this
Certificate, except as set forth below.
Described below are the exceptions, if any, to paragraph 3 by listing, in
detail, the nature of the condition or event, the period during which it has
existed and the action which the Borrower and its Subsidiaries have taken, is
taking or proposes to take with respect to each such condition or event:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The foregoing certifications, together with the computations set forth in
Schedule I hereto are made and delivered this _____ day of __________________,
19___.
[President] or [Chief Financial Officer of the
Borrower]
<PAGE>
SCHEDULE 1
TO PRICING RATIO CERTIFICATE
MISSISSIPPI CHEMICAL CORPORATION
PRICING RATIO CALCULATION FOR
CREDIT AGREEMENT DATED AS OF NOVEMBER 25, 1997
CALCULATION AS OF ____________________, 19__
Pricing Ratio.
(a) __________________.......................$___________
(b) __________________.......................$___________
(c) __________________.......................$___________
(d) Pricing Ratio
((a) divided by (b)) _________ to 1
<PAGE>
EXHIBIT L
EXISTING LETTERS OF CREDIT
Number Amount Expiry Date
------ ------ -----------
35690 $157,334 July 1, 1999
<PAGE>
SCHEDULE 5.3
LITIGATION DISCLOSURES
1. 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 cleanup 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 cleanup. They are now engaged in negotiations
for cleanup. Two years ago, Triad received a supplemental 104(e) request
for information from the EPA, indicating the EPA's renewed interest in
pursuing Potential Responsible Person 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.
In early 1996, a class action suit was brought against Triad and other
companies allegedly involved in the site based upon toxic torts alleged to
have resulted from the presence of contaminants at the Cleve Reber site.
Triad has not been served with process in the case. In the opinion of
management, based upon available information, the likelihood that these
proceedings will result in a loss in a material amount is remote. The
Borrower is monitoring the case while awaiting service of process.
2. 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. The Company is
also seeking damages for defamation based on Terra's public statement
related to the Company's alleged role in the explosion. Also, on August
31, 1995, Terra filed suit in federal court in Iowa against the Company
seeking damages caused by the explosion. Terra alleges that the Company
negligently designed the ammonium nitrate neutralizer technology licensed
to Terra and that design defect led to the Port Neal explosion. Discovery
in this case is underway and is scheduled to run through December 31, 1997.
Trial is tentatively scheduled to begin in the summer of 1998. The Company
intends to vigorously defend itself against Terra's allegations and plans
to fully prosecute its defamation claim.
<PAGE>
SCHEDULE 7.24
CERTAIN EXISTING RESTRICTIONS ON SUBSIDIARIES
Restrictions contained in documents evidencing or governing industrial
revenue bonds issued for the benefit of Mississippi Phosphates Corporation which
restrict the use of the proceeds of such industrial revenue bonds.
<PAGE>
EXHIBIT 10.8
MISSISSIPPI CHEMICAL CORPORATION
OFFICER AND KEY EMPLOYEE INCENTIVE PLAN
EFFECTIVE JULY 1, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
<S> <C> <C>
I. Establishment and Purposes...................................... 1
1.1 Establishment.......................................... 1
1.2 Purpose................................................ 1
II. Definitions..................................................... 1
2.1 Definitions............................................ 1
III. Eligibility..................................................... 2
3.1 Eligibility............................................ 2
IV. Entitlement to and Amount of Incentive Compensation............. 3
4.1 Performance Goal....................................... 3
4.2 Eligibility to Receive Amount of Incentive Compensation 3
4.3 Form and Time of Payment............................... 4
4.4 Payment of Bonuses in the Event of Death............... 4
4.5 Source of Payment...................................... 4
4.6 Shareholder Approval................................... 4
V. Plan Administration............................................. 5
5.1 Committee.............................................. 5
5.2 Indemnification........................................ 5
VI. General......................................................... 5
6.1 Offset and Withholding................................. 5
6.2 Facility of Payment.................................... 5
6.3 Gender and Number...................................... 5
6.4 Controlling Law........................................ 5
6.5 Successors............................................. 6
6.6 Not an Employment Contract............................. 6
6.7 Amendment and Termination.............................. 6
VII. Execution of Plan............................................... 6
</TABLE>
<PAGE>
I. ESTABLISHMENT AND PURPOSES
1.1 Establishment. Mississippi Chemical Corporation, acting through its
Compensation Committee, has established this Mississippi Chemical Corporation
Officer and Key Employee Incentive Plan, effective July 1, 1997, subject to
shareholder approval in accordance with Section 4.6 below. The Plan supersedes
and replaces the Company's prior "Officer Incentive Plan," effective with
respect to amounts accruing on and after July 1, 1997.
1.2 Purpose. The purpose of the Plan is to align the interests of
officers and key employees of the Company and certain of its affiliates and
subsidiaries with those of the Company's shareholders, to enhance the
profitability of the Company, to facilitate the Employers' ability to recruit
and retain valued officers and key employees, and to provide officers and key
employees with annual incentives competitive with the median level of such
incentives among companies of a similar size and industry, by providing to such
officers and key employees annual incentive compensation. Incentive
compensation granted to Covered Employees is intended to qualify as qualified
performance-based compensation under Code Section 162(m)(4)(C) and related
Treasury regulations, and the Plan shall be interpreted accordingly.
II. DEFINITIONS
2.1 Definitions. The following capitalized terms appearing in this Plan
have the following meanings, unless the context clearly indicates otherwise:
a. "Code" means the Internal Revenue Code of 1986, as amended.
b. "Committee" and "Compensation Committee" mean the Compensation
Committee of the Board of Directors of the Company.
c. "Company" means Mississippi Chemical Corporation or its
successors.
d. "Consolidated Performance" means the financial performance of the
Company and its consolidated subsidiaries as expressed by Operating Income as a
percentage of Total Capital for the Plan Year being considered.
e. "Covered Employee" means an officer of the Company described in
Code Section 162(m)(3).
f. "Deferred Compensation Plan" means the Mississippi Chemical
Corporation Executive Deferred Compensation Plan, as amended from time to time.
g. "Employers" means the Company, Mississippi Chemical Management
Company, and Mississippi Chemical Company, L.P., and any other subsidiary or
affiliate of the Company that adopts the Plan with the approval of the
Committee.
h. "Extraordinary Bonus" for any particular Participant with respect
to a particular Plan Year shall be the percentage of such Participant's base
salary designated by the Compensation Committee to be paid to such Participant
if the Company's Consolidated Performance equals or exceeds Extraordinary
Performance.
1
<PAGE>
i. "Extraordinary Performance" for any Plan Year means that the
Company's Consolidated Performance equaled its Weighted Average Cost of Capital
plus 20 percent.
j. "Hay Points" means the number of points assigned to an employment
position in accordance with the Employers' compensation system developed by the
HayGroup.
k. "Participant" means an officer or key employee of an Employer who
is eligible or selected to participate pursuant to Article III below and is
eligible to receive a bonus payment pursuant to Section 4.2 below.
l. "Plan" means this Mississippi Chemical Corporation Officer and
Key Employee Incentive Plan, as amended from time to time.
m. "Plan Year" means the period commencing on July 1 and ending on
the following June 30.
n. "Superior Bonus" for any particular Participant with respect to a
particular Plan Year shall be the percentage of such Participant's base salary
designated by the Compensation Committee to be paid to such Participant if the
Company's Consolidated Performance equals Superior Performance.
o. "Superior Performance" for any Plan Year means that the Company's
Consolidated Performance equaled its Weighted Average Cost of Capital plus 8
percent.
p. "Threshold Bonus" for any particular Participant with respect to
a particular Plan Year shall be the percentage of such Participant's base salary
designated by the Compensation Committee to be paid to such Participant if the
Company's Consolidated Performance equals Threshold Performance.
q. "Threshold Performance" for any Plan Year means that the
Company's Consolidated Performance equaled its Weighted Average Cost of Capital.
Additional terms are defined and/or illustrated in Exhibits A and B
attached hereto and incorporated herein.
III. ELIGIBILITY
3.1 Eligibility. The Compensation Committee, in its sole discretion,
shall, no later than the 90th day of each Plan Year (or, in the case of an
employee other than a Covered Employee who first becomes an officer or a key
employee in accordance with this Section 3.1 during a Plan Year, within 90 days
thereafter) (i) designate in writing the officers and key employees of the
Employers eligible to participate in the Plan for that Plan Year, each of whom
shall be in a position with at least the minimum number of Hay Points designated
by the Committee, and (ii) designate in writing the Threshold, Superior and
Extraordinary Bonuses for each Participant.
2
<PAGE>
IV. ENTITLEMENT TO AND AMOUNT
OF INCENTIVE COMPENSATION
4.1 Performance Goal. Incentive compensation payments will be made under
the Plan with respect to a Plan Year as follows:
a. if the Company's Consolidated Performance equals Threshold
Performance, each Participant shall receive his Threshold Bonus;
b. if the Company's Consolidated Performance falls between Threshold
Performance and Superior Performance, each Participant shall receive his
Threshold Bonus and shall, subject to any reduction by the Compensation
Committee pursuant to Section 4.2 below, receive an additional payment
determined by (i) dividing the difference between the Company's Consolidated
Performance and Threshold Performance by the difference between Superior
Performance and Threshold Performance, times (ii) the difference between the
Participant's Superior Bonus and Threshold Bonus;
c. if the Company's Consolidated Performance equals Superior
Performance, each Participant shall receive his Threshold Bonus and shall,
subject to any reduction by the Compensation Committee pursuant to Section 4.2
below, receive an additional amount which, when added to his Threshold Bonus,
equals the amount of his Superior Bonus;
d. if the Company's Consolidated Performance falls between Superior
Performance and Extraordinary Performance, each Participant shall receive his
Threshold Bonus and shall, subject to any reduction by the Compensation
Committee pursuant to Section 4.2 below, receive (i) an additional payment equal
to the difference between his Threshold Bonus and his Superior Bonus and (ii) an
additional payment determined by (a) dividing the difference between the
Company's Consolidated Performance and Superior Performance by the difference
between Extraordinary Performance and Superior Performance, times (b) the
difference between the Participant's Extraordinary Bonus and his Superior Bonus;
or
e. if the Company's Consolidated Performance equals or exceeds
Extraordinary Performance, each Participant shall receive his Threshold Bonus
and shall, subject to any reduction by the Compensation Committee pursuant to
Section 4.2 below, receive an additional amount which, when added to his
Threshold Bonus, equals the amount of his Extraordinary Bonus.
As soon as practicable after the end of each Plan Year, the Committee
shall certify in writing the Company's Consolidated Performance and the extent
to which the Company has achieved Threshold Performance, Superior Performance or
Extraordinary Performance for the year. The Committee's determination shall be
final and binding.
4.2 Eligibility to Receive Amount of Incentive Compensation. To be
eligible to receive an incentive compensation payment with respect to a Plan
Year under the Plan, an individual (i) must be eligible to participate in the
Plan pursuant to Article III above; and (ii) must remain employed by an Employer
through the last day of such Plan Year. Notwithstanding the foregoing, a
prorated amount of incentive compensation (determined by the Committee) will be
paid to any individual who is otherwise eligible who, during the Plan Year,
dies, becomes disabled, or terminates employment for reasons other than willful
misconduct, and to any
3
<PAGE>
individual other than a Covered Employee who first becomes otherwise eligible to
participate in the Plan during the Plan Year. The maximum amount of incentive
compensation payable to any Participant shall not exceed 90 percent of his
annual salary. For this purpose, annual salary is determined as of the first day
of the Plan Year, and in the case of any employee other than a Covered Employee
who first becomes a Participant during the Plan Year, annual salary is
determined as of the first day of the Plan Year such employee became a
Participant; and annual salary is the Participant's base salary (before salary
reduction or salary deferral contributions under Code Sections 125 or 401(k) and
without regard to the value of any benefit other than base salary). The
Committee shall have the discretionary authority, based on individual
performance and such other factors as the Committee deems appropriate, to reduce
the Bonus payable to a particular Participant by up to 100 percent of the
excess, if any, over such Participant's Threshold Bonus.
4.3 Form and Time of Payment. Any incentive compensation shall be paid in
a cash lump sum as soon as practicable after the Committee's certification of
the Company's Consolidated Performance pursuant to Section 4.1 above and any
reductions in accordance with Section 4.2 above. Notwithstanding the foregoing,
a Participant who is entitled to incentive compensation under this Plan and who
is a participant in the Mississippi Chemical Corporation Executive Deferred
Compensation Plan may elect to defer payment of his incentive compensation and
to have deferred stock credited to him, in accordance with said Deferred
Compensation Plan. Once a Participant elects to participate in said Deferred
Compensation Plan, his benefits, rights, and entitlements will be determined
solely under the Mississippi Chemical Corporation Executive Deferred
Compensation Plan.
4.4 Payment of Bonuses in the Event of Death. If a Participant dies
before receiving all amounts payable hereunder, the entire unpaid amount shall
be paid in one lump sum to the beneficiary designated by such Participant. No
beneficiary designation shall be valid unless it is in writing, signed by the
Participant, dated and filed with the Committee prior to death. If the
Participant is married and designates a primary beneficiary other than his
spouse, the beneficiary designation must include the written consent of the
spouse in such form as the Committee requires. Any beneficiary designation may
be revoked and a new designation may be made, as long as the new designation is
in writing, signed by the Participant, dated and filed with the Committee prior
to death. If no beneficiary has been designated, or no designated beneficiary
survives the Participant, any unpaid amounts will be paid to the Participant's
surviving spouse, or if the Participant does not have a surviving spouse, to the
Participant's estate, as soon as administratively possible.
4.5 Source of Payment. All payments under this Plan shall be paid from
the general funds of the Employer. The Employer shall be under no obligation to
segregate any assets in connection with the award of any bonus hereunder, nor
shall anything contained in this Plan or any action taken pursuant to the Plan
create or be construed to create a trust of any kind or a fiduciary relationship
between the Employer and Participant.
4.6 Shareholder Approval. Payment of incentive compensation under this
Plan to Covered Employees is contingent upon shareholder approval of certain
material terms of the Plan, in accordance with Code Section 162(m)(4)(C).
4
<PAGE>
V. PLAN ADMINISTRATION
5.1 Committee. The Committee shall have complete authority and discretion
to control and manage the operation and administration of the Plan. The
Committee shall construe and interpret the Plan, reconcile inconsistencies,
resolve ambiguities and supply omissions in the Plan, and shall determine all
questions arising in the administration and interpretation of the Plan; however,
all such interpretations and decisions shall be applied in a uniform manner to
all similarly situated Participants. All decisions and interpretations of the
Committee made in good faith pursuant to the Plan shall be final, conclusive and
binding on all persons.
5.2 Indemnification. In the event and to the extent not insured under any
contract of insurance with an insurance company, the Employers shall indemnify
and hold harmless each "Indemnified Person," as defined below, against any and
all claims, demands, suits, proceedings, losses, damages, interest, penalties,
fines, expenses (specifically including, but not limited to, counsel fees to the
extent approved by the Board of Directors of the Company or otherwise provided
by law, court costs and other reasonable expenses of litigation), and liability
of every kind, including amounts paid in settlement with the approval of the
Board of Directors, arising from any action or cause of action related to the
Indemnified Person's act or acts or failure to act. Such indemnity shall apply
regardless of whether such claims, demands, suits, proceedings, losses, damages,
interest, penalties, fines, expenses, and liability arise in whole or in part
from the negligence or other fault of the Indemnified Person, except when the
same is judicially determined to be due to gross negligence, fraud,
recklessness, or willful or intentional misconduct of such Indemnified Person.
The indemnification provided in this Section 5.2 shall not be construed to limit
or supersede any other indemnity provided by the Employer. "Indemnified Person"
shall mean the Committee and each employee, officer, or director of the
Employers acting in a decision-making or administrative role with respect to the
Plan.
VI. GENERAL
6.1 Offset and Withholding. The Committee shall have the discretion and
sole authority to determine the amount and timing of any withholding or
employment taxes with respect to amounts otherwise payable under the Plan. In
the event a Participant is indebted to an Employer for any reason at the time
payment becomes due hereunder, the Employer, in its discretion, may offset the
payments due hereunder against such indebtedness.
6.2 Facility of Payment. Any amounts payable hereunder to any person
under legal disability or who, in the judgment of the Committee, is unable to
properly manage his financial affairs may be paid to the legal representative of
such person or may be applied for the benefit of such person in any manner which
the Committee may select.
6.3 Gender and Number. Where the context admits, words in the masculine
gender shall include the feminine gender, the plural shall include the singular
and the singular shall include the plural.
6.4 Controlling Law. The laws of Mississippi (without regard to its
conflicts of laws rules) shall be controlling in all matters relating to the
Plan.
5
<PAGE>
6.5 Successors. This Plan is binding on the Employers and will be binding
on and inure to the benefit of any successor of any Employer, whether by way of
purchase, merger, consolidation or otherwise.
6.6 Not an Employment Contract. This Plan does not constitute a contract
of employment and shall not be construed to give any Participant the right to be
retained in the Employer's service.
6.7 Amendment and Termination. The Committee must necessarily reserve and
hereby does reserve the right to amend or terminate the Plan at any time.
VII. EXECUTION OF PLAN
7.1 To record the establishment of the Plan, the undersigned, being duly
authorized to act on behalf of the Compensation Committee of the Board of
Directors of the Company, have executed this document at Yazoo City,
Mississippi, in one or more counterparts, each of which shall be considered an
original, and all but one instrument.
Dated: September 16, 1997 MISSISSIPPI CHEMICAL CORPORATION
By: /s/John Sharp Howie
-------------------
Chairman, Compensation Committee
By: /s/ Ethel Truly
---------------
Vice President - Administration
6
<PAGE>
EXHIBIT A
DEFINITIONS INCORPORATED INTO THE MISSISSIPPI CHEMICAL CORPORATION
OFFICER AND KEY EMPLOYEE INCENTIVE PLAN
(LINE REFERENCES TO SAMPLE CALCULATION IN EXHIBIT B)
<TABLE>
<CAPTION>
LINE TERM DEFINITION
- ---- ------------------------------ ------------------------------------------------------------------------------------
<S> <C> <C>
1 Debt Average consolidated debt for the Plan Year (sum of debt at each month's end divided
by 12).
2 Equity Average equity for the Plan Year (sum of equity at each month's end
divided by 12).
3 Total Capital Sum of lines 1 and 2.
4 Percent Debt Debt as a percent of Total Capital (line 1 divided by line 3).
5 Percent Equity Equity as a percent of Total Capital (line 2 divided by line 3).
6 Total 100 percent.
7 Actual Interest Rate Actual Interest Rate on Debt for the Plan Year (provided by Finance).
on Debt
8 Assigned Add-On to Equity 6 percent or such other percentage set by the Compensation Committee within 90 days
of the beginning of the Plan Year.
9 Assumed Cost of Equity Actual Interest Rate on Debt plus Add-On For Equity (line 7 plus line 8).
10 Weighted Average Cost Weighted Average Cost of Capital for the Plan Year
of Capital [(line 7 times line 4) plus (line 9 times line 5)].
11 Operating Income Net revenues less operating expenses on a consolidated basis (provided by Finance).
12 Consolidated Performance Operating Income divided by Total Capital expressed as a percentage (line 11 divided
by line 3).
13 Weighted Average Cost Same as line 10.
of Capital
14 Excess (Deficit) Consolidated Performance above (below) Weighted Average Cost of Capital (line 12
less line 13).
15 Threshold Bonus The percentage of a Participant's base salary designated by the Compensation
Committee to be paid to him if the Company's Consolidated Performance for the Plan
Year equals Threshold Performance.
16 Superior Bonus The percentage of a Participant's base salary designated by the Compensation
Committee to be paid to him if the Company's Consolidated Performance for the Plan
Year equals Superior Performance.
17 Extraordinary Bonus The percentage of a Participant's base salary designated by the Compensation
Committee to be paid to him if the Company's Consolidated Performance for the Plan
Year equals or exceeds Extraordinary Performance.
18 Actual Bonus Calculated in accordance with Section 4.1 of the Plan.
</TABLE>
7
<PAGE>
EXHIBIT B
TO THE MISSISSIPPI CHEMICAL CORPORATION
OFFICER AND KEY EMPLOYEE INCENTIVE PLAN
SAMPLE CALCULATION FOR HYPOTHETICAL EMPLOYEE
WITH SALARY OF $75,000 CALCULATED
FOR PLAN YEAR ENDED 6/30/97 AS IF PLAN HAD BEEN EFFECTIVE
<TABLE>
<CAPTION>
FISCAL YEAR 1997
----------------------------------
<S> <C> <C>
1 Debt $155,057,000
2 Equity $353,814,000
3 Total Capital (sum of lines 1 and 2) $508,871,000
4 Percent Debt 30.47%
5 Percent Equity 69.53%
6 Total (sum of lines 4 and 5) 100.00%
7 Actual Interest Rate on Debt 6.15%
8 Assigned Add-On to Equity 6.00%
9 Assumed Cost of Equity (sum of lines 7 and 8) 12.15%
10 Weighted Average Cost of Capital 10.32%
11 Operating Income $91,209,000
12 Consolidated Performance 17.92%
13 Weighted Average Cost of Capital 10.32%
14 Excess (Deficit) (line 12 less line 13) 7.60%
15 Threshold Bonus (sample) 5% of Base Salary or $3,750
16 Superior Bonus (sample) 10% of Base Salary or $7,500
17 Extraordinary Bonus (sample) 15% of Base Salary or $11,250
18 ACTUAL BONUS FOR PLAN YEAR ENDED 6/30/97 9.75% OF BASE SALARY OR $7,312.50
</TABLE>
8
<PAGE>
EXHIBIT 10.9
MISSISSIPPI CHEMICAL CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
EFFECTIVE AUGUST 26, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
<C> <S> <C>
1. Introduction.................................................... 1
1.1 Plan...................................................... 1
1.2 Effective Date............................................ 1
1.3 Purpose................................................... 1
2. Participation and Supplemental Benefits......................... 1
2.1 Eligibility............................................... 1
2.2 Election to Defer......................................... 1
2.3 Amount of Deferral........................................ 2
2.4 Time of Election.......................................... 2
2.5 Establishment and Adjustment of Deferred Stock Accounts... 2
3. Payment of Deferred Compensation................................ 3
3.1 Payment of Deferred Compensation.......................... 3
3.2 Installment Election; Further Deferrals................... 3
3.3 Death..................................................... 3
3.4 Hardship Distribution..................................... 4
3.5 Source of Payment......................................... 4
3.6 Limitations on Issuance of Stock.......................... 4
4. Plan Administration............................................. 4
4.1 Committee................................................. 4
4.2 Indemnification........................................... 5
5. General......................................................... 5
5.1 Interests not Transferable; Taxes......................... 5
5.2 Facility of Payment....................................... 5
5.3 Gender and Number......................................... 5
5.4 Controlling Law........................................... 5
5.5 Successors................................................ 5
5.6 Not a Contract............................................ 6
6. Amendment, Termination and Cessation of Trading................. 6
6.1 Amendment and Termination................................. 6
6.2 Cessation of Trading in Employer Stock.................... 6
7. Execution of Plan............................................... 6
</TABLE>
<PAGE>
SECTION 1
INTRODUCTION
------------
1.1 Plan. This plan has been established by Mississippi Chemical
Corporation for the benefit of eligible employees of Mississippi Chemical
Corporation, Mississippi Chemical Management Company and Mississippi Chemical
Company, L.P. (hereinafter collectively referred to as the "Employer"), and
shall be known as the Mississippi Chemical Corporation Executive Deferred
Compensation Plan (the "Plan"). Other subsidiaries and affiliates of
Mississippi Chemical may adopt the Plan for the benefit of their executive
officers and key employees, subject to the approval of the Committee (as defined
in Section 4.1 below).
1.2 Effective Date. The "Effective Date" of the Plan is August 26, 1997,
subject to shareholder approval of the material terms of the Plan in accordance
with Section 162(m)(4)(C) of the Internal Revenue Code of 1986, as amended (the
"Code").
1.3 Purpose. The Plan has been established to provide incentives to a
select group of the Employer's executive officers and key employees to more
closely align their interests with those of the shareholders of Mississippi
Chemical Corporation and to work towards growth in the Employer's shareholder
value, by risking certain payments otherwise payable to them for deferred
compensation based on future growth in the value of Mississippi Chemical
Corporation common stock ("Stock"). The Plan is intended to permit such
executive officers and key employees to elect to defer certain incentive
payments that would otherwise be payable pursuant to the Employer's Officer and
Key Employee Incentive Plan, any payment that would otherwise be made under any
"all-employee" profit-sharing plan of the Employer or of a subsidiary or
affiliate of Mississippi Chemical Corporation which has adopted the Plan with
the approval of the Committee, and under any other bonus, profit-sharing or
incentive plan of the Employer or of a subsidiary or affiliate of Mississippi
Chemical Corporation which has adopted the Plan with the approval of the
Committee (hereinafter collectively referred to as "Incentive Payments"). The
Plan is intended to be unfunded for purposes of the Code and the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). Amounts deferred
under this Plan that would otherwise be payable under the Officer and Key
Employee Incentive Plan are intended to qualify as qualified performance-based
compensation under Code Section 162(m)(4)(C) and related Treasury regulations,
and the Plan shall be interpreted accordingly.
SECTION 2
PARTICIPATION AND SUPPLEMENTAL BENEFITS
---------------------------------------
2.1 Eligibility. Each executive officer and key employee of the Employer
who is named in writing by the Committee ("Executive") will be eligible to
become a Participant in the Plan. Eligibility shall be limited to a select
group of management or highly compensated employees in accordance with
Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA.
2.2 Election to Defer. An Executive may elect to defer all or a portion
of his Incentive Payments by filing a written election with the Committee on
forms to be prescribed by the Committee at the time prescribed in Section 2.4
below. Such election must include a designation of beneficiary. Upon making
such election, the Executive shall become a "Participant" in the Plan.
1
<PAGE>
2.3 Amount of Deferral. The amount of Incentive Payments to be deferred
in any calendar year shall be designated by the Participant in dollar or
percentage terms on forms to be prescribed by the Committee.
2.4 Time of Election. A separate election to defer must be filed for each
calendar year in which a Participant desires to defer any Incentive Payments and
must be received by the end of the calendar year preceding the calendar year in
which the Incentive Payments would otherwise be paid. Any election by a
Participant with respect to Incentive Payments in a given calendar year will not
preclude a different action with respect to Incentive Payments in any subsequent
calendar year. Notwithstanding the foregoing, any eligible Executive may,
within 30 days of first becoming eligible to participate in the Plan, elect to
defer any Incentive Payments earned subsequent to such election for the balance
of the calendar year in which he first becomes eligible.
2.5 Establishment and Adjustment of Deferred Stock Accounts. The
Committee shall cause a "Deferred Stock Account" to be created for each
Participant. The Deferred Stock Account shall be a mere bookkeeping account
reflecting the Employer's future obligation to make payments under the Plan and
shall not confer on any Participant any of the rights of a stockholder of
Mississippi Chemical Corporation. A Participant's Deferred Stock Account shall
be credited with "deferred shares" effective as of the date payment of a cash
Incentive Payment would have been made, absent the Participant's election to
defer such Incentive Payment pursuant to this Plan. The number of "deferred
shares" to be credited shall be determined by dividing (i) 150 percent of the
dollar amount of the cash Incentive Payment the Participant has elected to defer
by (ii) the fair market value of one share of Stock as of the July 1 immediately
prior to the calendar year in which payment of the Incentive Payment would
otherwise have occurred. Notwithstanding the foregoing, in no event shall the
number of deferred shares credited be less than (i) 150 percent of the dollar
amount of the cash Incentive Payment the Participant has elected to defer,
divided by (ii) the fair market value of one share of Stock as of the date such
Incentive Payment would otherwise have been paid in cash. The result of such
division shall be rounded up to the nearest whole share. A Participant's
Deferred Stock Account shall be credited, effective as of the payment date of
any dividend on the Stock, with additional shares of deferred stock, calculated
by dividing (i) the dollar amount of the dividend per share times the number of
deferred shares then credited to the Participant's Deferred Stock Account by
(ii) the fair market value of one share of Stock. The Committee shall cause
each Participant's Deferred Stock Account to be adjusted to reflect stock
splits, stock dividends, exchange of stock in connection with a merger, and
similar transactions to produce the same number of deferred shares as the holder
of an equal number of shares of Stock would have following such a transaction.
Whenever payment of all or any portion of a Participant's Deferred Stock Account
is to be made in cash hereunder, the amount of cash to be paid to the
Participant is to be determined by multiplying the number of deferred shares to
be distributed by the fair market value of such shares. For purposes of this
Section 2.5, "fair market value" of a share of Stock shall equal the average of
the closing prices of a share as reported on the New York Stock Exchange for the
last 20 trading days prior to the date in question.
2
<PAGE>
SECTION 3
PAYMENT OF DEFERRED COMPENSATION
--------------------------------
3.1 Payment of Deferred Compensation. Subject to the provisions of
Section 3.2 below, a Participant shall be entitled to receive shares of Stock
equal to the number of deferred shares then credited to the Participant's
Deferred Stock Account, computed in accordance with Section 2.5 above, on the
first to occur of (i) 30 days following the end of the calendar year in which
such Participant ceases to be an employee of the Employer due to separation of
employment, retirement, Total Disability (as defined below), or death or (ii)
the payment date that he elected at the time of his deferral election, which
date shall be equal to or more than 18 months after the date of such deferral
election. The shares issued to the Participant may be authorized but unissued
shares, Treasury shares or shares purchased with general funds of the Employer.
For purposes of this Plan, the term "Total Disability" shall mean inability of a
Participant to perform the normal functions of his current position with the
Company due to a physical or mental condition, disease, or injury that is
anticipated to last at least 12 months. The Committee shall determine whether
Total Disability has occurred based on such evidence as it deems satisfactory.
3.2 Installment Election; Further Deferrals. Subject to the approval of
the Committee, in lieu of receiving the lump-sum issuance of Stock to which the
Participant may be entitled pursuant to the provisions of Section 3.1 above at
the time specified therein, a Participant may elect to receive installment
payments by delivering to the Committee at any time prior to December 31 of the
calendar year preceding the calendar year in which payment would otherwise occur
hereunder, written notice of the Participant's election to receive the amount
credited to his Deferred Stock Account in such number of annual installments
(not to exceed installments extending over 10 years) and commencing on such date
(which date shall be no earlier than the date on which the balance in the
Participant's Deferred Stock Account would otherwise be paid to the Participant)
as is specified in the written notice. Subject to the approval of the
Committee, a Participant may also elect, no later than December 31 of the
calendar year preceding the calendar year in which issuance of shares of Stock
would otherwise occur under Section 3.1 above, to defer issuance of such shares
of Stock until a later date specified in such election. A Participant may
modify or rescind an installment election or further deferral election in its
entirety at any time prior to the December 31 date referred to in this
Section 3.2, but on such December 31 the election shall become irrevocable.
3.3 Death. If a Participant dies before receiving all amounts credited to
his Deferred Stock Account, the entire unpaid amount shall be paid in one lump
sum in accordance with Section 3.1 above to the beneficiary designated by such
Participant. No beneficiary designation shall be valid unless it is in writing,
signed by the Participant, dated and filed with the Committee prior to death.
If the Participant is married and designates a primary beneficiary other than
his spouse, the beneficiary designation must include the written consent of the
spouse in such form as the Committee requires. Any beneficiary designation may
be revoked and a new designation may be made, as long as the new designation is
in writing, signed by the Participant, dated and filed with the Committee prior
to death. If no beneficiary has been designated, or no designated beneficiary
survives the Participant, any unpaid amounts will be paid to the Participant's
surviving spouse, or if the Participant does not have a surviving spouse, to the
Participant's estate as soon as administratively possible.
3
<PAGE>
3.4 Hardship Distribution. A Participant or beneficiary may request
acceleration of the payment terms hereunder only in the event of severe
financial hardship resulting from an Unforeseeable Emergency (as defined below).
The amount of any hardship distribution is limited to the amount necessary to
meet the emergency. Such request shall specify in detail the grounds for the
requested modification and shall be referred to the Committee. The decision of
the Committee with respect to the requested modification shall be solely at the
discretion of the Committee and in accordance with its evaluation of the
exigencies of the situation. Such decision shall be binding on the Employer and
Participant. For purposes of this Plan, the term "Unforeseeable Emergency"
means an unanticipated emergency that is caused by an event beyond the control
of the Participant or beneficiary that would result in severe financial hardship
to the individual if early withdrawal were not permitted and that otherwise
meets the requirements of such term in any applicable statute or regulation.
3.5 Source of Payment. All payments under this Plan in cash pursuant to
Section 3.6 below shall be paid from the general funds of the Employer or from
such other funding vehicle as the Committee shall provide, and all distributions
of Stock under this Plan shall be made from authorized but unissued shares,
Treasury shares or shares purchased with general funds of the Employer, or from
such other funding vehicle as the Committee shall provide, provided that all
assets paid into any funding vehicle shall, at all times prior to payment to a
Participant or beneficiary, be subject to the general creditors of the Employer.
The Employer shall be under no obligation to segregate any assets in connection
with the maintenance of any Deferred Stock Account, nor shall anything contained
in this Plan or any action taken pursuant to the Plan create or be construed to
create a trust of any kind or a fiduciary relationship between the Employer and
Participant. Title to the beneficial ownership of any assets, whether cash or
investments, which the Employer may designate to pay the amounts credited to the
Deferred Stock Accounts shall at all times remain in the Employer, and
Participants shall not have any property interest whatsoever in any specific
assets of the Employer. Each Participant's interest in his Deferred Stock
Account shall be limited to the Employer's promise to make payment of such
Account in the future pursuant to the terms of this Plan, and such right to
receive future payment shall be no greater than the right of any other unsecured
general creditor of the Employer.
3.6 Limitations on Issuance of Stock. Notwithstanding anything to the
contrary in the Plan, in lieu of delivering Stock of the Employer to a
Participant, the Employer reserves the right to pay a Participant in cash equal
to the fair market value (determined in accordance with Section 2.5 above) of
the deferred shares credited to his Deferred Stock Account, if the Employer, in
its sole discretion, determines that it is necessary or desirable to do so to
comply with any provision of federal or state law, stock exchange listing rules,
or its articles or bylaws.
SECTION 4
PLAN ADMINISTRATION
-------------------
4.1 Committee. The terms "Committee" and "Compensation Committee" mean
the Compensation Committee established by Mississippi Chemical Corporation's
Board of Directors. The Committee shall have complete authority to control and
manage the operation and administration of the Plan. The Committee shall
interpret the Plan and shall determine all questions arising in the
administration and interpretation of the Plan; however, all such interpretations
and decisions shall be applied in a uniform manner to all similarly situated
Participants. All decisions and interpretations of the Committee made in good
faith pursuant to
4
<PAGE>
the Plan shall be final, conclusive and binding on all persons, subject only to
the claims review procedures required by ERISA.
4.2 Indemnification. In the event and to the extent not insured under any
contract of insurance with an insurance company, the Employer shall indemnify
and hold harmless each "Indemnified Person," as defined below, against any and
all claims, demands, suits, proceedings, losses, damages, interest, penalties,
fines, expenses (specifically including, but not limited to, counsel fees to the
extent approved by the Board of Directors of Mississippi Chemical Corporation or
otherwise provided by law, court costs and other reasonable expenses of
litigation), and liability of every kind, including amounts paid in settlement
with the approval of the Board of Directors, arising from any action or cause of
action related to the Indemnified Person's act or acts or failure to act. Such
indemnity shall apply regardless of whether such claims, demands, suits,
proceedings, losses, damages, interest, penalties, fines, expenses, and
liability arise in whole or in part from (i) the negligence or other fault of
the Indemnified Person or (ii) the imposition on such Indemnified Person of any
civil penalties or excise tax pursuant to ERISA or the Code, except when the
same is judicially determined to be due to gross negligence, fraud,
recklessness, or willful or intentional misconduct of such Indemnified Person.
The indemnification provided in this Section 4.2 shall not be construed to limit
or supersede any other indemnity provided by the Employer. "Indemnified Person"
shall mean the Committee and each employee, officer, or director of the Employer
acting in a decision-making or administrative role with respect to the Plan.
SECTION 5
GENERAL
-------
5.1 Interests Not Transferable; Taxes. Except as to any withholding of
federal, state or local tax and except with respect to assignment of amounts
currently due and payable hereunder to an alternate payee pursuant to a
"qualified domestic relations order" as defined in ERISA, the interest of any
Participant or his spouse or his beneficiary under the Plan is not subject to
the claims of creditors and may not be voluntarily or involuntarily sold,
transferred, assigned, alienated or encumbered. The Committee shall have the
discretion and sole authority to determine the amount and timing of any
withholding or employment taxes with respect to amounts accrued or paid under
the Plan.
5.2 Facility of Payment. Any amounts payable hereunder to any person
under legal disability or who, in the judgment of the Committee, is unable to
properly manage his financial affairs may be paid to the legal representative of
such person or may be applied for the benefit of such person in any manner which
the Committee may select.
5.3 Gender and Number. Where the context admits, words in the masculine
gender shall include the feminine gender, the plural shall include the singular
and the singular shall include the plural.
5.4 Controlling Law. To the extent not superseded by the laws of the
United States, the laws of Mississippi shall be controlling in all matters
relating to the Plan.
5.5 Successors. This Plan is binding on the Employer and will be binding
on, and inure to the benefit of, any successor of the Employer, whether by way
of purchase, merger, consolidation or otherwise.
5
<PAGE>
5.6 Not a Contract. This Plan does not constitute a contract of
employment and shall not be construed to give any Participant the right to be
retained in the Employer's service.
SECTION 6
AMENDMENT, TERMINATION
AND CESSATION OF TRADING
------------------------
6.1 Amendment and Termination. While the Employer expects to continue the
Plan indefinitely, the Compensation Committee must necessarily reserve, and
hereby reserves, the right to terminate the Plan at any time and to amend the
Plan at any time, but no more than once in any six-month period except to
comport with changes in the Code, provided that in no event shall any
Participant's Deferred Stock Account accrued to the date of such amendment or
termination be reduced by such action without the specific written agreement of
the Participant to such modification or reduction. In the event the Committee
elects to terminate the Plan, the Employer reserves the right to settle all
liabilities under the Plan by paying each Participant a lump-sum payment in cash
or in Stock, determined at the Committee's sole election, in full satisfaction
of his benefits hereunder. Such lump sum shall equal the value of his Deferred
Stock Account valued through the date of Plan termination pursuant to
Section 2.5 above.
6.2 Cessation of Trading in Employer Stock. Notwithstanding anything to
the contrary in this Plan, in the event the Stock permanently ceases to be
traded on a national stock exchange or over the counter for any reason other
than a merger with another publicly traded entity, or ceases to exist for any
reason other than a merger (whether due to liquidation or other event), the
Employer (or its successor) shall, within 60 days of such event, distribute to
each Participant (or beneficiary) the value of the entire balance of his
Deferred Stock Account in cash, based on the fair market value as calculated
under Section 2.5 above, as of the last date the Stock was traded.
SECTION 7
EXECUTION OF PLAN
-----------------
7.1 To record the establishment of the Plan, the undersigned, being duly
authorized to act on behalf of the Compensation Committee of the Board of
Directors of Mississippi Chemical Corporation, have executed this document at
Yazoo City, Mississippi.
Dated: September 16, 1997 MISSISSIPPI CHEMICAL CORPORATION
By: /s/ John Sharp Howie
--------------------------------------
Chairman, Compensation Committee
By: /s/ Ethel Truly
--------------------------------------
Vice President - Administration
6
<PAGE>
EXHIBIT 10.10
MISSISSIPPI CHEMICAL CORPORATION
NONEMPLOYEE DIRECTORS' DEFERRED COMPENSATION PLAN
EFFECTIVE AUGUST 29, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
<C> <S> <C>
1. Introduction..................................................... 1
1.1 Plan....................................................... 1
1.2 Effective Date............................................. 1
1.3 Purpose.................................................... 1
2. Participation and Supplemental Benefits.......................... 1
2.1 Eligibility................................................ 1
2.2 Automatic Awards........................................... 1
2.3 Election to Defer.......................................... 1
2.4 Amount of Deferral......................................... 1
2.5 Time of Election........................................... 1
2.6 Establishment and Adjustment of Deferred Stock Accounts... 2
3. Payment of Deferred Compensation................................. 2
3.1 Payment of Deferred Compensation........................... 2
3.2 Installment Election; Further Deferrals.................... 3
3.3 Death...................................................... 3
3.4 Hardship Distribution...................................... 3
3.5 Source of Payment.......................................... 4
3.6 Limitations on Issuance of Stock........................... 4
4. Plan Administration.............................................. 4
4.1 Committee.................................................. 4
4.2 Indemnification............................................ 5
5. General.......................................................... 5
5.1 Interests not Transferable................................. 5
5.2 Facility of Payment........................................ 5
5.3 Gender and Number.......................................... 5
5.4 Controlling Law............................................ 5
5.5 Successors................................................. 5
6. Amendment, Termination and Cessation of Trading.................. 5
6.1 Amendment and Termination.................................. 5
6.2 Cessation of Trading in Company Stock...................... 6
7. Execution of Plan................................................ 6
</TABLE>
<PAGE>
SECTION 1
INTRODUCTION
1.1 Plan. This plan has been established by Mississippi Chemical
Corporation for the benefit of nonemployee directors of Mississippi Chemical
Corporation (the "Company"), and shall be known as the Mississippi Chemical
Corporation Nonemployee Directors' Deferred Compensation Plan (the "Plan").
1.2 Effective Date. The "Effective Date" of the Plan is August 29, 1997,
subject to shareholder approval of the Plan.
1.3 Purpose. The Plan has been established to provide additional
incentives to the Company's nonemployee directors to more closely align their
interests with those of the shareholders of the Company and to work towards
growth in the Company's shareholder value, by risking cash retainer payments
otherwise payable to them for deferred compensation based on future growth in
the value of Mississippi Chemical Corporation common stock ("Stock"). The Plan
is intended to permit such directors to elect to defer certain cash retainer
payments that would otherwise be payable to them and to provide that a portion
of their retainer will automatically be deferred. The Plan is intended to be
unfunded for purposes of the Internal Revenue Code of 1986, as amended (the
"Code").
SECTION 2
PARTICIPATION AND SUPPLEMENTAL BENEFITS
2.1 Eligibility. Each director of the Company who is not an employee or
officer of the Company or any of its subsidiaries or affiliates ("Nonemployee
Director") will be a Participant in the Plan.
2.2 Automatic Awards. Effective for retainer periods beginning on and
after January 1, 1998, one-half of each Nonemployee Director's annual retainer
from the Company shall automatically be provided in the form of "deferred
shares" pursuant to Section 2.6 below. The Participant shall designate the
deferred payment date for such portion, which must be at least 18 months after
the date of the deferral election. The Participant shall have no option to
receive this portion of his retainer in cash.
2.3 Election to Defer. A Nonemployee Director may elect to defer all or a
part of the remaining one-half of his annual retainer that would otherwise be
payable to him in cash by filing a written election with the Committee (as
defined below) on forms to be prescribed by the Committee at the time prescribed
in Section 2.5 below. Such election must include a designation of beneficiary.
2.4 Amount of Deferral. The amount of retainer to be deferred in any
calendar year shall be designated by the Participant in dollar or percentage
terms on forms to be prescribed by the Committee.
2.5 Time of Election. A separate election to defer must be filed with
respect to each calendar year for which a Participant desires to defer any
retainer and must be received by the
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end of the calendar year preceding the calendar year in which the retainer would
otherwise be paid. Any election by a Participant with respect to his retainer in
a given calendar year will not preclude a different action with respect to his
retainer in any subsequent calendar year. Notwithstanding the foregoing, any
eligible Nonemployee Director may, within 30 days of first becoming eligible to
participate in the Plan, elect to defer any retainer earned subsequent to such
election for the balance of the calendar year in which he first becomes
eligible.
2.6 Establishment and Adjustment of Deferred Stock Accounts. The
Committee shall cause a "Deferred Stock Account" to be created for each
Participant. The Deferred Stock Account shall be a mere bookkeeping account
reflecting the Company's future obligation to make payments under the Plan and
shall not confer on any Participant any of the rights of a stockholder of the
Company. A Participant's Deferred Stock Account shall be credited with
"deferred shares" effective as of the first day of the retainer period in
question. The number of deferred shares to be credited shall be determined by
dividing (i) 150 percent of the dollar amount of the Participant's retainer for
the year which is automatically deferred pursuant to Section 2.2 above, plus 150
percent of the dollar amount that otherwise would have been payable to the
Participant and that has been deferred pursuant to Section 2.3 above by (ii) the
fair market value of one share of Stock as of the July 1 immediately prior to
the calendar year in which payment of the retainer would otherwise have
occurred. Notwithstanding the foregoing, in no event shall the number of
deferred shares credited be less than (i) 150 percent of the total dollar amount
of the Participant's retainer for the applicable year that is deferred under
Sections 2.2 and 2.3 above, divided by (ii) the fair market value of one share
of Stock as of the first day of the retainer period. The result of such
division shall be rounded up to the nearest whole share. A Participant's
Deferred Stock Account shall be credited, effective as of the payment date of
any dividend on the Stock, with additional shares of deferred stock, calculated
by dividing (i) the dollar amount of the dividend per share times the number of
deferred shares then credited to the Participant's Deferred Stock Account by
(ii) the fair market value of one share of Stock. The Committee shall cause
each Participant's Deferred Stock Account to be adjusted to reflect stock
splits, stock dividends, exchange of stock in connection with a merger, and
similar transactions to produce the same number of deferred shares as the holder
of an equal number of shares of Stock would have following such a transaction.
In the event a Participant ceases serving as a Nonemployee Director before the
end of a retainer year, his Deferred Stock Account shall be reduced by the
product of (i) the number of shares previously credited to his account for the
current retainer year, adjusted to take into account any prior dividends, stock
splits, or similar adjustments with respect to such shares, multiplied by (ii)
the ratio of (a) the number of months he has served as a Nonemployee Director in
the current retainer year to (b) 12. Whenever payment of all or any portion of
a Participant's Deferred Stock Account is to be made in cash hereunder, the
amount of cash to be paid to the Participant is to be determined by multiplying
the number of deferred shares to be distributed by the fair market value of such
shares. For purposes of this Section 2.6, "fair market value" of a share of the
Company's Stock shall equal the average of the closing prices of a share as
reported on the New York Stock Exchange for the last 20 trading days prior to
the date in question.
SECTION 3
PAYMENT OF DEFERRED COMPENSATION
3.1 Payment of Deferred Compensation. Subject to the provisions of
Section 3.2 below, a Participant shall be entitled to receive shares of Stock
equal to the number of deferred
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shares then credited to the Participant's Deferred Stock Account, computed in
accordance with Section 2.6 above, on the first to occur of (i) 30 days
following the end of the calendar year in which such Participant ceases to be a
director of the Company due to resignation, expiration of term, retirement,
Total Disability (as defined below), or death, (ii) the payment date that he
elected at the time of his deferral election, which date shall be 18 months or
more after the date of the deferral election, or (iii) if (and only if) the
Participant so specifies in his initial deferral election, 30 days following a
change of control of the Company (as defined in deferral election forms
prescribed by the Committee). The shares issued to the Participant may be
authorized but unissued shares, Treasury shares or shares purchased with general
funds of the Company. In lieu of shares of Stock, a Participant may elect, in
accordance with any procedures and deadlines prescribed by the Committee, to
receive in cash, at the time issuance of shares of Stock would otherwise occur
hereunder, the "fair market value" (calculated in accordance with Section 2.6
above) of that portion of his Deferred Stock Account attributable to deferrals
under Section 2.3 above. For purposes of this Plan, the term "Total Disability"
shall mean inability to perform the normal functions of a director of the
Company due to a physical or mental condition, disease, or injury that is
anticipated to last at least 12 months. The Committee shall determine whether
Total Disability has occurred based on such evidence as it deems satisfactory.
3.2 Installment Election; Further Deferrals. Subject to the approval of
the Committee, in lieu of receiving the lump-sum issuance of Stock or cash to
which the Participant may be entitled pursuant to the provisions of Section 3.1
above at the time specified therein, a Participant may elect to receive
installment payments by delivering to the Committee at any time prior to
December 31 of the calendar year preceding the calendar year in which payment
would otherwise occur hereunder, written notice of the Participant's election to
receive the amount credited to his Deferred Stock Account in such number of
annual installments (not to exceed installments extending over 10 years) and
commencing on such date (which date shall be no earlier than the date on which
the balance in the Participant's Deferred Stock Account would otherwise be paid
to the Participant) as is specified in the written notice. Subject to the
approval of the Committee, a Participant may also elect, no later than December
31 of the calendar year preceding the calendar year in which delivery of shares
of Stock or cash would otherwise occur under Section 3.1 above, to defer
issuance of such shares of Stock until a later date specified in such election.
A Participant may modify or rescind an installment election or further deferral
election in its entirety at any time prior to the December 31 date referred to
in this Section 3.2, but on such December 31 the election shall become
irrevocable.
3.3 Death. If a Participant dies before receiving all amounts credited to
his Deferred Stock Account, the entire unpaid amount shall be paid in one lump
sum in accordance with Section 3.1 above to the beneficiary designated by such
Participant. No beneficiary designation shall be valid unless it is in writing,
signed by the Participant, dated and filed with the Committee prior to death.
If the Participant is married and designates a primary beneficiary other than
his spouse, the beneficiary designation must include the written consent of the
spouse in such form as the Committee requires. Any beneficiary designation may
be revoked and a new designation may be made, as long as the new designation is
in writing, signed by the Participant, dated and filed with the Committee prior
to death. If no beneficiary has been designated, or no designated beneficiary
survives the Participant, any unpaid amounts will be paid to the Participant's
surviving spouse, or if the Participant does not have a surviving spouse, to the
Participant's estate as soon as administratively possible.
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3.4 Hardship Distribution. A Participant or beneficiary may request
acceleration of the payment terms hereunder only in the event of severe
financial hardship resulting from an Unforeseeable Emergency (as defined below).
The amount of any hardship distribution is limited to the amount necessary to
meet the emergency. Such request shall specify in detail the grounds for the
requested modification and shall be referred to the Committee. The decision of
the Committee with respect to the requested modification shall be solely at the
discretion of the Committee and in accordance with its evaluation of the
exigencies of the situation. Such decision shall be binding on the Company and
Participant. For purposes of this Plan, the term "Unforeseeable Emergency"
means an unanticipated emergency that is caused by an event beyond the control
of the Participant or beneficiary that would result in severe financial hardship
to the individual if early withdrawal were not permitted and that otherwise
meets the requirements of such term in any applicable statute or regulation.
3.5 Source of Payment. All payments under this Plan in cash shall be paid
from the general funds of the Company or from such other funding vehicle as the
Committee shall provide, and all distributions of Stock under this Plan shall be
made from authorized but unissued shares, Treasury shares or shares purchased
with general funds of the Company, or from such other funding vehicle as the
Committee shall provide, provided that all assets paid into any funding vehicle
shall, at all times prior to payment to a Participant or beneficiary, be subject
to the general creditors of the Company. The Company shall be under no
obligation to segregate any assets in connection with the maintenance of any
Deferred Stock Account, nor shall anything contained in this Plan or any action
taken pursuant to the Plan create or be construed to create a trust of any kind
or a fiduciary relationship between the Company and Participant. Title to the
beneficial ownership of any assets, whether cash or investments, which the
Company may designate to pay the amounts credited to the Deferred Stock Accounts
shall at all times remain in the Company, and Participants shall not have any
property interest whatsoever in any specific assets of the Company. Each
Participant's interest in his Deferred Stock Account shall be limited to the
Company's promise to make payment of such Account in the future pursuant to the
terms of this Plan, and such right to receive future payment shall be no greater
than the right of any other unsecured general creditor of the Company.
3.6 Limitations on Issuance of Stock. Notwithstanding anything to the
contrary in the Plan, in lieu of delivering Stock of the Company to a
Participant, the Company reserves the right to pay a Participant in cash equal
to the fair market value (determined in accordance with Section 2.6 above) of
the deferred shares credited to his Deferred Stock Account, if the Company, in
its sole discretion, determines that it is necessary or desirable to do so to
comply with any provision of federal or state law, stock exchange listing rules,
or its articles or bylaws.
SECTION 4
PLAN ADMINISTRATION
4.1 Committee. The terms "Committee" and "Compensation Committee" mean
the Compensation Committee established by the Company's Board of Directors. The
Committee shall have complete authority to control and manage the operation and
administration of the Plan. The Committee shall interpret the Plan and shall
determine all questions arising in the administration and interpretation of the
Plan; however, all such interpretations and decisions shall be applied in a
uniform manner to all such similarly situated Participants. All decisions and
interpretations of the Committee made in good faith pursuant to the Plan shall
be final, conclusive and binding on all persons. Notwithstanding the foregoing,
no Participant who is a
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member of the Committee shall vote on any decision solely affecting his own
benefits under the Plan (such as whether the Participant has suffered Total
Disability or is eligible for a hardship withdrawal).
4.2 Indemnification. In the event and to the extent not insured under any
contract of insurance with an insurance company, the Company shall indemnify and
hold harmless each "Indemnified Person," as defined below, against any and all
claims, demands, suits, proceedings, losses, damages, interest, penalties,
fines, expenses (specifically including, but not limited to, counsel fees to the
extent approved by the Board of Directors of the Company or otherwise provided
by law, court costs and other reasonable expenses of litigation), and liability
of every kind, including amounts paid in settlement with the approval of the
Board of Directors, arising from any action or cause of action related to the
Indemnified Person's act or acts or failure to act. Such indemnity shall apply
regardless of whether such claims, demands, suits, proceedings, losses, damages,
interest, penalties, fines, expenses, and liability arise in whole or in part
from the negligence or other fault of the Indemnified Person, except when the
same is judicially determined to be due to gross negligence, fraud,
recklessness, or willful or intentional misconduct of such Indemnified Person.
The indemnification provided in this Section 4.2 shall not be construed to limit
or supersede any other indemnity provided by the Company. "Indemnified Person"
shall mean the Committee and each employee, officer, or director of the Company
acting in a decision-making or administrative role with respect to the Plan.
SECTION 5
GENERAL
5.1 Interests Not Transferable. The interest of any Participant or his
spouse or his beneficiary under the Plan is not subject to the claims of
creditors and may not be voluntarily or involuntarily sold, transferred,
assigned, alienated or encumbered.
5.2 Facility of Payment. Any amounts payable hereunder to any person
under legal disability or who, in the judgment of the Committee, is unable to
properly manage his financial affairs may be paid to the legal representative of
such person or may be applied for the benefit of such person in any manner which
the Committee may select.
5.3 Gender and Number. Where the context admits, words in the masculine
gender shall include the feminine gender, the plural shall include the singular
and the singular shall include the plural.
5.4 Controlling Law. To the extent not superseded by the laws of the
United States, the laws of Mississippi shall be controlling in all matters
relating to the Plan.
5.5 Successors. This Plan is binding on the Company and will be binding
on, and inure to the benefit of, any successor of the Company, whether by way of
purchase, merger, consolidation or otherwise.
SECTION 6
AMENDMENT, TERMINATION
AND CESSATION OF TRADING
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6.1 Amendment and Termination. While the Company expects to continue the
Plan indefinitely, the Compensation Committee must necessarily reserve, and
hereby reserves, the right to terminate the Plan at any time, and to amend the
Plan, but no more than once in any six-month period except to comport with
changes in the Code; provided that in no event shall any Participant's Deferred
Stock Account accrued to the date of such amendment or termination be reduced by
such action without the specific written agreement of the Participant to such
modification or reduction. In the event the Committee elects to terminate the
Plan, the Company reserves the right to settle all liabilities under the Plan by
paying each Participant a lump-sum payment in cash or in Stock, determined at
the Committee's sole election, in full satisfaction of his benefits hereunder.
Such lump sum shall equal the value of his Deferred Stock Account valued through
the date of Plan termination pursuant to Section 2.5 above.
6.2 Cessation of Trading in Company Stock. Notwithstanding anything to
the contrary in this Plan, in the event the Stock permanently ceases to be
traded on a national stock exchange or over the counter for any reason other
than a merger with another publicly traded entity, or ceases to exist for any
reason other than a merger (whether due to liquidation or other event), the
Company (or its successor) shall, within 60 days of such event, distribute to
each Participant (or beneficiary) the value of the entire balance of his
Deferred Stock Account in cash, based on the fair market value as calculated
under Section 2.5 above, as of the last date the Stock was traded.
SECTION 7
EXECUTION OF PLAN
7.1 To record the establishment of the Plan, the undersigned, being duly
authorized to act on behalf of the Board of Directors of the Company, have
executed this document at Yazoo City, Mississippi.
Dated: a/o August 29, 1997 MISSISSIPPI CHEMICAL CORPORATION
By: /s/ Coley L. Bailey
---------------------------------
Chairman, Board of Directors
By: /s/ John Sharp Howie
---------------------------------
Chairman, Compensation Committee
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EXHIBIT 10.11
MISSISSIPPI CHEMICAL CORPORATION
SUPPLEMENTAL BENEFIT PLAN
AS AMENDED AND RESTATED AS OF JULY 1, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
<C> <S> <C>
1. Introduction.............................................. 1
1.1 Plan................................................. 1
1.2 Effective Date....................................... 1
1.3 Purpose.............................................. 1
2. Participation and Supplemental Benefits................... 2
2.1 Eligibility.......................................... 2
2.2 Supplemental Pension Benefits........................ 2
2.3 Supplemental Thrift Benefits......................... 2
2.4 Payment of Supplemental Pension Benefits............. 3
2.5 Payment Modification................................. 3
2.6 Payment of Supplemental Thrift Benefits.............. 4
2.7 Benefits Provided by Employer........................ 4
3. Other Employment.......................................... 5
4. General................................................... 6
4.1 Administrator........................................ 6
4.2 Interests Not Transferable........................... 6
4.3 Facility of Payment.................................. 6
4.4 Gender and Number.................................... 6
4.5 Controlling Law...................................... 6
4.6 Successors........................................... 6
4.7 Not a Contact........................................ 6
5. Amendment and Termination................................. 7
6. Execution of Plan......................................... 8
</TABLE>
<PAGE>
SECTION 1
INTRODUCTION
1.1 PLAN. This plan has been established by Mississippi Chemical
Corporation (the "Employer") for the benefit of eligible employees of the
Employer, and shall be known as the Mississippi Chemical Corporation
Supplemental Benefit Plan (the "Plan"). Subsidiaries and affiliates of the
Employer may not, however, adopt the Plan for the benefit of any of their
employees.
1.2 EFFECTIVE DATE. The "Effective Date" of the Plan is July 1, 1984.
The Effective Date of this amendment and restatement of the Plan is July 1,
1996.
1.3 PURPOSE. The Plan has been established to supplement retirement
benefits provided by the Employer's qualified defined benefit pension plan,
entitled the Mississippi Chemical Corporation Retirement Plan ("Pension Plan").
To the extent that benefits under such plan are limited by Sections 415 and
401(a)(17) of the Internal Revenue Code of 1986, as amended ("Code"), and the
regulations thereunder (the "Pension Limiting Provisions"), supplemental
benefits are provided under terms and conditions of this Plan. The plan is also
intended to supplement benefits provided by the Employer's qualified 401(k)
savings plan, entitled the Mississippi Chemical Corporation Thrift Plan Plus
("Thrift Plan"). To the extent that Employer matching contributions under such
plan are limited by Sections 415, 401(a)(17) and 402(g) of the Code, and the
regulations thereunder (the "Thrift Limiting Provisions"), supplemental benefits
are provided under the terms and conditions of this Plan. The Plan is intended
to be unfunded for purposes of the Code and the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). For purposes of calculating
benefits under this Plan, the Pension Limiting Provisions and the Thrift
Limiting Provisions shall be deemed to be not less than the dollar and/or
percentage limits in effect as of January 1, 1996.
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SECTION 2
PARTICIPATION AND SUPPLEMENTAL BENEFITS
2.1 ELIGIBILITY. Each employee of the Employer who is covered by the
Pension Plan or by the Thrift Plan, whose benefits thereunder are or were
limited by the Pension Limiting Provisions or the Thrift Limiting Provisions,
and who is specifically named and nominated in writing by the Administrator for
participation hereunder, will be a Participant under this Plan and, upon
retirement on or after the Effective Date, will be eligible for benefits in
accordance with subsections 2.2 and 2.3 hereof. Eligibility shall be limited to
a select group of management or highly compensated employees.
2.2 SUPPLEMENTAL PENSION BENEFITS. Upon a Participant's termination of
employment, retirement or death on or after the Effective Date, any benefits
which otherwise would have been provided to him or his beneficiary under the
Pension Plan, but which have not been provided to him or his beneficiary because
of the Pension Limiting Provisions shall be calculated and, if appropriate,
shall be valued by an actuary selected by the Employer. Such benefits
("Supplemental Pension Benefits") shall be the full amount of retirement benefit
produced for the Participant by the Pension Plan's formula without regard to the
Pension Limiting Provisions, less the maximum amount of retirement benefits that
can be provided under the Pension Plan in accordance with the Pension Limiting
Provisions.
2.3 SUPPLEMENTAL THRIFT BENEFITS. Upon a Participant's termination of
employment, retirement or death on or after the Effective Date, the accumulated
value of any Employer matching contributions which otherwise would have been
credited to him under the Thrift Plan, but which were not credited to him
because of the operation of the Thrift Limiting Provisions, shall be calculated
as hereinafter provided:
(a) Employer matching contributions to be credited for a particular year
under this Plan shall be equal to the excess of (i) the Employer
matching contributions that would have been credited under the Thrift
Plan for the year without regard to the Thrift Limiting Provisions
over (ii) the actual Employer matching contributions that were
credited under the Thrift Plan for the year.
(b) If a Participant has made salary deferred contributions in the maximum
amount allowed by Section 402(g) of the Internal Revenue Code and the
regulations thereunder, it shall be assumed that the Participant would
have made salary deferral contributions at a level that would have
produced the maximum Employer matching contributions permitted
pursuant to the matching formula in the Thrift Plan.
(c) The accumulated value of such Employer matching contributions shall be
determined using an interest rate of eight percent (8%) per annum.
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<PAGE>
Such accumulated value shall be the Participant's "Supplemental Thrift
Benefits."
2.4 PAYMENT OF SUPPLEMENTAL PENSION BENEFITS. Supplemental Pension
Benefits, subject to the further provisions of the Plan, shall be payable to or
on account of the Participant as follows:
(a) on a monthly basis beginning at the same time and under the same terms
and conditions as would have applied if such benefits were payable on
a monthly basis from the Pension Plan.
(b) on a monthly basis to the Participant's surviving spouse or other
beneficiary in the event of the Participant's death (before or after
retirement) beginning at the same time and under the same terms and
conditions as would have applied if such benefits were payable on a
monthly basis from the Pension Plan. Benefits to the surviving spouse
or other beneficiary shall be based upon the difference between the
full amount of retirement benefit produced for the Participant by the
Pension Plan's formula, multiplied by the percentage of such benefit
payable to the surviving spouse or other beneficiary under the Pension
Plan, less the amount of benefits being provided to the surviving
spouse or other beneficiary under the Pension Plan after application
of the Pension Limiting Provisions. In no event will any payments be
made hereunder to or on account of a surviving spouse or other
beneficiary after the month in which the surviving spouse's death
occurs.
All elections made, beneficiaries designated and payment options selected
under the Pension Plan by the Participant, his spouse or his beneficiary shall
be deemed to have been so made, designated or selected for purposes of this
Section 2.4. No later than the last day of the calendar year immediately prior
to the year payments are to begin hereunder, the Participant shall irrevocably
elect the form of payment of benefits hereunder from among the payment options
available under the Pension Plan. Such election shall be made in writing and
delivered to the Administrator. Such election shall not affect the
Participant's right to select his payment option under the Pension Plan within
the time periods established by the Pension Plan and applicable law. In the
event the Participant fails to make such an irrevocable election, the
Administrator, in its sole discretion, shall determine the form of payment
hereunder.
2.5 PAYMENT MODIFICATIONS. Regardless of any other provisions of this
Plan, the period during which any monthly installments hereunder are to be paid
to a Participant or to his surviving spouse or other beneficiary may, at any
time after such person(s) is entitled to payments hereunder, be modified by
mutual agreement between the Administrator and the person(s) to whom such
monthly installments are to be paid. Notwithstanding anything to the contrary
in the Plan, the Administrator, in its sole discretion, may cause a lump-sum
payment to be made to a Participant in full satisfaction of all amounts payable
hereunder, if the present value
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<PAGE>
of all amounts payable hereunder does not exceed $50,000. The amount of such
lump-sum payment and such present value shall be determined in accordance with
the procedures and assumptions specified in Section 5 below.
2.6 PAYMENT OF SUPPLEMENTAL THRIFT BENEFITS. Supplemental Thrift
Benefits, subject to the further provisions of this Plan and to the payout
provisions of the Thrift Plan, shall be payable to or on account of the
Participant at the time and in the form as elected by the Participant, or if
applicable the Participant's beneficiary. All beneficiaries designated under
the Thrift Plan by the Participant shall be deemed to have been designated for
purposes of this Section 2.6. No later than the last day of the calendar year
immediately prior to the year payments are to begin hereunder, the Participant
shall irrevocably elect the form of payment of benefits hereunder from among the
payment options available under the Thrift Plan. Such election shall be made in
writing and delivered to the Administrator. Such election shall not affect the
Participant's right to select his payment option under the Thrift Plan within
the time periods established by the Thrift Plan and applicable law. In the
event the Participant fails to make such an irrevocable election, the
Administrator, in its sole discretion, shall determine the form of payment
hereunder.
2.7 BENEFITS PROVIDED BY EMPLOYER. Benefits payable under this Plan to a
Participant or his spouse or other beneficiary shall be the obligation of the
Employer. The Employer may, but shall not be required to, sequester any assets
to be applied for the payment of benefits under this Plan. In the event the
Employer elects to establish a grantor trust for the payment of benefits
hereunder, the Employer shall be relieved of liability to the extent of any
payments actually made to Participants by such trust. Participants shall have
the status of unsecured creditors of the Employer with respect to their benefits
hereunder in all events.
4
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SECTION 3
OTHER EMPLOYMENT
A Participant or his spouse or other beneficiary receiving Supplemental
Pension Benefits or Supplemental Thrift Benefits will continue to be entitled
thereto regardless of other employment or self-employment.
5
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SECTION 4
GENERAL
4.1 ADMINISTRATOR. This Plan will be administered by the Employer or by
one or more officers of the Employer who are designated as "Administrator" by
the Board of Directors of the Employer.
4.2 INTERESTS NOT TRANSFERABLE; TAXES. Except as to any withholding of
tax under the laws of the United States or any State and except with respect to
a "qualified domestic relations order" as defined in ERISA, the interest of any
Participant or his spouse, minor children of beneficiary under the Plan is not
subject to the claims of creditors and may not be voluntarily or involuntarily
sold, transferred, assigned, alienated or encumbered. The Administrator shall
have the discretion and sole authority to determine the amount and timing of any
withholding or employment taxes with respect to amounts accrued or paid under
the Plan. The Employer shall reimburse the Participant for, or pay, any tax
imposed on the Participant under the Federal Insurance Contributions Act with
respect to the Participant's interest in this Plan; however, the Participant
shall be responsible for any taxes resulting from the Employer's payment of such
tax.
4.3 FACILITY OF PAYMENT. Any amounts payable hereunder to any person
under legal disability or who, in the judgment of the Administrator, is unable
to properly manage his financial affairs may be paid to the legal representative
of such person or may be applied for the benefit of such person in any manner
which the Administrator may select.
4.4 GENDER AND NUMBER. Where the context admits, words in the masculine
gender shall include the feminine gender, the plural shall include the singular
and the singular shall include the plural.
4.5 CONTROLLING LAW. To the extent not superseded by the laws of the
United States, the laws of Mississippi shall be controlling in all matters
relating to the Plan.
4.6 SUCCESSORS. This Plan is binding on the Employer and will be binding
on and inure to the benefit of any successor of the Employer, whether by way of
purchase, merger, consolidation or otherwise.
4.7 NOT A CONTRACT. This Plan does not constitute a contract of
employment and shall not be construed to give any Participant the right to be
retained in the Employer's service.
6
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SECTION 5
AMENDMENT AND TERMINATION
While the Employer expects to continue the Plan indefinitely, the Board of
Directors of the Employer must necessarily reserve and hereby reserves the right
to amend the Plan at any time, provided that in no event shall any Participant's
Supplemental Pension Benefits or Supplemental Thrift Benefits accrued to the
date of such amendment or termination be modified or reduced by such action,
without the specific written agreement of the Participant to such modification
or reduction. Notwithstanding the foregoing, in the event the Board elects to
terminate the Plan, the Employer reserves the right to settle all liabilities
under the Plan by paying each Participant a lump-sum payment in full
satisfaction of his benefits hereunder. Such lump sum shall equal (1) the
present value of the Participant's Supplemental Pension Benefits, determined by
an actuary selected by the Employer, plus (2) the accumulated value of his
Supplemental Thrift Benefits with interest credited through the date of
termination pursuant to Section 2.3 above. The present value of the
Participant's Supplemental Pension Benefits shall be determined in accordance
with the assumptions designated in Section 1.34 of the Pension Plan, entitled
"Present Value of Accrued Benefit."
7
<PAGE>
SECTION 6
EXECUTION OF PLAN
To record the amendment and restatement of the Plan, the undersigned, being
duly authorized to act on behalf of the Board of Directors of Mississippi
Chemical Corporation, have executed this document at Yazoo City, Mississippi.
Dated: June 26, 1996 MISSISSIPPI CHEMICAL CORPORATION
By: Plan Administrator
/s/ Ethel Truly
-------------------------------------
/s/ Robert E. Jones
-------------------------------------
8
<PAGE>
EXHIBIT 13.1
MISSISSIPPI CHEMICAL CORPORATION
1998
ANNUAL REPORT
<PAGE>
MISSISSIPPI CHEMICAL CORPORATION
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INCOME STATEMENT DATA: Fiscal Years Ended June 30
- ------------------------------------------------------------------------------------------------------------------
(In thousands, except per share data) 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $519,911 $520,569 $428,789 $388,154 $309,360
Operating income $ 37,936 $ 91,209 $ 84,818 $ 80,969 $ 37,905
Income from continuing operations before
cumulative effect of change in accounting
principle $ 22,974 $ 55,815 $ 54,178 $ 52,230 $ 26,912
Net income $ 22,974 $ 55,815 $ 54,178 $ 52,230 $ 36,523
Income from continuing operations assuming
conversion from a cooperative to a regular
business corporation as of July 1, 1993 (1) n/a n/a n/a n/a $ 21,415
Earnings per share - basic (2) $ 0.84 $ 2.29 $ 2.47 $ 2.34 $1.10
Earnings per share - diluted (2) $ 0.84 $ 2.29 $ 2.46 $ 2.34 $1.10
Weighted average common shares outstanding - basic (3) 27,355 24,329 21,975 22,337 19,454
Weighted average common shares outstanding - diluted (3) 27,390 24,404 22,039 22,364 19,454
BALANCE SHEET DATA: June 30
- ------------------------------------------------------------------------------------------------------------------
(In thousands, except per share data) 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------
Working capital $ 64,086 $ 53,910 $ 81,613 $ 70,790 $ 34,931
Total assets $912,332 $858,545 $341,006 $302,215 $298,430
Long-term debt, excluding long-term debt due
within one year $304,705 $244,516 $ - $ 2,478 $ 57,217
Shareholders' equity $448,525 $439,429 $247,825 $227,307 $142,956
Cash dividends declared per common share (4) $ 0.40 $ 0.40 $ 0.36 $ 0.16 $ -
</TABLE>
(1) For 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. If the conversion from a cooperative to a regular
business corporation had occurred as of July 1, 1993, income taxes would
have been increased by $5.5 million for fiscal 1994.
(2) For 1994, earnings per share reflect the reorganization of the Company from
a cooperative to a regular business corporation as if it had occurred July
1, 1993 and is based on income from continuing operations.
(3) For 1994, 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, 1993.
(4) For 1994, the Company operated as a cooperative and paid cash patronage
refunds in lieu of cash dividends
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company's fiscal 1998 results reflect depressed prices for all of its
nitrogen products due to a persistent world supply and demand imbalance. Net
income decreased to $23.0 million in fiscal 1998 from $55.8 million in fiscal
1997. Net sales decreased to $519.9 million in fiscal 1998 from $520.6 million
in fiscal 1997, and operating income decreased to $37.9 million in fiscal 1998
from $91.2 million in fiscal 1997. The Company's weighted average nitrogen
sales price decreased 21% during the current year as compared to the prior year.
The average selling prices for ammonia, ammonium nitrate, urea and nitrogen
solutions were down 25%, 18%, 27% and 21%, respectively, in fiscal 1998 as
compared to fiscal 1997. The lower sales prices experienced during the current
year offset the benefits derived from a 22% increase in nitrogen sales volumes
during the current year. This increase was primarily the result of increased
ammonia and urea volumes attributable to the acquisition of the fertilizer
production facilities of First Mississippi Corporation ("First Mississippi") in
December 1996. During the current year, diammonium phosphate ("DAP") sales
prices did not change significantly while sales prices for the Company's potash
products increased 12%.
During the current year, nitrogen costs per ton increased 3%, primarily as a
result of higher maintenance and labor costs associated with turnarounds at the
Company's nitrogen facilities and higher depreciation costs related to the
Company's acquisition of the First Mississippi fertilizer assets. These costs
were partially offset by slightly lower natural gas costs and lower prices paid
for purchased ammonia. DAP costs per ton increased 2% during the current year,
primarily because of higher conversion costs associated with scheduled
turnarounds and increased water treatment costs associated with abnormally high
rainfall levels experienced during the current year. The Company experienced a
3% decrease in its potash costs per ton, which was primarily the result of the
suspension of operations of the higher cost mining and production facilities at
Eddy Potash, Inc. ("Eddy") in December 1997.
Looking forward to fiscal 1999, the key issue is the direction of nitrogen
pricing which will be driven by supply and demand. Three of the most
significant factors affecting pricing of nitrogen products will be Chinese
purchasing practices, Russian production and pricing policies, and the impact of
recent global capacity expansions.
Farmland MissChem Limited, the Company's 50-50 joint venture anhydrous ammonia
plant located in Point Lisas, The Republic of Trinidad and Tobago, achieved
mechanical completion during the current year and produced interim revenues as
of June 30, 1998. The plant produced sporadically during the Company's fourth
fiscal quarter, but did not reach operational status by the end of fiscal 1998.
In late July 1998, the plant achieved operational status.
In March and April of the current year, the Company experienced lost
production at its DAP facility due to a shutdown associated with a production
expansion. This expansion increased production rates in the fourth quarter
which allowed the Company to make up the lost production. By year end, sales
volumes were comparable to the prior year. In fiscal 1999 and thereafter, this
expansion should allow the Company to increase its DAP production by
approximately 180,000 tons annually.
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 a variety of conditions in the agricultural
industry such as planted acreage, United States government agricultural
policies, projected grain stocks, weather and changes in agricultural production
methods. The Company's results can also be affected by such factors as the
volatility of natural gas prices, construction delays in completing and
obtaining production from new or expanded facilities, the relative value of the
U.S. dollar, foreign
<PAGE>
agricultural policies (in particular the policies of the governments of India
and China regarding fertilizer imports), capacity expansions by competitors, the
pricing policies of domestic and foreign (especially Russian) competitors, and
the unpredictable nature of international and local economies.
RESULTS OF OPERATIONS
Following are summaries of the Company's sales results by product categories:
<TABLE>
<CAPTION>
Fiscal Year Ended June 30
------------------------------
1998 1997 1996
-------- -------- --------
(in thousands)
<S> <C> <C> <C>
Net Sales:
Nitrogen $298,595 $308,441 $255,195
DAP 127,734 128,076 142,084
Potash 91,708 81,945 29,553
Other 1,874 2,107 1,957
-------- -------- --------
Net Sales $519,911 $520,569 $428,789
======== ======== ========
Fiscal Year Ended June 30
-----------------------------
1998 1997 1996
--------- ------- -------
Tons Sold: (in thousands)
Nitrogen:
Ammonia 648 379 39
Ammonium nitrate 765 725 759
Urea 515 425 313
Nitrogen solutions 485 458 624
Nitric acid 57 36 35
-------- -------- --------
Total Nitrogen 2,470 2,023 1,770
DAP 726 723 754
Potash 1,022 1,020 418
Fiscal Year Ended June 30
---------------------------
1998 1997 1996
------ ------ ------
Average Sales Price Per Ton:
Nitrogen $121 $152 $144
DAP $176 $177 $188
Potash $ 90 $ 80 $ 71
</TABLE>
<PAGE>
FISCAL 1998 COMPARED TO FISCAL 1997
NET SALES. Net sales decreased to $519.9 million in fiscal 1998 from
$520.6 million in fiscal 1997, primarily as a result of lower sales prices for
nitrogen, partially offset by increased sales volumes for nitrogen and higher
sales prices for potash. During the current year, the Company's sales prices
for its anhydrous ammonia, ammonium nitrate, urea and nitrogen solutions
decreased 25%, 18%, 27% and 21%, respectively. This resulted in a 21% reduction
in the weighted average sales price per ton of nitrogen. Nitrogen fertilizer
sales volumes increased 22% during the current year due to increased ammonia and
urea volumes attributable to the acquisition of the fertilizer production
facilities of First Mississippi in December 1996. Potash sales increased 12% as
a result of a 12% increase in sales prices. The higher sales prices are the
result of increased domestic and international demand during the current year.
Potash sales volumes did not change significantly during the current year.
Production efficiency gains at the Company's two remaining operating mines and a
reduction in inventories offset the lost production associated with the
suspension of operations at the Eddy facilities in December 1997. Sales of DAP
did not change significantly during the current year, as sales prices decreased
1% while volumes remained relatively unchanged. The Company experienced some
lost DAP production due to a shutdown associated with the Company's production
expansion during March and April of the current year. This expansion increased
DAP production rates in the fourth quarter which allowed the Company to make up
the lost production. By year end, sales volumes were comparable to the prior
year.
TRADING LOSS ON BROKERED PRODUCT. The Company began brokering ammonia in
the open market following the First Mississippi acquisition in December 1996.
During the current year, brokered ammonia sales of $18.5 million and purchases
of $19.3 million resulted in an $800,000 net trading loss. During the prior
year, brokered ammonia sales of $32.3 million and purchases of $33.2 million
resulted in a $57,000 net trading loss after considering certain purchase price
adjustments associated with the acquisition. The Company brokered approximately
142,000 short tons during the current year compared to 177,000 short tons during
the prior year.
COST OF PRODUCTS SOLD. For fiscal 1998, cost of products sold increased to
$412.5 million from $367.0 million for fiscal 1997. As a percentage of net
sales, cost of products sold increased to 79% from 70%. The increase in cost of
products sold, as a percentage of net sales, is primarily the result of
decreases in the average sales price for each of the Company's nitrogen
products. The Company's cost per ton for its nitrogen products increased 3% in
the current year, primarily the result of higher maintenance and labor costs
associated with scheduled maintenance turnarounds at the Company's nitrogen
facilities in Yazoo City, Mississippi, and Donaldsonville, Louisiana, and higher
depreciation associated with the acquisition of the First Mississippi fertilizer
assets. These costs were partially offset by slightly lower natural gas costs
as well as lower prices paid for purchased ammonia. DAP costs per ton increased
2% during the current year as compared to the prior year, resulting primarily
from higher conversion costs incurred due to scheduled turnarounds of its
sulfuric acid plants and increased water treatment costs due to abnormally high
rainfall levels experienced during the current year. These higher costs were
partially offset by lower raw material costs, primarily ammonia and phosphate
rock. Phosphate rock costs decreased due to the pricing formula in the
Company's phosphate rock supply contract that is based on the phosphate rock
costs incurred by certain other domestic phosphate producers and the financial
performance of the Company's phosphate operations. Potash cost per ton
decreased 3% during the current year as compared to the prior year, primarily
the result of the Company's suspension of operations at its higher cost mining
and production facilities at Eddy in early December 1997.
SELLING EXPENSES. For fiscal 1998, selling expenses increased to $33.3
million from $30.7 million in fiscal 1997. This increase was primarily the
result of the Company's incurring higher delivery cost for its potash products
as well as higher storage costs for its potash and nitrogen products resulting
from increased tonnage placed into the Company's outlying storage facilities.
During the current year, the Company also experienced increased costs for sales
administration as a result of the
<PAGE>
acquisitions made during the prior year. As a percentage of net sales, selling
expenses were 6% for fiscal 1998 and 1997.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased to $35.3 million in fiscal 1998 from $31.7 million in fiscal 1997.
This increase was primarily the result of increased goodwill amortization during
the current year associated with the acquisition of First Mississippi in the
prior year and idle plant costs associated with the suspension of operations at
the Eddy facility in December 1997. As a percentage of net sales, general and
administrative expenses increased to 7% in fiscal 1998 from 6% in fiscal 1997.
OPERATING INCOME. As a result of the above factors, operating income
decreased to $37.9 million for fiscal 1998 from $91.2 million in fiscal 1997, a
58% decrease.
INTEREST, NET. For fiscal 1998, net interest expense was $10.9 million
compared to $4.3 million in fiscal 1997. This increase was primarily the
reflection of higher interest expense resulting from higher levels of borrowings
during the current year. Also, the Company capitalized $9.0 million and $3.9
million of its interest costs during fiscal 1998 and 1997, respectively, related
to major construction projects at its nitrogen and phosphates operations as well
as its investment in Farmland MissChem Limited.
OTHER. Other income increased to $12.3 million in fiscal 1998 from $3.7
million in fiscal 1997. This increase was primarily the result of the Company's
sale of its phosphate rock properties.
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 in Hardee County, Florida. On 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 for $14.0 million and granted to the third party the exclusive
option to purchase the remaining portion of the property. In January 1998, the
third party exercised its option, and on April 16, 1998, the sale to the third
party was completed. These remaining properties had a carrying value of $52.9
million, and were classified in the consolidated balance sheet at June 30, 1997,
as properties held for sale. The $57.0 million purchase price of the remaining
property was paid in the form of an initial cash payment of $2.4 million and a
note for $54.6 million. In addition to the purchase price, the Company has
received $7.0 million in option payments since 1994. The note, which is subject
to prepayment, matures over a six-year period and requires quarterly principal
payments totaling $9.5 million each year. At June 30, 1998, the note carried an
interest rate of 6.07%, subject to adjustment, and was secured by a mortgage on
the property. As a result of this transaction, the Company has recorded a net
pre-tax gain of $10.9 million as a component of other income in its 1998
consolidated statement of income.
INCOME TAX EXPENSE. For fiscal 1998, income tax expense decreased to $16.3
million from $34.8 million in fiscal 1997, which is primarily the result of a
decrease in earnings during fiscal 1998. The Company also incurred an increase
in the effective tax rate during fiscal 1998 due to the nondeductible
amortization of goodwill associated with the acquisition of First Mississippi in
December 1996.
NET INCOME. As a result of the foregoing, net income decreased to $23.0
million in fiscal 1998 from $55.8 million in fiscal 1997.
FISCAL 1997 COMPARED TO FISCAL 1996
NET SALES. Net sales increased 21% to $520.6 million in fiscal 1997 from
$428.8 million in fiscal 1996, primarily as a result of increased sales volumes
for nitrogen and potash fertilizers.
<PAGE>
Nitrogen fertilizer sales increased 21% through an increase in tons sold of 14%
and a 6% increase in sales prices. The volume increase is attributable to an
increase in anhydrous ammonia and urea sales due to the acquisition of the
fertilizer operations of First Mississippi which was partially offset by lower
sales volumes for nitrogen solutions and ammonium nitrate. During fiscal 1997,
the weighted average nitrogen sales price increased by 6% over fiscal 1996
primarily due to a 340,000-ton increase in anhydrous ammonia sales and an
111,000-ton increase in urea sales. Prices for individual nitrogen products
during fiscal 1997 were similar to those in fiscal 1996 with the exception of
urea, which was down approximately 5%. Sales of DAP decreased 10% as a result of
a 6% decrease in the average sales price and a 4% decrease in tons sold. The
decrease in the average sales price was the result of aggressive competition for
non-Chinese DAP sales during fiscal 1997. Potash sales increased 177% as a
result of a 144% increase in tons sold and a 14% increase in the average sales
price. This increase in volume is the result of increased tonnage made available
through an acquisition completed during fiscal 1996. In August 1996, the Company
acquired substantially all of the assets of New Mexico Potash Corporation and
Eddy (the "Potash Acquisitions") from Trans-Resources, Inc. Potash prices
increased due to strengthening in both the domestic and international markets
and the inclusion of value added industrial grades of potash in the Company's
product mix.
TRADING LOSS ON BROKERED PRODUCT. Following the acquisition of the
fertilizer operations of First Mississippi, the Company began brokering ammonia
in the open market. During fiscal 1997, the Company brokered approximately
177,000 short tons of ammonia. Brokered ammonia sales of approximately $32.3
million and purchases of approximately $33.2 million resulted in a $57,000 net
loss after considering certain purchase price adjustments associated with the
acquisition.
COST OF PRODUCTS SOLD. For fiscal 1997, the Company's cost of products
sold increased to $367.0 million from $291.4 million in fiscal 1996. As a
percentage of net sales, cost of products sold increased to 70% from 68%. This
increase in cost of products sold, as a percentage of net sales, is the result
of the Company incurring higher costs per ton for nitrogen and potash partially
offset by lower costs per ton for DAP. Through the Potash Acquisitions, the
Company's fiscal 1997 sales also included a higher proportion of potash sales
which have a higher percentage of cost to sales. This increase, as a percentage
of net sales, was partially offset by higher weighted average sales prices for
nitrogen and potash. For fiscal 1997, nitrogen fertilizer cost per ton
increased primarily as a result of higher natural gas costs and higher
depreciation associated with the First Mississippi acquisition. These higher
costs were partially offset by reduced purchases of ammonia and lower
maintenance and labor costs during fiscal 1997. During fiscal 1996, the Company
incurred higher maintenance and labor costs and increased purchases of ammonia
due to a scheduled biennial maintenance turnaround at the Company's Yazoo City
facility. For fiscal 1997, DAP cost per ton decreased as a result of lower
costs for phosphate rock and sulfur, partially offset by higher ammonia costs.
Phosphate rock costs decreased due to the pricing formula in the Company's
phosphate rock supply contract that is based on the phosphate rock costs
incurred by certain other domestic phosphate producers and the financial
performance of the Company's phosphate operations.
SELLING EXPENSES. For fiscal 1997, selling expenses increased to $30.7
million from $27.9 million in fiscal 1996. As a percentage of net sales,
selling expenses decreased to 5.9% for fiscal 1997, from 6.5% in fiscal 1996.
This decrease, as a percentage of net sales, was primarily the result of the
Company's sales including less tonnage sold on a delivered basis and higher
weighted average sales prices for nitrogen and potash. This decrease was
partially offset by higher transportation expenses for the Company's nitrogen
products. The Company also experienced increased costs for sales administration
and storage during fiscal 1997 due to its Potash Acquisitions and the
acquisition of First Mississippi.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased to $31.7 million in fiscal 1997 from $24.7 million in fiscal 1996. As
a percentage of net sales, general and administrative expenses increased to 6.1%
in fiscal 1997 from 5.8% in fiscal 1996. This increase is primarily the result
of the amortization of goodwill associated with the acquisition of
<PAGE>
First Mississippi in December 1996. In addition, the Company experienced
increased royalties and other administrative costs associated with the Potash
Acquisitions.
OPERATING INCOME. As a result of the above factors, operating income
increased to $91.2 million for fiscal 1997 from $84.8 million in fiscal 1996, an
8% increase.
INTEREST, NET. For fiscal 1997, net interest expense was $4.3 million
compared to net interest income of $2.2 million in fiscal 1996. This increase
in net interest expense was primarily the reflection of higher interest expense
resulting from higher levels of borrowings and lower interest income earned due
to lower levels of investments during fiscal 1997. This increase was partially
offset by interest income received on income tax refunds related to a prior
period. Also, during fiscal 1997, the Company capitalized $3.9 million of its
interest costs.
INCOME TAX EXPENSE. For fiscal 1997, income tax expense increased to $34.8
million from $34.3 million in fiscal 1996, which is primarily the result of an
increase in earnings during fiscal 1997. The Company also incurred an increase
in the effective tax rate during fiscal 1997 due to the nondeductible
amortization of goodwill associated with the acquisition of First Mississippi in
December 1996. This increase was offset by a decrease in the Company's
effective state income tax rate.
NET INCOME. As a result of the foregoing, net income increased to $55.8
million in fiscal 1997 from $54.2 million in fiscal 1996.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1998, the Company had cash and cash equivalents of $3.9
million, compared to $8.2 million at June 30, 1997, a decrease of $4.3 million.
At June 30, 1997, cash and cash equivalents had decreased to $8.2 million from
$60.2 million at June 30, 1996, a decrease of $52.0 million.
OPERATING ACTIVITIES. For fiscal 1998, 1997 and 1996, net cash provided by
operating activities was $53.0 million, $72.6 million and $94.6 million,
respectively.
INVESTING ACTIVITIES. Net cash used in investing activities was $98.3
million, $195.5 million, and $27.1 million for fiscal 1998, 1997 and 1996,
respectively, primarily reflecting capital expenditures in those periods.
Fiscal 1998 capital expenditures were $96.5 million, which included
approximately $40.7 million related to the Company's nitrogen expansion project
at its Yazoo City, Mississippi facility, and $9.6 million for the development of
a new phosphogypsum disposal facility and approximately $12.7 million related to
the expansion of its manufacturing facilities in Pascagoula, Mississippi. The
remaining $33.5 million was utilized in normal improvements and modifications to
the Company's facilities. Capital expenditures for fiscal 1997 and 1996 were
$93.8 million and $16.1 million, respectively. Fiscal 1998, 1997 and 1996,
included $4.5 million, $45.2 million, and $12.0 million, respectively, related
to the Company's investment in Farmland MissChem Limited.
FINANCING ACTIVITIES. Net cash provided by financing activities was $41.0
million for fiscal 1998, $70.9 million for fiscal 1997, and net cash used in
financing activities was $36.9 million for fiscal 1996. During the current
year, the amounts provided by financing activities included $60.2 million in net
proceeds from borrowings. These amounts were partially offset by $3.0 million
paid for the purchase of treasury stock and $10.9 million paid in cash
dividends. During the prior year, the amounts provided by financing activities
included $99.3 million in net proceeds from borrowings partially offset by $18.9
million paid for the purchase of treasury stock and $9.8 million paid in cash
dividends. During fiscal 1996, the amounts used in financing activities
included $25.9 million for the purchase of treasury stock, $7.9 million paid in
cash dividends and $3.2 million in debt payments, which included $2.4 million in
prepayments.
<PAGE>
On November 25, 1997, the Company issued $200.0 million of 7.25% Senior
Notes ("Notes"), due November 15, 2017. The holders may elect to have the Notes
repaid on November 15, 2007. The Notes were issued under a $300.0 million shelf
registration statement filed with the Securities and Exchange Commission in
November 1997. The net proceeds from the issuance totaled $194.8 million and
were used to repay a portion of the outstanding indebtedness under the Company's
unsecured revolving credit facilities with Harris Trust and Savings Bank and a
syndicate of other commercial banks. Also on November 25, 1997, the Company
modified these unsecured revolving credit facilities to extend the maturity date
and to reduce the facilities to $200.0 million. These modified facilities are
five-year facilities which mature on November 25, 2002, and bear interest at the
Prime Rate or at rates related to the London Interbank Offered Rate or Federal
Funds Rate. At June 30, 1998, the Company had $90.7 million outstanding under
these facilities. The Company also has available a separate $5.0 million short-
term line of credit which is not part of the facilities mentioned above. There
were no outstanding borrowings under this commitment at June 30, 1998.
In August 1997, the Company issued $14.5 million in industrial revenue
bonds, a portion of which were tax-exempt, to finance the development of a new
phosphogypsum disposal facility at its Pascagoula, Mississippi, DAP
manufacturing plant. On April 1, 1998, the Company issued $14.5 million in
fully tax-exempt industrial revenue bonds, the proceeds of which were used to
redeem the initial industrial revenue bonds issued in August 1997. The bonds
issued on April 1, 1998, mature on March 1, 2022, and carry a 5.80% fixed rate
of interest. The bonds may be redeemed at the Company's option at a premium
from March 1, 2008, to February 28, 2010, and may be redeemed at face value at
any time after February 28, 2010, through the maturity date.
CAPITAL PROJECTS. In late fiscal 1996, the Company began an expansion at
its nitrogen fertilizer manufacturing facilities at Yazoo City. The project
includes the addition of a 650 ton-per-day nitric acid plant, a new 500 ton-per-
day ammonia plant and modifications to its ammonium nitrate plant to increase
production from approximately 750,000 to approximately 950,000 tons per year at
an estimated total cost of $130.0 million, and is scheduled for a phased
completion. The nitric acid plant was completed and placed in service in March
1998. The Company anticipates the anhydrous ammonia and substantially all of
the ammonium nitrate capacity being added by the end of calendar 1998.
In April 1998, the Company announced its plans for an expansion project to
increase its potash production capacity. This expansion will increase the
Company's red granular capacity from 445,000 to 545,000 tons-per-year, as well
as increase storage capacities by 30,000 tons. Upon completion of the project,
the Company will have approximately 1,100,000 tons of combined potash production
capacity from its two operating mines. The Company estimates total cost of the
expansion to be $8.2 million and is scheduled to be fully operational by the end
of fiscal 1999.
The Company believes that existing cash, cash generated from operations,
and current lines of credit will be sufficient to satisfy its financing
requirements for its operations and its capital projects through fiscal 1999 and
the foreseeable future. The Company estimates its capital expenditure
requirements for fiscal 1999 to be approximately $62.0 million.
QUARTERLY RESULTS
The Company's quarterly results reflect the fact that significantly more
fertilizer is marketed in the spring. As a result, 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 quarterly results are
affected by the seasonal nature of the Company's business, they are not
indicative of results expected for the full fiscal year. Quarterly results can
also vary significantly from one year to the next primarily due to weather-
related shifts in planting schedules and purchase patterns. The Company
<PAGE>
incurs substantial expenditures for fixed costs throughout the year and
substantial expenditures for inventory in advance of the spring planting season.
The following tables present selected unaudited quarterly results of
operations for fiscal 1998, 1997 and 1996.
<TABLE>
<CAPTION>
Year Ending June 30, 1998
-----------------------------------------
(In thousands, except per share data) 1st Q 2nd Q 3rd Q 4th Q
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $110,912 $118,035 $125,773 $165,191
Operating income $ 8,910 $ 3,725 $ 3,675 $ 21,626
Net income $ 4,297 $ 435 $ 443 $ 17,799
Earnings per share - basic (1) $ 0.16 $ 0.02 $ 0.02 $ 0.65
Earnings per share - diluted (1) $ 0.16 $ 0.02 $ 0.02 $ 0.65
Weighted average common
shares outstanding - basic 27,410 27,373 27,335 27,306
Weighted average common
shares outstanding - diluted 27,457 27,409 27,366 27,328
Dividends paid per share $ 0.10 $ 0.10 $ 0.10 $ 0.10
Common stock price range
- high $ 22.19 $ 20.13 $ 20.19 $ 20.06
- low $ 18.75 $ 16.75 $ 16.94 $ 15.06
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Year Ending June 30, 1997
--------------------------------------------
(In thousands, except per share data) 1st Q 2nd Q 3rd Q 4th Q
-------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales $91,290 $113,196 $142,583 $173,500
Operating income $14,740 $ 18,600 $ 20,093 $ 37,776
Net income $ 9,295 $ 12,093 $ 10,599 $ 23,828
Earnings per share - basic (1) $ 0.44 $ 0.56 $ 0.38 $ 0.86
Earnings per share - diluted (1) $ 0.44 $ 0.56 $ 0.38 $ 0.86
Weighted average common
shares outstanding - basic 21,242 21,506 27,926 27,613
Weighted average common
shares outstanding - diluted 21,293 21,598 28,022 27,673
Dividends paid per share $ 0.10 $ 0.10 $ 0.10 $ 0.10
Common stock price range
- high $ 23.38 $ 26.00 $ 27.25 $ 24.38
- low $ 17.75 $ 23.00 $ 23.13 $ 19.50
Year Ending June 30, 1996
--------------------------------------------
(In thousands, except per share data) 1st Q 2nd Q 3rd Q 4th Q
-------- --------- --------- ---------
Net sales $96,570 $ 99,857 $107,740 $124,622
Operating income $16,885 $ 18,400 $ 23,528 $ 26,005
Net income $ 9,704 $ 11,874 $ 15,648 $ 16,952
Earnings per share - basic (1) $ 0.43 $ 0.54 $ 0.71 $ 0.79
Earnings per share - diluted (1) $ 0.43 $ 0.53 $ 0.71 $ 0.79
Weighted average common
shares outstanding - basic 22,380 22,145 21,895 21,479
Weighted average common
shares outstanding - diluted 22,443 22,218 21,962 21,535
Dividends paid per share $ 0.08 $ 0.08 $ 0.10 $ 0.10
Common stock price range
- high $ 23.88 $ 25.13 $ 24.75 $ 22.50
- low $ 19.88 $ 21.00 $ 19.75 $ 19.25
</TABLE>
<PAGE>
(1) Quarterly amounts do not add to the annual earnings per share because of
changes in the number of outstanding shares during the year.
Effective October 10, 1996, the Company's common stock began trading on the
New York Stock Exchange under the symbol "GRO." The Company's shares had
previously traded on the NASDAQ Stock Market's National Market under the symbol
"MISS." As of August 4, 1998, shareholders of record numbered approximately
15,048.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive
Income." SFAS No. 130 establishes new standards for reporting comprehensive
income and its components (revenues, expenses, gains and losses) in a full set
of general-purpose financial statements. This statement is effective for fiscal
years beginning after December 15, 1997, and will require additional disclosures
by the Company beginning in fiscal 1999.
In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use" ("SOP 98-1"). SOP 98-1
provides guidance on accounting for these costs and requires that certain
related expenses be capitalized. This statement is effective for fiscal years
beginning after December 15, 1998. The Company does not expect the adoption of
SOP 98-1 to have a material effect on its financial statements.
In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-5, "Reporting on the Costs of Start-Up
Activities" ("SOP 98-5"). SOP 98-5 will require companies to expense as
incurred, all costs associated with start-up activities. This pronouncement is
effective for fiscal years beginning after December 15, 1998. The Company does
not expect the adoption of SOP 98-5 to have a material effect on its financial
statements.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities". SFAS No. 133
establishes accounting and reporting standards which require derivative
instruments to be recorded in the balance sheet as either an asset or liability
and measured at fair value. This statement requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. Special accounting for qualifying hedges
allows a derivative's gains and losses to offset related results on the hedged
item in the income statement and requires companies to formally document,
designate, and assess the effectiveness of transactions that receive hedge
accounting. This statement is effective for fiscal years beginning after June
15, 1999, and must be applied to all derivative instruments. The Company
anticipates that the primary impact of adoption will be the recognition of
unrealized gains or losses on open gas futures contracts as a component of
equity and comprehensive income.
MARKET RISK
The Company is exposed to market risk, including changes in interest rates
and commodity prices. To manage the volatility relating to these exposures, the
Company enters into derivative transactions. The Company does not hold or issue
derivative financial instruments for trading purposes. The Company maintains
formal policies and a systematic approach with respect to entering and
monitoring derivative transactions, and Company policy precludes management from
entering into derivative transactions that would be deemed speculative
positions. The Company's derivative transactions are intended to hedge the
future production and interest costs of the Company. For more information about
how the Company manages specific risk exposures, see Note 14 - Hedging
Activities, and Note 7 - Credit Agreements and Long-Term Debt, in the Company's
Notes to Consolidated Financial Statements.
<PAGE>
The table below provides information about the Company's derivative
instruments and other financial instruments that are sensitive to changes in
interest rates.
<TABLE>
<CAPTION>
(Dollars in thousands, except interest rates)
Maturity Date
-------------------------------------------------------------------------------- Fair
1999 2000 2001 2002 2003 Thereafter Total Value
------- ------- ------- ------- ------- ------------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Long-term debt
- -----------------------------------
Fixed rate
Principal amount (1) $ 114 - - - - $214,005 $214,119 $202,131
Weighted average
interest rate 7.36% - - - - 7.15% 7.15%
Variable rate
Principal amount (1) - - - - $90,700 - $ 90,700 $ 90,700
Average interest rate (2) - - - - 6.66% - 6.66%
Interest rate swaps
- -----------------------------------
Weighted average
notional principal amount
outstanding (3) $47,085 $36,570 $ (704)
Fixed weighted average
pay rate 6.57% 6.57%
Receive rate - 3 month LIBOR
Note receivable
- -----------------------------------
Principal amount $ 9,500 $ 9,500 $9,500 $9,500 $ 9,500 $ 7,125 $ 54,625 $ 54,625
Interest rate 6.07% 6.07% 6.07% 6.07% 6.07% 6.07% 6.07%
</TABLE>
(1) The fair values of the Company's long-term debt and note receivable
represent the discounted future cash flows of the instruments using current
market rates.
(2) The average interest rate was based on June 30, 1998 variable rates. Actual
rates could differ.
(3) The fair value of the Company's interest rate swaps represents the amount
that would have to be paid by the Company as of June 30, 1998, to terminate
the swap agreements.
The Company uses natural gas futures contracts to reduce the impact of
changes in gas prices. A sensitivity analysis has been prepared to estimate the
Company's market risk exposure arising from these instruments. The fair value
of open contracts is calculated by valuing each position using quoted market
prices. Market risk is the potential loss in fair value as a result of a 10%
adverse change in such prices. The Company estimates this change in prices
would reduce the fair value of open contracts by $6.3 million at June 30, 1998.
YEAR 2000
The Company is currently assessing its computer systems, including the
systems involved in the operation of its manufacturing facilities, to identify
to what extent the Company could be affected by the "Year 2000" issue. The
Company expects to complete the assessment prior to the end of the 1998 calendar
year and to have any Year 2000 conversion projects completed on a timely basis.
The total cost of any such projects is as yet undetermined but, based upon facts
known to date, is not expected to be material to the Company because of previous
significant capital expenditures made by the Company to update computer software
and hardware. The Company is also assessing Year 2000 issues in relation to its
customers, suppliers and creditors to determine whether Year 2000 problems of
any such third parties may materially affect the Company. This assessment
should also be completed by the end of the 1998 calendar year. The ability of
third parties with which the Company transacts business to adequately address
their Year 2000 issues is outside the Company's control. There can be no
assurance that the failure of such third parties to adequately address their
respective Year 2000
<PAGE>
issues will not have a material adverse effect on the Company's business
operations and financial condition.
FORWARD LOOKING STATEMENTS
Except for the historical statements and discussion contained herein,
statements set forth in this report constitute "forward looking statements."
Since these forward looking statements rely on a number of assumptions
concerning future events, risks and other uncertainties that are beyond the
Company's ability to control, readers are cautioned that actual results may
differ materially from such forward-looking statements. Future events, risks and
uncertainties that could cause a material difference in such results, include,
but are not limited to, the relative unpredictability of international and local
economic conditions, changes in matters which affect the supply and demand of
fertilizer products, weather, the volatility of the natural gas market,
environmental regulation, price competition from both domestic and international
competitors, possible delays in completing and obtaining production from new or
expanded facilities, and other important factors affecting the fertilizer
industry and the Company as detailed under "Outlook and Uncertainties" and
elsewhere in the Company's most recent annual report on Form 10-K which is on
file with the Securities and Exchange Commission.
<PAGE>
MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FISCAL YEARS ENDED JUNE 30, 1998, 1997 AND 1996
TOGETHER WITH AUDITORS' REPORT
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and
the Shareholders of
Mississippi Chemical Corporation:
We have audited the accompanying consolidated balance sheets of Mississippi
Chemical Corporation (a Mississippi corporation) and subsidiaries (collectively,
the "Company") as of June 30, 1998 and 1997, and the related consolidated
statements of income, shareholders' equity and cash flows for the three years
ended June 30, 1998. 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, 1998 and 1997, and the results of
their operations and their cash flows for the three years ended June 30, 1998,
in conformity with generally accepted accounting principles.
Memphis, Tennessee,
July 22, 1998
<PAGE>
MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Dollars in thousands) June 30
-------------------
ASSETS 1998 1997
-------- --------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 3,857 $ 8,159
Accounts receivable (less allowances of $1,989 and $1,767) 51,532 63,095
Note receivable due within one year 9,500 -
Inventories 65,429 69,310
Prepaid expenses and other current assets 6,636 4,873
Deferred income taxes 3,767 3,596
-------- --------
Total current assets 140,721 149,033
INVESTMENTS IN AFFILIATES 73,073 69,230
NOTE RECEIVABLE 45,125 -
PROPERTIES HELD FOR SALE - 52,919
OTHER ASSETS 16,227 14,039
PROPERTY, PLANT AND EQUIPMENT, AT COST,
LESS ACCUMULATED DEPRICIATION, DEPLETION AND AMORTIZATION 460,841 392,395
GOODWILL, NET OF ACCUMULATED AMORTIZATION 176,345 180,929
-------- --------
$912,332 $858,545
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Long-term debt due within one year $ 114 $ 140
Accounts payable 58,089 74,534
Accrued liabilities 15,156 14,476
Income taxes payable 3,276 5,973
-------- --------
Total current liabilities 76,635 95,123
LONG-TERM DEBT 304,705 244,516
OTHER LONG-TERM LIABILITIES AND DEFERRED CREDITS 17,481 20,620
DEFERRED INCOME TAXES 64,986 58,857
COMMITMENTS AND CONTINGENCIES (SEE NOTES 14, 18, 19 AND 20)
SHAREHOLDERS' EQUITY:
Common stock ($.01 par; authorized 100,000,000 shares;
issued 27,975,936) 280 280
Additional paid-in capital 305,901 305,901
Retained earnings 157,800 145,827
Treasury stock, at cost (735,719 and 565,809 shares) (15,456) (12,579)
-------- --------
Total shareholders' equity 448,525 439,429
-------- --------
$912,332 $858,545
======== ========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these financial statements.
<PAGE>
MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
(In thousands, except per share data) Years Ended June 30
----------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
REVENUES:
Net sales $519,911 $520,569 $428,789
Trading loss on brokered product (820) (57) -
-------- -------- --------
519,091 520,512 428,789
OPERATING EXPENSES:
Cost of products sold 412,500 366,961 291,403
Selling 33,316 30,670 27,856
General and administrative 35,339 31,672 24,712
-------- -------- --------
481,155 429,303 343,971
-------- -------- --------
OPERATING INCOME 37,936 91,209 84,818
OTHER INCOME (EXPENSE):
Interest, net (10,948) (4,331) 2,229
Other 12,315 3,709 1,446
-------- -------- --------
INCOME BEFORE INCOME TAXES 39,303 90,587 88,493
INCOME TAX EXPENSE 16,329 34,772 34,315
-------- -------- --------
NET INCOME $ 22,974 $ 55,815 $ 54,178
======== ======== ========
EARNINGS PER SHARE - BASIC $0.84 $ 2.29 $2.47
======== ======== ========
EARNINGS PER SHARE - DILUTED $0.84 $ 2.29 $2.46
======== ======== ========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these financial statements.
<PAGE>
MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
(Dollars in thousands) Additional
Common Paid-in Retained Treasury
Stock Capital Earnings Stock Total
------ ---------- -------- --------- ---------
<S> <C> <C> <C> <C> <C>
BALANCES, JUNE 30, 1995 $229 $178,332 $ 53,520 $ (4,774) $227,307
Net income - - 54,178 - 54,178
Cash dividends paid - - (7,884) - (7,884)
Treasury stock, net - 32 - (25,808) (25,776)
------ -------- -------- -------- --------
BALANCES, JUNE 30, 1996 229 178,364 99,814 (30,582) 247,825
Net income - - 55,815 - 55,815
Cash dividends paid - - (9,802) - (9,802)
Treasury stock, net - 56 - (18,753) (18,697)
Stock options exercised - 203 - - 203
Stock issued for business
acquired 51 127,278 - 36,756 164,085
------ -------- --------- -------- --------
BALANCES, JUNE 30, 1997 280 305,901 145,827 (12,579) 439,429
Net income - - 22,974 - 22,974
Cash dividends paid - - (10,948) - (10,948)
Treasury stock, net - - (53) (2,877) (2,930)
------ -------- -------- -------- --------
BALANCES, JUNE 30, 1998 $280 $305,901 $157,800 $(15,456) $448,525
====== ======== ======== ======== ========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these financial statements.
<PAGE>
MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(Dollars in thousands) Years Ended June 30
-----------------------------------
1998 1997 1996
---------- ---------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 22,974 $ 55,815 $ 54,178
Reconciliation of net income to net cash provided
by operating activities:
Net change in operating assets and liabilities (4,781) (9,423) 21,401
Depreciation, depletion and amortization 37,228 27,980 17,798
Deferred income taxes 5,958 562 1,885
Gain on sale of phosphate rock property (10,867) - -
Other 2,506 (2,322) (643)
--------- --------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 53,018 72,612 94,619
--------- --------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (96,496) (93,816) (16,143)
Investment in Farmland MissChem Limited (4,508) (45,165) (11,993)
Acquisition of potash businesses - (56,098) -
Other 2,727 (449) 1,063
--------- --------- --------
NET CASH USED IN INVESTING ACTIVITIES (98,277) (195,528) (27,073)
--------- --------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt payments (564,742) (390,945) (3,175)
Debt proceeds 624,905 490,290 -
Purchase of treasury stock (3,027) (18,885) (25,890)
Cash dividends paid (10,948) (9,802) (7,884)
Bond issuance costs (5,231) - -
Proceeds from issuance of common stock - 203 -
--------- --------- --------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 40,957 70,861 (36,949)
--------- --------- --------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS (4,302) (52,055) 30,597
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD 8,159 60,214 29,617
--------- --------- --------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 3,857 $ 8,159 $ 60,214
========= ========= ========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these financial statements.
<PAGE>
MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF FINANCIAL STATEMENTS
The accompanying consolidated financial statements include the accounts of
Mississippi Chemical Corporation and its subsidiaries (collectively, the
"Company"). All material intercompany transactions and balances have been
eliminated.
The Company produces and supplies a full product line of fertilizers, including
nitrogen, phosphate and potash fertilizers. The Company's principal nitrogen
products include ammonia, fertilizer-grade ammonium nitrate, UAN solutions, and
urea. The Company currently produces nitrogen products at its production
facilities in Yazoo City, Mississippi, and Donaldsonville, Louisiana, and
produces ammonia at its 50-50 joint venture in The Republic of Trinidad and
Tobago. The Company distributes its nitrogen products primarily in the southern
farming regions of the United States. The Company produces diammonium phosphate
at its facility in Pascagoula, Mississippi, and through the Phosphate Chemicals
Export Association, Inc. ("PhosChem"), exports the majority of its production.
The Company's mines and related facilities near Carlsbad, New Mexico, produce
the Company's potash products. The majority of the Company's agricultural
potash sales are in domestic markets in states west of the Mississippi River.
The Company also markets its nitrogen and potash products into industrial
markets where such products are used for a broad range of industrial
applications.
In August 1996, the Company, through two subsidiaries of its wholly owned
subsidiary, Mississippi Potash, Inc., acquired substantially all of the assets
of New Mexico Potash Corporation and Eddy Potash, Inc. ("Eddy") from Trans-
Resources, Inc. (see Note 2). Since the acquisition, New Mexico Potash
Corporation has been merged into Mississippi Potash, Inc. Eddy, a wholly owned
subsidiary of Mississippi Potash, Inc., suspended its production operations in
December 1997.
In December 1996, the Company acquired the fertilizer operations of First
Mississippi Corporation ("First Mississippi") in an all-stock merger transaction
(see Note 2). The fertilizer operations primarily included AMPRO Fertilizer,
Inc. ("AMPRO") and a 50% interest in Triad Chemical; the Company already held
the remaining 50% interest. Prior to this acquisition, the Company had the
right to withdraw, at cost, approximately one-half of the production of Triad
Chemical and was obligated to withdraw certain minimum quantities.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.
INVENTORIES
Inventories are stated at the lower of cost or market. Cost has been determined
under a moving average cost method.
<PAGE>
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
Investments in Affiliates
The Company's investments in affiliates primarily consist of an investment in a
50-50 ammonia production joint venture, Farmland MissChem Limited ("Farmland
MissChem"), with Farmland Industries, Inc. (see Note 4). During fiscal 1998,
the Company and Farmland Industries also formed a separate 50-50 joint venture
which is responsible for the transportation of the ammonia produced at Farmland
MissChem Limited. The Company also has a 50% interest in an ammonia storage
terminal in Pasadena, Texas (see Note 2), acquired as part of its acquisition of
the fertilizer assets of First Mississippi in December 1996.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost, less accumulated depreciation,
depletion and amortization. Expenditures for major improvements are
capitalized; expenditures for normal maintenance and repairs are charged to
expense as incurred. Upon the sale or retirement of properties, the cost and
accumulated depreciation and amortization are removed from the accounts, and any
resulting gain or loss is recognized in income. The Company uses primarily the
declining-balance method of depreciation for assets purchased through June 30,
1995. Effective July 1, 1995, the Company changed its method of depreciating
newly acquired long-lived assets from the declining-balance method to the
straight-line method. Depletion of mineral properties is provided using the
units-of-production method over the estimated life of the reserves.
Depreciation of property, plant and equipment is provided over the estimated
useful lives of the related assets as follows:
Buildings 3-45 years
Machinery and equipment 2-30 years
Interest costs attributable to major construction projects under development are
capitalized in the appropriate property account and amortized over the life of
the related asset.
The Company maintains spare parts at its production facilities in order to
minimize downtime in the event of a part failure. All parts that exceed a
minimum value and are repairable are capitalized as property, plant and
equipment and are depreciated over their estimated useful lives. Parts that do
not exceed the minimum value or are not repairable are maintained as replacement
parts and are included as inventory in the Company's current assets. These
replacement parts are charged to cost of products sold as they are installed in
the facility.
GOODWILL
Goodwill represents the excess of cost over the fair value of the net assets
acquired by the Company in its December 1996, acquisition of the fertilizer
operations of First Mississippi. Goodwill is amortized on a straight-line basis
over 40 years. Accumulated amortization was approximately $6,973,000 and
$2,389,000 at June 30, 1998 and 1997, respectively.
REVENUE RECOGNITION
Revenues are recognized as product is sold and title transfers to the customer.
<PAGE>
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
HEDGING ACTIVITIES
The Company enters into futures contracts to protect future production costs
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 as a component of cost
of products sold.
INCOME TAXES
Deferred tax assets and liabilities are recorded based on the difference between
the financial statement and income tax basis of assets and liabilities using
existing tax rates.
USE OF ESTIMATES
The preparation of the Company's financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements, and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive
Income." SFAS No. 130 establishes new standards for reporting comprehensive
income and its components (revenues, expenses, gains and losses) in a full set
of general-purpose financial statements. This statement is effective for fiscal
years beginning after December 15, 1997, and will require additional disclosure
by the Company beginning in fiscal 1999.
In March 1998, the American Institute of Certified Public Accountants issued
Statement of Position 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use" ("SOP 98-1"). SOP 98-1 provides
guidance on accounting for these costs and requires that certain related
expenses be capitalized. This statement is effective for fiscal years beginning
after December 15, 1998. The Company does not expect the adoption of SOP 98-1
to have a material effect on its financial statements.
In April 1998, the American Institute of Certified Public Accountants issued
Statement of Position 98-5, "Reporting on the Costs of Start-Up Activities"
("SOP 98-5"). SOP 98-5 will require companies to expense as incurred, all costs
associated with start-up activities. This pronouncement is effective for fiscal
years beginning after December 15, 1998. The Company does not expect the
adoption of SOP 98-5 to have a material effect on its financial statements.
<PAGE>
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities". SFAS No. 133
establishes accounting and reporting standards which require derivative
instruments to be recorded in the balance sheet as either an asset or liability
and measured at fair value. This statement requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. Special accounting for qualifying hedges
allows a derivative's gains and losses to offset related results on the hedged
item in the income statement, and requires companies to formally document,
designate, and assess the effectiveness of transactions that receive hedge
accounting. This statement is effective for fiscal years beginning after June
15, 1999, and must be applied to all derivative instruments. The Company
anticipates that the primary impact of adoption will be the recognition of
unrealized gains or losses on open gas futures contracts as a component of
equity and comprehensive income.
RECLASSIFICATIONS
The Company has reclassified certain prior year information to conform with the
current year's presentation.
NOTE 2 - ACQUISITIONS:
NITROGEN
On December 24, 1996, the Company acquired the fertilizer businesses of First
Mississippi in an all-stock merger transaction. This transaction was accounted
for by the purchase method of accounting. According to the terms of the merger,
the Company issued approximately 6,902,000 shares of its common stock to former
First Mississippi shareholders. Additionally, at closing, First Mississippi's
fertilizer businesses had $150,500,000 in outstanding debt which was assumed by
the Company.
The fertilizer operations of First Mississippi included AMPRO and a 50% interest
in Triad Chemical. Prior to the transaction, the Company held the remaining 50%
interest in Triad Chemical, which owned and operated an anhydrous ammonia plant
with an annual production of approximately 465,000 tons, and a urea plant with
an annual production of approximately 560,000 tons. AMPRO owned and operated an
anhydrous ammonia plant with annual production of approximately 615,000 tons.
AMPRO and Triad are located on adjacent sites in Donaldsonville, Louisiana. In
the transaction, the Company also acquired a 50% interest in an ammonia storage
terminal in Pasadena, Texas, and a 50% interest in a company which owns and
operates eleven ammonia barges. In March 1997, the Company purchased the other
50% interest in the barge company for $3,824,000. Subsequent to closing, the
Company merged AMPRO into and contributed its 50% interest in Triad Chemical to
First Mississippi and changed the name of First Mississippi to Triad Nitrogen,
Inc. ("Triad Nitrogen").
<PAGE>
NOTE 2 ACQUISITIONS (Continued):
Allocation of the purchase price is as follows:
<TABLE>
<CAPTION>
(Dollars in thousands)
<S> <C>
Property, plant and equipment $151,407
Goodwill 180,655
Other assets/liabilities acquired, net 19,189
Deferred income taxes (41,931)
--------
$309,320
========
</TABLE>
Additionally, the Company incurred approximately $2,663,000 in transaction costs
and other related fees associated with the acquisition. The Company recorded
these amounts as goodwill.
POTASH
In August 1996, the Company, through two subsidiaries of its wholly owned
subsidiary, Mississippi Potash, Inc., acquired substantially all of the assets
of New Mexico Potash Corporation and Eddy (the "Potash Acquisitions") from
Trans-Resources, Inc. for $45,000,000, plus an adjustment for working capital of
approximately $11,000,000. This acquisition was accounted for by the purchase
method of accounting with the purchase price being principally allocated to
property, plant and equipment. In December 1996, New Mexico Potash Corporation
was merged into Mississippi Potash, Inc. Eddy operates as a wholly owned
subsidiary of Mississippi Potash, Inc. At the time of the acquisition, the two
potash mines, both located near Carlsbad, New Mexico, had a combined annual
production capacity of approximately 850,000 tons of potash. In December 1997,
the Eddy mine, which had an annual production capacity of approximately 300,000
tons, suspended its production operations. This suspension of operations did
not have a material impact on the financial position or results of operations of
the Company. Prior to this acquisition, Mississippi Potash, Inc. produced
approximately 420,000 tons of potash per year.
The Company's consolidated statement of income for fiscal 1997 includes Triad
Nitrogen's results of operations for the period December 24, 1996 through June
30, 1997, and the Potash Acquisitions' results of operations for the period
August 16, 1996 through June 30, 1997. The unaudited pro forma summary
financial information includes Triad Nitrogen's and the Potash Acquisitions'
results of operations, assuming the acquisitions had occurred on July 1, 1996,
and also on July 1, 1995. These pro forma results of operations are not
necessarily indicative of what would have occurred had the acquisitions actually
been consummated at the beginning of the periods presented, or of future results
of the combined companies.
<TABLE>
<CAPTION>
Years Ended June 30
-------------------
(Dollars in thousands, except per share data) 1997 1996
-------- --------
<S> <C> <C>
Net sales $643,159 $698,404
======== ========
Net income $ 68,151 $ 80,712
======== ========
Earnings per share - basic and diluted $ 2.44 $ 2.79
======== ========
</TABLE>
<PAGE>
NOTE 3 - INVENTORIES:
Inventories consisted of the following:
<TABLE>
<CAPTION>
(Dollars in thousands) June 30
-----------------
1998 1997
------- -------
<S> <C> <C>
Finished products $24,959 $28,308
Raw materials and supplies 5,894 4,636
Replacement parts 34,576 36,366
------- -------
$65,429 $69,310
======= =======
</TABLE>
NOTE 4 - INVESTMENT IN FARMLAND MISSCHEM LIMITED:
The Company's 50-50 joint venture, Farmland MissChem, has constructed a 2,040
short-ton-per-day anhydrous ammonia plant located near Point Lisas, The Republic
of Trinidad and Tobago. The plant was placed in service in late July 1998. The
Company has a contractual obligation to purchase one-half of the ammonia,
approximately 350,000 short tons per year, produced by Farmland MissChem at a
purchase price which approximates market price, but is subject to an agreed-upon
floor price. The Company will use its portion of the production from the new
facility as a raw material for upgrading into finished fertilizer products at
its existing facilities and for sales into world markets. The Company is
accounting for its investment in Farmland MissChem using the equity method. At
June 30, 1998, the Company's investment in Farmland MissChem amounted to
$62,794,000 which included $6,846,000 of capitalized interest. At June 30,
1997, the Company's investment in Farmland MissChem amounted to $58,286,000 and
included $2,864,000 of capitalized interest. Farmland MissChem's financial
position for the year ended June 30, 1998, is summarized below:
<TABLE>
<CAPTION>
Condensed Balance Sheet Information: (Dollars in thousands)
- ----------------------------------- ----------------------
<S> <C>
Current assets $ 6,295
Non-current assets $306,939
Current liabilities $ 6,226
Non-current liabilities $195,111
Stockholders' equity $111,897
</TABLE>
NOTE 5 - NOTE RECEIVABLE:
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 in Hardee County, Florida. On 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 for $14,000,000 and granted to the third party the exclusive option
to purchase the remaining portion of the property. In January 1998, the third
party exercised its option, and on April 16, 1998, the sale to the third party
was completed. These remaining properties had a carrying value of $52,919,000,
and were classified in the consolidated balance sheet at June 30, 1997, as
properties held for sale. The $57,000,000 purchase price of the remaining
property was paid in the form of an initial cash payment of $2,375,000 and a
note for $54,625,000. In addition to the purchase price, the Company has
received $7,000,000 in option payments since 1994. The note, which is subject
to prepayment, matures over a six-year period and requires quarterly principal
payments totaling $9,500,000 each year. At June 30, 1998, the note carried an
interest rate of 6.07%, subject to adjustment, and was secured by a mortgage on
the property. At June 30, 1998, the carrying value of the
<PAGE>
NOTE 5 NOTE RECEIVABLE (Continued):
note receivable approximated its fair value. As a result of this transaction,
the Company has recorded a net pre-tax gain of $10,867,000 as a component of
other income in the accompanying fiscal 1998 consolidated statement of income.
NOTE 6 - PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment consisted of the following:
<TABLE>
<CAPTION>
(Dollars in thousands) June 30
-----------------------
1998 1997
---------- ----------
<S> <C> <C>
Mineral properties $ 41,233 $ 40,668
Land 8,822 8,609
Buildings 48,091 46,904
Machinery and equipment 599,355 519,940
Construction in progress 97,831 80,980
--------- ---------
795,332 697,101
Less accumulated depreciation,
depletion and amortization (334,491) (304,706)
--------- ---------
$ 460,841 $ 392,395
========= =========
</TABLE>
NOTE 7 - CREDIT AGREEMENTS AND LONG-TERM DEBT:
In December 1996, the Company and its subsidiaries obtained unsecured credit
facilities with Harris Trust and Savings Bank ("Harris") and a syndicate of
other commercial banks totaling $300,000,000. In November 1997, the Company
modified these unsecured revolving credit facilities to extend the maturity date
and to reduce the facilities to $200,000,000. These modified facilities are five
year facilities which mature on November 25, 2002, and bear interest at the
prime rate or at rates related to the London Interbank Offered Rate or Federal
Funds Rate. At June 30, 1998 and 1997, there were outstanding borrowings of
$90,700,000 and $244,400,000, respectively, under these facilities.
On November 25, 1997, the Company issued $200,000,000 of 7.25% Senior Notes (the
"Notes"), due November 15, 2017. The holders may elect to have the Notes repaid
on November 15, 2007. The Notes were issued under a $300,000,000 shelf
registration statement filed with the Securities and Exchange Commission in
November 1997. The net proceeds from the issuance totaled $194,800,000 and were
used to repay a portion of the outstanding indebtedness under the Company's
unsecured revolving credit facilities.
In August 1997, the Company issued $14,500,000 in industrial revenue bonds, a
portion of which were tax-exempt, to finance the development of a new
phosphogypsum disposal facility at its Pascagoula, Mississippi, diammonium
phosphate manufacturing plant. On April 1, 1998, the Company issued $14,500,000
in fully tax-exempt industrial revenue bonds, the proceeds of which were used to
redeem the initial industrial revenue bonds issued in August 1997. The bonds
issued on April 1, 1998, mature on March 1, 2022, and carry a 5.8% fixed rate.
The bonds may be redeemed at the Company's option at a premium from March 1,
2008, to February 28, 2010, and may be redeemed at face value at any time after
February 28, 2010, through the maturity date.
<PAGE>
NOTE 7 CREDIT AGREEMENTS AND LONG-TERM DEBT (Continued):
The Company also has a separate $5,000,000 short-term line of credit which is
not part of the facilities mentioned above. There were no outstanding
borrowings under this commitment at June 30, 1998 or 1997.
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
(Dollars in thousands) June 30
---------------------
1998 1997
--------- ---------
<S> <C> <C>
Unsecured revolving credit facilities
(1998 - 6.66%; 1997 - 6.26%) $ 90,700 $244,400
Senior notes, net of unamortized discount
of $495 (7.25%) 199,505 -
Industrial revenue bonds (5.8%) 14,500 -
Other 114 256
-------- --------
304,819 244,656
Long-term debt due within one year (114) (140)
-------- --------
$304,705 $244,516
======== ========
</TABLE>
The estimated fair value of the Company's long-term debt, including current
maturities at June 30, 1998, was $292,831,000 and was computed using an interest
rate equal to 2% above the effective yield on U.S. Treasury Notes with similar
maturities. At June 30, 1997, the Company's carrying value approximated its
market value.
The Company's credit facilities with Harris have covenants that require, among
other things, that the Company maintain specified levels of tangible net worth,
debt to cash flow, and cash flow to interest expense. As of June 30, 1998, the
Company was in compliance with all covenants under its facilities.
The Company has entered into interest rate swap agreements to reduce the impact
of changes in interest rates on its floating rate long-term debt. At June 30,
1998 and 1997, the Company had two outstanding interest rate swap agreements
(the "Agreements") with commercial banks having total notional principal amounts
of $50,000,000 and $40,000,000, respectively. Those Agreements effectively
change the Company's interest rate exposure on a portion of its unsecured
revolving credit facilities from a variable rate to a fixed rate. The
Agreements mature in fiscal 2000, and provide for notional amounts varying from
a minimum of $33,650,000 to a maximum of $50,000,000. The fair value of these
agreements amounted to a liability of $704,000 and $300,000, respectively, at
June 30, 1998 and 1997.
<PAGE>
NOTE 8 - OTHER LONG-TERM LIABILITIES AND DEFERRED CREDITS:
Other long-term liabilities and deferred credits are comprised of the following:
<TABLE>
<CAPTION>
(Dollars in thousands) June 30
-----------------
1998 1997
------- -------
<S> <C> <C>
Accrual for closure of gypsum disposal area $ 9,330 $ 8,051
Option proceeds (see Note 5) - 5,967
Other 8,151 6,602
------- -------
$17,481 $20,620
======= =======
</TABLE>
The Company is currently accruing costs for the future closure of the
phosphogypsum disposal facility located at Pascagoula, Mississippi. These
closure costs are accrued over the estimated life of the disposal facility using
the units-of-production method. Amounts accrued are recorded as a component of
cost of products sold in the accompanying consolidated statements of income.
Additional charges of $2,017,000 will be accrued over the remaining life of the
facility which is estimated to be fourteen months. In June 1998, the Company
substantially completed the construction of a new phosphogypsum disposal
facility at a cost of approximately $18,000,000.
NOTE 9 - SHAREHOLDERS' EQUITY:
At June 30, 1998, the Company had 100,000,000 authorized shares of common stock
at a par value of $.01.
Common stock issued and outstanding consisted of the following:
<TABLE>
<CAPTION>
(Shares in thousands)
Common
Stock
----------------------
<S> <C>
Shares outstanding, June 30, 1995 22,598
Stock reissued 5
Purchase of treasury stock (1,250)
------
Shares outstanding, June 30, 1996 21,353
Treasury stock issued for business acquired 1,545
Stock issued for business acquired 5,357
Stock options exercised 12
Stock reissued 8
Purchase of treasury stock (865)
------
Shares outstanding, June 30, 1997 27,410
Stock reissued 6
Purchase of treasury stock (176)
------
Shares outstanding, June 30, 1998 27,240
======
</TABLE>
<PAGE>
NOTE 9 - SHAREHOLDERS' EQUITY (CONTINUED):
In May 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. In March 1996, the Board of Directors authorized the
Company to repurchase up to 1,500,000 additional shares. During fiscal 1998,
the Company repurchased 175,900 shares bringing the total shares repurchased
pursuant to these authorizations to 2,591,709 at June 30, 1998. These treasury
stock repurchases were funded from cash provided by operations and from
borrowings under the Company's revolving credit facilities.
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, 1998, none of these shares were
outstanding.
NOTE 10 - STOCK OPTIONS:
On August 2, 1994, the Board of Directors adopted a stock incentive plan for
certain officers and key employees of the Company. On July 20, 1995, the Board
of Directors adopted a stock option plan for nonemployee directors of the
Company. Both the stock incentive plan and the stock option plan for
nonemployee directors were approved by the Company's shareholders at its annual
meeting held on November 14, 1995. Options may be granted under the provisions
of the Company's plans to purchase common stock of the Company at a price not
less than the fair market value on the date of grant. Stock options for
officers and key employees are exercisable six months from the date of grant.
Stock options for nonemployee directors become exercisable in installments
beginning one year after the date of grant and become fully exercisable six
years after the date of grant. All options expire 10 years from the date of
grant. At June 30, 1998, 1997 and 1996, exercisable options were 676,180;
490,489 and 334,104, respectively. There were approximately 929,000 shares
available for option plan grants at June 30, 1998. The summary of stock option
activity is shown below:
<TABLE>
<CAPTION>
Options Weighted Average
Outstanding Exercise Price
------------ ----------------
<S> <C> <C>
July 1, 1995 201,941 $15.00
Options granted 220,404 $23.96
Stock options exercised - -
Stock options canceled (26,241) $15.00
-------
June 30, 1996 396,104 $19.99
Options granted 174,576 $20.00
Stock options exercised (12,091) $16.68
Stock options canceled - -
-------
June 30, 1997 558,589 $20.06
Options granted 200,625 $20.82
Stock options exercised - -
Stock options canceled - -
-------
June 30, 1998 759,214 $20.26
=======
</TABLE>
<PAGE>
NOTE 10 - STOCK OPTIONS (Continued):
The following table summarizes information about stock options outstanding at
June 30, 1998:
<TABLE>
<CAPTION>
Weighted Average Weighted Average
Exercise Price Range Options Outstanding Remaining Contractual Life Exercise Price
- ----------------------- ------------------- -------------------------- ---------------
<S> <C> <C> <C>
$15.00 - $16.44 177,014 6.3 $15.07
$18.22 - $21.00 361,796 8.7 $20.55
$23.96 220,404 7.4 $23.96
</TABLE>
During fiscal 1997, the Company adopted SFAS No. 123, "Accounting for Stock-
Based Compensation," which requires companies to estimate the fair value for
stock options on the date of grant. Under SFAS No. 123, the Company is required
to record the estimated fair value of stock options issued as compensation
expense in its consolidated statements of income over the related service
periods or, alternatively, continue to apply accounting methodologies as
prescribed by Accounting Principles Board ("APB") Opinion No. 25, "Accounting
for Stock Issued to Employees," and disclose the pro forma effects of the
estimated fair value of stock options issued in the accompanying footnotes to
its financial statements. The determination of fair value is only required for
stock options issued beginning in fiscal 1996. In adopting SFAS No. 123, the
Company decided to continue to follow the accounting methodologies as prescribed
by APB Opinion No. 25.
The pro forma effects of the total compensation expense that would have been
recognized under SFAS No. 123 are as follows:
<TABLE>
<CAPTION>
(Dollars in thousands,
except per share data) June 30
---------------------------
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Net income
As reported $22,974 $55,815 $54,178
Pro forma $22,141 $55,015 $52,925
Earnings per share - basic
As reported $ 0.84 $ 2.29 $ 2.47
Pro forma $ 0.81 $ 2.26 $ 2.41
Earnings per share - diluted
As reported $ 0.84 $ 2.29 $ 2.46
Pro forma $ 0.81 $ 2.25 $ 2.40
</TABLE>
Because the SFAS No. 123 method of accounting has not been applied to options
granted prior to January 1, 1995, the resulting pro forma compensation cost may
not be representative of that to be expected in future years.
<PAGE>
NOTE 10 - STOCK OPTIONS (Continued):
In adopting SFAS No. 123, the Company utilized the Black-Scholes Option Pricing
Model to estimate the fair value of stock options granted using the following
assumptions:
<TABLE>
<CAPTION>
1998 1997 1996
-------- ---------- ----------
<S> <C> <C> <C>
Expected dividend yield 1.99% 1.94% 1.49%
Expected option lives 6 years 6 years 6 years
Expected volatility 33% 33% 33%
Risk-free interest rates 5.47% 6.06% 6.13%
</TABLE>
Based on the results of the model, the fair value of the stock options issued on
the date of grant are as follows:
Weighted Average
Number Grant Date
Years Issued Fair Value per Option
- ---------- -------- ---------------------
1998 200,625 $6.64
1997 174,576 $7.35
1996 220,404 $9.14
NOTE 11 - EARNINGS PER SHARE:
In December 1997, the Company adopted SFAS No. 128, "Earnings per Share," which
changes the methodology by which companies compute earnings per share. Under
SFAS No. 128, basic earnings per share is computed by dividing net income by the
weighted average number of common shares outstanding during the period. Diluted
earnings per share is computed by dividing net income by the weighted average
number of common shares outstanding during the period, including the dilutive
common share equivalents arising from stock options using the treasury stock
method. For the Company, diluted earnings per share are not significantly
different from basic earnings per share. In the accompanying financial
statements, all prior periods have been restated to reflect the impact of
adopting SFAS No. 128.
The number of shares used in the Company's basic and diluted earnings per share
computations are as follows:
<TABLE>
<CAPTION>
Years Ended June 30
------------------------
(Shares in thousands) 1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Weighted average common shares outstanding,
net of treasury shares, for basic earnings
per share 27,355 24,329 21,975
Common stock equivalents for employee
stock options 35 75 64
------ ------ ------
Weighted average common shares outstanding for
diluted earnings per share 27,390 24,404 22,039
====== ====== ======
</TABLE>
<PAGE>
NOTE 12 - MAJOR CUSTOMERS:
Sales to the Company's three largest customers were approximately $65,946,000,
$32,199,000 and $23,177,000 for fiscal 1998; $119,412,000, $26,590,000 and
$23,526,000 for fiscal 1997; and $136,560,000, $36,499,000 and $20,135,000 for
fiscal 1996.
Effective October 1, 1997, the Company became a member of PhosChem, a Webb-
Pomerene corporation. Since becoming a member, all of the Company's sales of
diammonium phosphate fertilizer into export markets are made through PhosChem,
while domestic sales are made through the Company's internal sales staff. The
Company ended its exclusive diammonium phosphate marketing agreement with
Atlantic Fertilizer & Chemical Corporation, who was the exclusive distributor of
diammonium phosphate fertilizer produced by the Company's Pascagoula,
Mississippi, facility prior to October 1, 1997. During fiscal 1998,
approximately 70% of the Company's diammonium phosphate sales were made in
international markets through the Company's distributors.
A significant portion of the Company's trade receivables is 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.
NOTE 13 - TRADING LOSS ON BROKERED PRODUCT:
The Company began brokering ammonia in the open market following the First
Mississippi acquisition in December 1996. During fiscal 1998 and 1997, the
Company brokered approximately 142,000 and 177,000 short tons of ammonia,
respectively. Fiscal 1998 brokered ammonia sales of approximately $18,494,000
and purchases of approximately $19,314,000 resulted in an $820,000 net trading
loss. Fiscal 1997 brokered ammonia sales of approximately $32,287,000 and
purchases of approximately $33,210,000 resulted in a $57,000 net loss after
certain purchase price adjustments associated with the First Mississippi
acquisition. These trading losses have been reflected in the accompanying
consolidated statements of income.
NOTE 14 - HEDGING ACTIVITIES:
During fiscal 1998, 1997 and 1996, natural gas hedging activities resulted in
average cost decreases of approximately $0.23, $0.30 and $0.40 per MMBTU on
volumes hedged of 23,730,000, 15,880,000 and 5,560,000 MMBTU's, respectively.
At June 30, 1998, the Company had open futures contracts covering a total volume
of 25,120,000 MMBTU's with some contracts extending through December 1999. The
net unrealized gain on these contracts at June 30, 1998, was approximately
$4,878,000. 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 15 - INTEREST, NET:
Interest, net, consisted of the following:
<TABLE>
<CAPTION>
(Dollars in thousands) Years Ended June 30
---------------------------------
1998 1997 1996
--------- ---------- --------
<S> <C> <C> <C>
Interest expense $(21,518) $(8,942) $ (715)
Interest capitalized 8,975 3,858 10
Interest income 1,595 753 2,934
-------- ------- ------
$(10,948) $(4,331) $2,229
======== ======= ======
</TABLE>
<PAGE>
NOTE 16 - INCOME TAXES:
The following is a summary of the components of the provision for income taxes:
<TABLE>
<CAPTION>
(Dollars in thousands) Years Ended June 30
-----------------------------------
1998 1997 1996
----------- ----------- -------
<S> <C> <C> <C>
Current:
Federal $ 9,350 $ 30,379 $29,838
State 1,021 3,831 2,592
------- -------- -------
10,371 34,210 32,430
------- -------- -------
Deferred:
Federal 5,345 503 1,734
State 613 59 151
------- -------- -------
5,958 562 1,885
------- -------- -------
$16,329 $ 34,772 $34,315
======= ======== =======
</TABLE>
The tax effect of the significant temporary differences and tax credit
carryforwards at June 30 follows:
<TABLE>
<CAPTION>
(Dollars in thousands) 1998 1997
------------------------ ----------------------
Current Non-current Current Non-current
---------- ----------- ------- ------------
<S> <C> <C> <C> <C>
Employee benefit obligations $ 2,237 $ 88 $ 2,137 $ 101
Reserve for bad debts 726 - 691 -
Employee post retirement 69 950 78 1,041
Deferred income on affiliate
sales 600 - 1,658 -
Accrual for closure of
gypsum disposal area - 2,294 - 2,397
Other 135 279 240 331
------- -------- ------- ------------
Deferred tax assets 3,767 3,611 4,804 3,870
Depreciation and amortization - (65,978) (1,208) (59,688)
Pension - (2,102) - (3,039)
Other - (517) - -
Deferred tax liabilities (68,597) (1,208) (62,727)
------- -------- ------- --------
Net deferred tax asset
(liability) $ 3,767 $(64,986) $ 3,596 $(58,857)
======= ======== ======= ========
</TABLE>
<PAGE>
NOTE 16 - INCOME TAXES (Continued):
A reconciliation, as of June 30, of the statutory rate for income taxes and the
effective tax rate follows:
<TABLE>
<CAPTION>
(Dollars in thousands) 1998 1997 1996
-------------------- ------------------ -------------------
% 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 $13,756 35.0% $31,705 35.0% $30,972 35.0%
Increase (decrease) in
taxes resulting from:
State taxes, net 1,149 2.9% 2,263 2.5% 2,743 3.1%
Non-deductible
goodwill 1,604 4.1% 836 0.9% - -
Other, net (180) (0.5%) (32) - 600 0.7%
------- ----- ------- ---- ------- --------
$16,329 41.5% $34,772 38.4% $34,315 38.8%
======= ===== ======= ==== ======= ========
</TABLE>
Income taxes have been settled with the Internal Revenue Service ("IRS") for all
years through June 30, 1993. The IRS has concluded its field examination of the
Company's U.S. income tax returns for fiscal years 1994-1996 and has assessed
certain taxes that the Company is contesting. The Company believes any
adjustments that might be required will not be material to the Company's
financial position or results of operations.
NOTE 17 - 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 Internal Revenue Code funding
limitation.
Net periodic pension expense includes the following components:
<TABLE>
<CAPTION>
(Dollars in thousands) Years Ended June 30
---------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Service cost - benefits earned during the period $ 3,708 $ 2,297 $ 1,955
Interest cost on projected benefit obligations 6,888 5,294 4,875
Actual gain on plan assets (25,540) (10,094) (13,260)
Net amortization (274) (240) (153)
Unrecognized gain on plan assets 17,763 3,734 7,778
-------- -------- --------
Net periodic pension expense $ 2,545 $ 991 $ 1,195
======== ======== ========
</TABLE>
<PAGE>
NOTE 17 - RETIREMENT PLANS (Continued):
The following table sets forth the plans' funded status and the amounts included
as a component of other assets in the Company's consolidated balance sheets:
<TABLE>
<CAPTION>
(Dollars in thousands) June 30
-----------------------
1998 1997
---------- ----------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation $ 77,532 $64,016
Non-vested benefit obligation 275 464
-------- --------
Accumulated benefit obligation 77,807 64,480
Increase in benefits due to future compensation increases 23,842 17,084
-------- --------
Projected benefit obligation 101,649 81,564
Estimated fair value of plan assets 115,162 83,521
-------- --------
Plan assets greater than projected benefit obligation 13,513 1,957
Remaining unrecognized transition assets (3,072) (2,645)
Unrecognized prior service cost 6,135 5,291
Unrecognized net (gain) loss (11,005) 3,129
-------- --------
Prepaid pension cost at end of period $ 5,571 $ 7,732
======== ========
</TABLE>
The following assumptions were used to measure net periodic pension cost for the
plans for fiscal 1998, 1997 and 1996:
<TABLE>
<CAPTION>
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Discount rate 7.25% 7.50% 7.00%
Expected long-term rate of return on assets 8.50% 8.50% 8.50%
Average increase in compensation levels 5.00% 5.00% 5.00%
</TABLE>
The plans' assets consist primarily of guaranteed investment contracts and
marketable equity securities.
The Company also has contributory thrift plans covering substantially all
regular full-time employees who have elected to participate in the plans. Under
the plans, the Company matches a certain percentage of each employee's
contributions to the plan up to a maximum percentage of the employee's base
compensation. Company contributions totaled approximately $1,529,000 in fiscal
1998, $1,353,000 in fiscal 1997 and $794,000 in fiscal 1996.
The Company has no material post-retirement benefit obligations.
<PAGE>
NOTE 18 - LEASE COMMITMENTS:
The Company has commitments under operating leases for equipment and storage
warehouses. The following is a schedule of the future minimum rental payments
required under operating leases that have noncancellable lease terms in excess
of one year as of June 30, 1998:
<TABLE>
<CAPTION>
(Dollars in thousands) Amount
------
<S> <C>
1999 $2,843
2000 2,017
2001 737
2002 303
2003 163
------
$ 6,063
=======
</TABLE>
Rental expense for all operating leases was $3,876,000 for fiscal 1998,
$3,417,000 for fiscal 1997 and $1,476,000 for fiscal 1996.
NOTE 19 - COMMITMENTS AND CONTINGENCIES:
In late fiscal 1996, the Company began an expansion at its nitrogen fertilizer
manufacturing facilities at Yazoo City. The project includes the addition of a
650 ton-per-day nitric acid plant, a new 500 ton-per-day ammonia plant and
modifications to its ammonium nitrate plant to increase production from
approximately 750,000 to approximately 950,000 tons-per-year at an estimated
total cost of $130,000,000, and is scheduled for a phased completion. The
nitric acid plant was completed and placed in service during March 1998. The
Company anticipates the anhydrous ammonia and substantially all of the ammonium
nitrate capacity being added by the end of calendar 1998.
In April 1998, the Company announced its plans for an expansion project to
increase its production capacity at the Company's potash facilities in Carlsbad,
New Mexico. This expansion will increase the Company's red granular capacity
from 445,000 to 545,000 tons-per-year as well as increase storage capacities by
30,000 tons. Upon completion of the project, the Company will have
approximately 1,100,000 tons of combined potash production capacity from its two
operating mines. The Company estimates total cost of the expansion to be
$8,200,000 and is scheduled to be fully operational by the end of fiscal 1999.
The Company is currently assessing its computer systems, including the systems
involved in the operation of its manufacturing facilities, to identify to what
extent the Company could be affected by the "Year 2000" issue. The Company
expects to complete the assessment prior to the end of the 1998 calendar year
and to have any Year 2000 conversion projects completed on a timely basis. The
total cost of any such projects is as yet undetermined but, based upon facts
known to date, is not expected to be material to the Company because of previous
significant capital expenditures made by the Company to update computer software
and hardware. The Company is also assessing Year 2000 issues in relation to its
customers, suppliers and creditors to determine whether Year 2000 problems of
any such third parties may materially affect the Company. This assessment
should also be completed by the end of the 1998 calendar year. The ability of
third parties with which the Company transacts business to adequately address
their Year 2000 issues is outside the Company's control. There can be no
assurance that the failure of such third parties to adequately address their
respective Year 2000 issues will not have a material adverse effect on the
Company's business operations and financial condition.
<PAGE>
NOTE 19 - COMMITMENTS AND CONTINGENCIES (Continued):
Additionally, the Company, in the ordinary course of its business, is the
subject of, or a party to, 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 20 - RAW MATERIAL CONTRACTS:
Mississippi Phosphates Corporation ("MPC"), a wholly owned subsidiary of the
Company, has contracted with Office Cherifien des Phosphates to import its full
requirement of phosphate rock through June 30, 2016. The purchase price for
phosphate rock is based on the estimated phosphate rock costs incurred by
certain domestic phosphate producers and the operating performance of MPC.
NOTE 21 - 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
purchase. These short-term investments were $1,600,000 at June 30, 1998, and
$53,739,000 at June 30, 1996. The Company had no short-term investments at June
30, 1997.
The increase (decrease) in cash due to the changes in operating assets and
liabilities consisted of the following:
<TABLE>
<CAPTION>
(Dollars in thousands) Years Ended June 30
---------------------------------
1998 1997 1996
-------- ---------- ---------
<S> <C> <C> <C>
Accounts receivable $ 11,563 $ (2,048) $(3,564)
Inventories 3,881 (11,378) 9,682
Prepaid expenses and other current assets (1,763) 3,443 (944)
Accounts payable (16,445) (4,504) 14,494
Accrued liabilities (2,017) 5,064 1,733
-------- -------- -------
$ (4,781) $ (9,423) $21,401
======== ======== =======
</TABLE>
During fiscal 1998, 1997 and 1996, the Company paid income taxes of $11,242,000,
$30,451,000 and $31,127,000, respectively. Payments of interest, net of amounts
capitalized, were $10,021,000 in fiscal 1998, $3,819,000 in fiscal 1997 and
$320,000 in fiscal 1996.
<PAGE>
NOTE 21 - SUPPLEMENTAL CASH FLOW INFORMATION (CONTINUED):
Supplemental disclosures regarding non-cash financing and investing activities
include the following:
<TABLE>
<CAPTION>
(Dollars in thousands) Years Ended June 30
-------------------------------
1998 1997 1996
---------- --------- -------
<S> <C> <C> <C>
Property held for sale converted to
note receivable $54,625 $ - $ -
Land option transferred to land $ - $ 941 $ -
</TABLE>
Other material non-cash activities include the Company's December 1996
acquisition of the fertilizer businesses of First Mississippi in an all-stock
merger transaction (see Note 2).
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF THE COMPANY
Subsidiaries of the Company as of June 30, 1998, are as follows:
<TABLE>
<CAPTION>
State of PERCENTAGE OF VOTING
NAME OF COMPANY Incorporation SECURITIES OWNED
- --------------- ------------- --------------------
<S> <C> <C>
Mississippi Phosphates Corporation Delaware 100%
NSI Land Corporation Delaware 100%
Mississippi Chemical Management Company Delaware 100%
Mississippi Chemical Company, L.P. Delaware 100%
MCC Investments, Inc. Delaware 100%
Mississippi Potash, Inc. Mississippi 100%
Eddy Potash, Inc. Mississippi 100%
(a subsidiary of Mississippi Potash, Inc.)
Triad Nitrogen, Inc. Delaware 100%
Triad Fertilizer, Inc. Mississippi 100%
(a subsidiary of Triad Nitrogen, Inc.)
TNI, Inc. Mississippi 100%
(a subsidiary of Triad Nitrogen, Inc.)
Triad Barge, Inc. Mississippi 100%
(a subsidiary of Triad Nitrogen, Inc.)
TNI Barge, Inc. Delaware 100%
(a subsidiary of Triad Barge, Inc.)
</TABLE>
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report, dated July 22, 1998, incorporated by reference in this Form 10-K, into
the Company's previously filed SEC File No. 333-13069 and File No. 333-38619.
/s/ Arthur Andersen LLP
Memphis, Tennessee,
September 18, 1998
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S 1998 ANNUAL REPORT TO SHAREHOLDERS AND IS QUALIFIED IN ITS ENTIRETY TO
SUCH ANNUAL REPORT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> JUN-30-1998
<CASH> 3,857
<SECURITIES> 0
<RECEIVABLES> 63,021
<ALLOWANCES> 1,989
<INVENTORY> 65,429
<CURRENT-ASSETS> 140,721
<PP&E> 795,332
<DEPRECIATION> 334,491
<TOTAL-ASSETS> 912,332
<CURRENT-LIABILITIES> 76,635
<BONDS> 214,005
0
0
<COMMON> 280
<OTHER-SE> 448,245
<TOTAL-LIABILITY-AND-EQUITY> 912,332
<SALES> 519,911
<TOTAL-REVENUES> 531,406
<CGS> 412,500
<TOTAL-COSTS> 481,155
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 222
<INTEREST-EXPENSE> 10,948
<INCOME-PRETAX> 39,303
<INCOME-TAX> 16,329
<INCOME-CONTINUING> 22,974
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,974
<EPS-PRIMARY> 0.84
<EPS-DILUTED> 0.84
</TABLE>
