UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d)
Of The Securities Exchange Act of 1934
For Quarter Ended September 30, 1999
OR
[ ] Transition Report Pursuant to Section 13 or 15(d)
Of the Securities Exchange Act of 1934
For Quarter Ended September 30, 1999
Commission File Number 001-12217
MISSISSIPPI CHEMICAL CORPORATION
Organized in the State of Mississippi
Tax Identification No. 64-0292638
P. O. Box 388, Yazoo City, Mississippi 39194
Telephone No. 601+746-4131
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 [ ]
The number of shares outstanding of each of the issuer's classes of
common stock, as of September 30, 1999.
Class Number of Shares
-------- ----------------
Common Stock, $0.01 par value 26,131,917
<PAGE>
MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES
INDEX
Page
Number
------
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Consolidated Statements of Income 3
Three months ended September 30,
1999 and 1998
Consolidated Balance Sheets 4 - 5
September 30, 1999 and June 30, 1999
Consolidated Statements of Shareholders' Equity 6
Fiscal Year Ended June 30, 1999
and Three months ended September 30, 1999
Consolidated Statements of Cash Flows 7
Three months ended September 30, 1999 and 1998
Notes to Consolidated Financial Statements 8 - 14
Item 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition 15 - 22
Item 3. Quantitative and Qualitative Disclosure About
Market Risk 23
PART II. OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K 24
Signatures 24
<PAGE>
PART>I. FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three months ended
September 30,
----------------------
1999 1998
--------- ---------
(In thousands, except per share data)
<S> <C> <C>
Revenues:
Net sales $ 96,998 $104,715
Operating expenses:
Cost of products sold 93,445 84,028
Selling, general and administrative 8,612 9,540
Other 2,540 157
-------- --------
104,597 93,725
-------- --------
Operating (loss) income (7,599) 10,990
Other (expense) income:
Interest, net (6,027) (3,510)
Other 635 (754)
-------- --------
(Loss) income before income taxes (12,991) 6,726
Income tax (benefit) expense (7,439) 2,505
-------- --------
Net (loss) income $ (5,552) $ 4,221
======== ========
(Loss) earnings per share - basic (see Note 2) $ (0.21) $ 0.16
======== ========
(Loss) earnings per share - diluted (see Note 2) $ (0.21) $ 0.16
======== ========
</TABLE>
[FN]
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<TABLE>
MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS
September 30, June 30,
1999 1999
------------ ---------
(In thousands, except per share data)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,724 $ 1,648
Accounts receivable, net 33,616 43,780
Inventories:
Finished products 42,362 33,061
Raw materials and supplies 7,233 7,993
Replacement parts 36,334 35,870
-------- --------
Total inventories 85,929 76,924
Income tax receivable 22,714 18,189
Insurance receivable 3,514 11,310
Prepaid expenses and other current assets 7,047 3,622
Deferred income taxes 3,383 3,286
-------- --------
Total current assets 157,927 158,759
Investments in affiliates 82,826 77,020
Other assets 13,999 19,263
Property, plant and equipment, at cost 839,910 835,306
less accumulated depreciation, depletion
and amortization (373,434) (363,222)
-------- --------
Net property, plant and equipment 466,476 472,084
Goodwill, net of accumulated amortization 170,617 171,762
-------- --------
$891,845 $898,888
======== ========
</TABLE>
[FN]
The accompanying notes are an integral part of these consolidated financial
statements.
<TABLE>
MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Continued)
LIABILITIES AND SHAREHOLDERS' EQUITY
September 30, June 30,
1999 1999
------------ --------
(In thousands, except per share data)
<S> <C> <C>
Current liabilities:
Accounts payable $ 42,924 $ 60,935
Accrued liabilities 16,878 13,460
-------- --------
Total current liabilities 59,802 74,395
Long-term debt 322,970 305,857
Other long-term liabilities and deferred credits 14,943 17,617
Deferred income taxes 82,068 80,791
Shareholders' equity:
Common stock ($.01 par; authorized 100,000
shares; issued 27,976) 280 280
Additional paid-in capital 305,901 305,901
Retained earnings 135,460 143,626
Treasury stock, at cost (1,844 shares) (29,579) (29,579)
-------- --------
412,062 420,228
-------- --------
$891,845 $898,888
======== ========
</TABLE>
[FN]
The accompanying notes are an integral part of these consolidated financial
statements.
<TABLE>
MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
SEPTEMBER 30, 1999
(Unaudited)
Additional
Common Paid-In Retained Treasury
Stock Capital Earnings Stock Total
-------- -------- -------- -------- --------
(In thousands)
<S> <C> <C> <C> <C> <C>
Balances, July 1, 1998 $ 280 $305,901 $157,800 $(15,456) $448,525
Net loss - - (3,608) - (3,608)
Cash dividends paid - - (10,566) - (10,566)
Treasury stock, net - - - (14,123) (14,123)
-------- -------- -------- -------- --------
Balances,
June 30, 1999 280 305,901 143,626 (29,579) 420,228
Net loss - - (5,552) - (5,552)
Cash dividends
paid - - (2,614) - (2,614)
------ -------- -------- -------- --------
Balances,
September 30, 1999 $ 280 $305,901 $135,460 $(29,579) $412,062
====== ======== ======== ======== ========
</TABLE>
[FN]
The accompanying notes are an integral part of these consolidated financial
statements.
<TABLE>
PAGE> MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended September 30,
1999 1998
--------- ---------
(In thousands)
<S> <C> <C>
Cash flows from operating activities:
Net (loss) income $ (5,552) $ 4,221
Reconciliation of net (loss) income to
net cash used in operating activities:
Net change in operating assets
and liabilities (16,570) (30,214)
Depreciation, depletion and amortization 11,649 10,280
Deferred income taxes 3,300 1,259
Equity earnings in unconsolidated
affiliates (5,896) (712)
Other (1,537) 838
-------- --------
Net cash used in operating activities (14,606) (14,328)
-------- --------
Cash flows from investing activities:
Purchases of property, plant and equipment (4,604) (9,730)
Investment in Farmland MissChem Limited - (3,819)
Collections on note receivable - 54,625
Other 4,800 56
-------- --------
Net cash provided by investing activities 196 41,132
-------- --------
Cash flows from financing activities:
Debt proceeds 108,900 158,300
Debt payments (91,800) (172,336)
Cash dividends paid (2,614) (2,725)
Purchase of treasury stock - (11,974)
-------- --------
Net cash provided by (used in)
financing activities 14,486 (28,735)
-------- --------
Net increase (decrease) in cash and
cash equivalents 76 (1,931)
Cash and cash equivalents - beginning of period 1,648 3,857
-------- --------
Cash and cash equivalents - end of period $ 1,724 $ 1,926
======== ========
</TABLE>
[FN]
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
MISSISSIPPI CHEMICAL CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - INTERIM FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been prepared
by us without audit, and include Mississippi Chemical Corporation, its
subsidiaries and affiliates. In our opinion, the financial statements reflect
all adjustments necessary to present fairly our results of operations for the
three-month periods ended September 30, 1999 and 1998, our financial position
at September 30, 1999 and June 30, 1999, our cash flows for the three months
ended September 30, 1999 and 1998, and our consolidated statements of
shareholders' equity as of September 30, 1999. In our opinion, these
adjustments are of a normal recurring nature which are necessary for a fair
presentation of our financial position and results of operations for the
interim periods. We have reclassified certain prior-year information to
conform with the current year's presentation.
Certain notes and other information have been condensed or omitted in our
interim financial statements presented in our quarterly report on Form 10-Q.
Therefore, these financial statements should be read in conjunction with our
1999 Form 10-K and our consolidated financial statements and notes thereto
included in our June 30, 1999, audited financial statements.
The nature of our business is seasonal; therefore, the results of
operations for the period ended September 30, 1999, are not necessarily
indicative of the operating results for the full fiscal year.
NOTE 2 - EARNINGS PER SHARE
The number of shares used in our basic and diluted earnings per share
computation are as follows:
<TABLE>
Three months ended
September 30,
----------------------
1999 1998
---------- ----------
(In thousands)
<S> <C> <C>
Weighted average common shares outstanding,
net of treasury shares, for basic earnings
per share 26,132 26,976
Common stock equivalents for employee stock
options - -
------ ------
Weighted average common shares
outstanding for diluted earnings per share 26,132 26,976
====== ======
</TABLE>
Options outstanding at September 30, 1999 and 1998, were not included in
our computations of diluted earnings per share because the options' exercise
prices were greater than the average market price for common shares and,
therefore, not dilutive.
In July 1999, our board of directors declared a regular quarterly cash
dividend of $0.10 per common share for the three-month period ending June 30,
1999. This dividend was paid on August 25, 1999, to holders of record on
August 11, 1999. In September 1999, our board of directors announced that
quarterly cash dividends paid in the foreseeable future would be reduced to
$0.03 per common share. In October 1999, a regular quarterly cash dividend of
$0.03 per common share was declared for the three-month period ending
September 30, 1999. This dividend will be payable November 24, 1999, to
holders of record on November 10, 1999.
NOTE 3 - SEGMENT INFORMATION
Our reportable operating segments, nitrogen, phosphates and potash, are
strategic business units that offer different products and services. They are
managed separately because each business unit requires different technology and
marketing strategies. Our nitrogen segment produces ammonia, ammonium nitrate,
urea, nitrogen solutions and nitric acid and distributes these products to
fertilizer dealers and distributors and industrial users. Our phosphates
segment produces diammonium phosphate fertilizer (commonly referred to as
"DAP") that is marketed to agricultural users primarily in international
markets through a separate export association. Our potash segment mines and
produces granular, coarse and standard potash products and distributes them to
agricultural and industrial users. Below is our segment information for the
three months ended September 30, 1999. The Other caption includes corporate
and consolidating eliminations.
<TABLE>
Three months ended
September 30, 1999
- -------------------------------------------------------------------------------
(In thousands) Nitrogen Phosphates Potash Other Total
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales -
external customers $ 42,276 $ 35,783 $ 18,939 $ - $ 96,998
Net sales - intersegment 5,708 16 - (5,724) -
Operating (loss) income (9,211) 2,307 45 (740) (7,599)
Depreciation, depletion
and amortization 7,693 1,500 1,519 937 11,649
Capital expenditures 1,421 864 1,928 391 4,604
Three months ended
September 30, 1998
- -------------------------------------------------------------------------------
(In thousands) Nitrogen Phosphates Potash Other Total
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales -
external customers $ 50,041 $ 30,995 $ 23,679 $ - $104,715
Net sales - intersegment 6,670 18 - (6,688) -
Operating income 4,328 2,475 4,101 86 10,990
Depreciation, depletion
and amortization 6,894 1,252 1,327 807 10,280
Capital expenditures 4,843 1,009 3,277 601 9,730
</TABLE>
NOTE 4 - GUARANTOR SUBSIDIARIES
Payment obligations under our 7.25% Senior Notes, due November 15, 2017,
issued pursuant to that certain indenture, dated as of November 25, 1997, are
fully and unconditionally guaranteed on a joint and several basis by
Mississippi Nitrogen, Inc., and MissChem Nitrogen, L.L.C. (the "Guarantor
Subsidiaries"), our wholly owned direct subsidiary and our wholly owned
indirect subsidiary, respectively. Condensed consolidating financial
information regarding the parent company, Guarantor Subsidiaries and
non-guarantor subsidiaries for September 30, 1999 and 1998 is presented below
for purposes of complying with the reporting requirements of the Guarantor
Subsidiaries. Separate financial statements of the Guarantor Subsidiaries are
not presented because we do not believe that separate financial statements are
material to investors.
<TABLE>
CONDENSED CONSOLIDATING STATEMENT OF INCOME
Three months ended September 30, 1999
- --------------------------------------------------------------------------------
Parent Guarantor Non-Guarantor
(In thousands) Company Subsidiaries Subsidiaries Eliminations Consonsolidated
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues:
Net sales $ - $ 29,735 $ 98,216 $(30,953) $ 96,998
Operating expenses:
Cost of products
sold - 35,740 96,367 (38,662) 93,445
Selling, general
and admin-
istrative 602 1,059 6,951 - 8,612
Other - - 2,540 - 2,540
------- -------- -------- -------- --------
602 36,799 105,858 (38,662) 104,597
------- -------- -------- -------- --------
Operating (loss)
income (602) (7,064) (7,642) 7,709 (7,599)
Other (expense)
income:
Interest,
net (5,897) (2,634) 2,504 - (6,027)
Other 255 (3,220) 299 3,301 635
------- ------- ------- ------- --------
Loss before
income taxes (6,244) (12,918) (4,839) 11,010 (12,991)
Income tax
benefit (692) (4,909) (1,838) - (7,439)
------- ------- ------- ------- --------
Net loss $(5,552) $(8,009) $(3,001) $11,010 $ (5,552)
======= ======= ======= ======= ========
</TABLE>
<TABLE>
CONDENSED CONSOLIDATING STATEMENT OF INCOME
Three months ended September 30, 1998
- --------------------------------------------------------------------------------
Parent Guarantor Non-Guarantor
(In thousands) Company Subsidiaries Subsidiaries Eliminations Consolidated
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues:
Net sales $ - $ 27,323 $106,168 $(28,776) $104,715
Operating expenses:
Cost of products
sold - 23,145 90,658 (29,775) 84,028
Selling, general
and admin-
istrative 825 1,468 7,247 - 9,540
Other - - 157 - 157
------- -------- -------- --------- --------
825 24,613 98,062 (29,775) 93,725
Operating (loss)
income (825) 2,710 8,106 999 10,990
Other (expense)
income:
Interest, net (2,282) (1,025) (203) - (3,510)
Other 6,414 - (409) (6,759) (754)
------- -------- -------- --------- --------
Income before
income taxes 3,307 1,685 7,494 (5,760) 6,726
Income tax (benefit)
expense (914) 627 2,792 - 2,505
-------- -------- -------- -------- -------
Net income $ 4,221 $ 1,058 $ 4,702 $ (5,760) $ 4,221
======== ======== ======== ======== =======
</TABLE>
<TABLE>
CONDENSED CONSOLIDATING BALANCE SHEET
September 30, 1999
- -------------------------------------------------------------------------------
Parent Guarantor Non-Guarantor
(In thousands) Company Subsidiaries Subsidiaries Eliminations Consolidated
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and cash
equivalents $ 643 $ 11 $ 1,070 $ - $ 1,724
Receivables, net 20,494 13,419 100,917 (74,986) 59,844
Inventories - 20,173 64,315 1,441 85,929
Prepaid expenses
and other
current assets 4,118 1,164 10,168 (5,020) 10,430
------- ------- -------- -------- ---------
Total current
assets 25,255 34,767 176,470 (78,565) 157,927
Investments in
affiliates 712,330 388,525 65,358 (1,083,387) 82,826
Other assets 126,442 - 232,551 (344,994) 13,999
PP&E, net 14,013 156,345 296,118 - 466,476
Goodwill, net - - 170,617 - 170,617
-------- -------- -------- ----------- --------
Total assets $878,040 $579,637 $941,114 $(1,506,946) $891,845
======== ======== ======== =========== ========
Current liabilities:
Accounts
payable $ 44,701 $ 29,931 $ 45,374 $ (77,082) $ 42,924
Accrued
liabilities 11,623 3,487 6,871 (5,103) 16,878
-------- -------- -------- ---------- --------
Total current
liabilities 56,324 33,418 52,245 (82,185) 59,802
Long-term debt 403,912 130,339 123,627 (334,908) 322,970
Other long-term
liabilities and
deferred credits 5,742 27,543 70,914 (7,188) 97,011
Shareholders' equity:
Common stock 280 1 58,943 (58,944) 280
Additional paid-in
capital 305,901 402,571 594,449 (997,020) 305,901
Retained
earnings 135,460 (14,235) 40,936 (26,701) 135,460
Treasury stock,
at cost (29,579) - - - (29,579)
-------- -------- -------- ---------- ---------
Total share-
holders'
equity 412,062 388,337 694,328 (1,082,665) 412,062
-------- -------- -------- ---------- ---------
Total
liabilities
and share-
holders'
equity $878,040 $579,637 $941,114 $(1,506,946) $ 891,845
======== ======== ======== =========== =========
</TABLE>
<TABLE>
CONDENSED CONSOLIDATING BALANCE SHEET
June 30, 1999
- --------------------------------------------------------------------------------
Parent Guarantor Non-Guarantor
(In thousands) Company Subsidiaries Subsidiaries Eliminations Consolidated
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and cash
equivalents $ 244 $ 21 $ 1,383 $ - $ 1,648
Receivables, net 19,210 7,792 91,632 (45,355) 73,279
Inventories - 19,629 57,076 219 76,924
Prepaid expenses
and other
current assets 3,994 5 6,704 (3,795) 6,908
------- -------- -------- ----------- --------
Total current
assets 23,448 27,447 156,795 (48,931) 158,759
Investments in
affiliates 707,772 392,312 59,123 (1,082,187) 77,020
Other assets 123,436 12,307 264,602 (381,082) 19,263
PP&E, net 14,270 158,755 299,059 - 472,084
Goodwill, net - - 171,762 - 171,762
-------- -------- -------- ----------- --------
Total assets $868,926 $590,821 $951,341 $(1,512,200) $898,888
======== ======== ======== =========== ========
Current liabilities:
Accounts
payable $ 52,007 $ 34,532 $ 69,315 $ (94,919) $ 60,935
Accrued
liabilities 7,355 - 8,319 (2,214) 13,460
-------- -------- -------- ----------- --------
Total current
liabilities 59,362 34,532 77,634 (97,133) 74,395
Long-term debt 382,402 130,192 112,352 (319,089) 305,857
Other long-term
liabilities and
deferred credits 6,934 28,210 64,158 (894) 98,408
Shareholders' equity:
Common stock 280 1 58,943 (58,944) 280
Additional
paid-in
capital 305,901 404,112 594,317 (998,429) 305,901
Retained
earnings 143,626 (6,226) 43,937 (37,711) 143,626
Treasury stock,
at cost (29,579) - - - (29,579)
-------- -------- --------- ----------- --------
Total
shareholders'
equity 420,228 397,887 697,197 (1,095,084) 420,228
-------- -------- --------- ----------- --------
Total
liabili-
ties and
share-
holders'
equity $868,926 $590,821 $ 951,341 $(1,512,200) $898,888
======== ======== ========= =========== ========
</TABLE>
<TABLE>
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Three months ended September 30, 1999
- -------------------------------------------------------------------------------
Parent Guarantor Non-Guarantor
(In thousands) Company Subsidiaries Subsidiaries Eliminations Consolidated
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash flows from
operating
activities:
Net loss $ (5,552) $ (8,009) $ (3,001) $ 11,010 $ (5,552)
Reconciliation
of net loss
to net cash
(used in)
provided by
operating
activities:
Net change
in
operating
assets
and liab-
ilities (6,057) (7,280) (46,482) 43,249 (16,570)
Depreciation,
depletion
and amort-
ization 751 3,025 7,685 188 11,649
Equity earnings
in unconsoli-
dated
affiliate 4,744 3,786 (6,234) (8,192) (5,896)
Deferred
income
taxes and
other (13,379) 8,937 7,851 (1,646) 1,763
------- -------- -------- --------- --------
Net cash (used in)
provided by
operating
activities (19,493) 459 (40,181) 44,609 (14,606)
-------- -------- -------- --------- --------
Cash flows from
investing
activities:
Purchase of
property,
plant and
equipment (391) (616) (3,597) - (4,604)
Other - - 4,800 - 4,800
------- ------- -------- ---------- --------
Net cash (used in)
provided by
investing
activities (391) (616) 1,203 - 196
------- ------- -------- ---------- --------
Cash flows from
financing
activities:
Net change
in affiliate
notes 5,797 147 38,665 (44,609) -
Debt payments (91,800) - - - (91,800)
Debt proceeds 108,900 - - - 108,900
Cash dividend
paid (2,614) - - - (2,614)
-------- --------- ---------- --------- --------
Net cash provided
by financing
activities 20,283 147 38,665 (44,609) 14,486
-------- --------- ---------- ---------- --------
Net increase
(decrease) in
cash and cash
equivalents 399 (10) (313) - 76
Cash and cash
equivalents -
beginning of
period 244 21 1,383 - 1,648
------- -------- -------- ---------- --------
Cash and cash
equivalents -
end of period $ 643 $ 11 $ 1,070 $ - $ 1,724
======= ======== ======== ========= ========
</TABLE>
<TABLE>
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Three months ended September 30, 1998
- --------------------------------------------------------------------------------
Parent Guarantor Non-Guarantor
(In thousands) Company Subsidiaries Subsidiaries Eliminations Consolidated
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash flows from
operating
activities:
Net income $ 4,221 $ 1,058 $ 4,702 $ (5,760) $ 4,221
Reconciliation
of net income
to net cash
(used in)
provided by
operating
activities:
Net change
in opera-
ting assets
and liabi-
lities (6,391) (2,413) (21,410) - (30,214)
Depreciation,
depletion
and amor-
tization 661 1,670 7,708 241 10,280
Equity earnings
in unconsol-
idated
affiliate (6,418) (72) 1,053 4,725 (712)
Deferred income
taxes and
other (3,498) 4,405 396 794 2,097
------ -------- -------- --------- -------
Net cash (used in)
provided by
operating
activities (11,425) 4,648 (7,551) - (14,328)
------- -------- -------- --------- --------
Cash flows from
investing
activities:
Purchase of
property,
plant and
equipment (600) (3,518) (5,612) - (9,730)
Investment in
affiliates (3,819) - - - (3,819)
Collections on
note receiv-
able -
IMC Agrico 54,625 - - - 54,625
Other - - 56 - 56
------- -------- ---------- ---------- --------
Net cash provided
by (used in)
investing
activities 50,206 (3,518) (5,556) - 41,132
------- -------- ---------- ---------- --------
Cash flows from
financing
activities:
Net change in
affiliate
notes (12,294) (1,130) 13,424 - -
Debt payments (172,300) - (36) - (172,336)
Debt proceeds 158,300 - - - 158,300
Cash dividend
paid (2,725) - - - (2,725)
Purchase of
treasury
stock (11,974) - - - (11,974)
------- ------- -------- --------- --------
Net cash (used in)
provided by
financing
activities (40,993) (1,130) 13,388 - (28,735)
------- ------- -------- --------- --------
Net (decrease)
increase in
cash and cash
equivalents (2,212) - 281 - (1,931)
Cash and cash
equivalents -
beginning of
period 2,616 21 1,220 - 3,857
------- ------- -------- ---------- --------
Cash and cash
equivalents -
end of period $ 404 $ 21 $ 1,501 $ - $ 1,926
======= ======= ======== ========== ========
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
Our operations are organized into three strategic business units: nitrogen,
phosphate and potash. Our nitrogen business unit produces nitrogen products for
distribution to fertilizer dealers and distributors and industrial users located
primarily in the southern region of the United States. Our phosphate business
unit produces DAP and exports the majority of this production through the
Phosphate Chemicals Export Association, Inc., a Webb-Pomerene corporation known
as "PhosChem." Our potash business unit mines and produces agricultural and
industrial potash products for sale to farmers, fertilizer dealers and
distributors, and industries for use primarily in the southern and western
regions of the United States. The following is management's discussion and
analysis of the financial condition and results of operations, which should be
read in conjunction with our audited financial statements and related notes for
the fiscal year ended June 30, 1999.
Consistent with the historical nature of our business, the usage of
fertilizer in our trade territory is highly seasonal, and our quarterly results
reflect the fact that significantly more fertilizer is sold during the last
four months of our fiscal year (March through June). Since interim period
operating results reflect the seasonal nature of our business, they may not
necessarily be indicative of results expected for the full fiscal year.
In addition, quarterly results can vary significantly from year to year due to
a number of factors, including mechanical failures in production facilities,
scheduled maintenance turnarounds, world market conditions of supply and
demand, and weather-related shifts in planting schedules and purchase
patterns. We incur substantial expenditures for fixed costs and inventory
throughout the year.
For the current year, we incurred a net loss during the quarter of $5.6
million (or $0.21 per basic and diluted share) compared to net income of $4.2
million (or $0.16 per basic and diluted share) for the same quarter during the
prior year. Net sales decreased to $97.0 million for the quarter ended
September 30, 1999, from $104.7 million for the quarter ended September 30,
1998. We incurred an operating loss of $7.6 million for the quarter ended
September 30, 1999, compared to operating income of $11.0 million for the
quarter ended September 30, 1998. Earnings before interest, taxes,
depreciation and amortization ("EBITDA") for the quarter ended September 30,
1999, were $4.7 million compared to $20.5 million for the quarter ended
September 30, 1998. During the current year quarter, we received a one-time
income tax benefit in the amount of $2.0 million resulting from settlement
agreements with the Internal Revenue Service for the fiscal years 1994, 1995
and 1996.
NITROGEN
The operating performance of our nitrogen business unit in the current-year
quarter continued to be impacted by weak product pricing. As a result, our
weighted average nitrogen sales price decreased 26% during the current year. A
14% increase in nitrogen sales volumes partially offset the decline in nitrogen
sales prices during the current year. This increase in sales volumes was
attributable to increased sales volumes for nitrogen solutions and urea.
Nitrogen solution sales volumes increased as a result of customers purchasing
inventory previously in consignment apparently in anticipation of higher
pricing in the coming months. Urea sales volumes increased due to improving
market conditions.
Our nitrogen costs per ton declined 2% during the current year primarily
as a result of higher equity earnings at Farmland MissChem Limited ("Farmland
MissChem"), our 50-50 joint venture ammonia plant in Trinidad that began
operations in late July 1998. Pursuant to the Farmland MissChem offtake
agreement, we purchase one-half of the ammonia production from Farmland MissChem
at a discount to market, subject to a minimum price. During the three-month
period ended September 30, 1999, all purchases from Farmland MissChem were at
the minimum price. We recorded $6.2 million in equity income from Farmland
MissChem for the quarter ended September 30, 1999, which reduced our cost of
products sold in our consolidated statement of income. The joint venture equity
income included $3.5 million related to a business interruption claim for
downtime that occurred in March and April, 1999. These higher equity earnings
from Farmland MissChem were partially offset by higher natural gas costs
incurred in our domestic production facilities during the current year.
Our nitrogen business segment also incurred $2.5 million in idle plant
costs in the current year associated with the curtailment of production in
August and September at our No. 2 ammonia plant in Donaldsonville, Louisiana.
This plant resumed production on October 4, 1999.
On July 23, 1999, the Committee for Fair Ammonium Nitrate Trade ("COFANT"),
a coalition of U.S. producers of fertilizer-grade ammonium nitrate that includes
us, filed an antidumping petition under U.S. trade laws contending that Russian
ammonium nitrate importers are injuring the U.S. ammonium nitrate industry by
importing large amounts of fertilizer-grade ammonium nitrate into the United
States at unfairly low prices. By unanimous vote, the U.S. International Trade
Commission ("ITC") found on September 3, 1999, that there is a reasonable
indication that domestic producers are being injured by Russian ammonium nitrate
imports. As a result of this preliminary ITC determination, the U.S. Department
of Commerce ("Department") began an investigation of whether Russian ammonium
nitrate imports are being sold at unfairly low prices. The Department issued on
November 1, 1999, a preliminary finding that, due to the high number of Russian
ammonium nitrate imports into the United States over a relatively short period
of time, "critical circumstances" exist which could subject to antidumping
duties Russian ammonium nitrate imported up to 90 days before the Department's
preliminary determination, currently scheduled for December 30, 1999. We
believe that the actions taken by the ITC and Department to date are likely to
result in Russian ammonium nitrate imports for the remainder of this year being
well below the high levels recently experienced. Such a reduction in Russian
imports should positively impact ammonium nitrate prices, all other factors
being equal.
PHOSPHATE
Our phosphate business unit experienced a 16% increase in sales during the
current year that included a 33% increase in sales volumes, partially offset by
a 13% decrease in sales prices. Sales volumes increased in the current year
through increased product availability and carryover tonnage from the last
quarter of fiscal 1999. The decline in sales prices during the current year
resulted in part from low application rates by farmers in the spring season,
which produced larger than normal domestic inventories. Phosphate prices were
further depressed by the anticipated startup of new production capacity in
India and Australia during the next several months. In the current year,
lower raw material costs for ammonia and phosphate rock and higher production
rates reduced DAP costs per ton 10% from the prior year.
POTASH
Our potash business unit experienced a 20% decrease in sales during the
current year as sales volumes declined 18% and sales prices decreased 2%.
Sales volumes decreased in the current year primarily through reduced product
availability and reduced domestic product demand. During the prior year
quarter, we sold 34,000 tons of inventory from the Eddy Potash, Inc. ("Eddy")
facility, which suspended operations in December 1997. Those inventories have
now been depleted. Dry weather conditions in the southwest during the current
year also contributed to lower sales volumes.
Our potash costs per ton increased 20% during the current year as compared
to the prior year as a result of higher maintenance and labor spending.
Production was also lower than anticipated as a result of a temporary decline
in ore grade.
OUTLOOK
Although nitrogen prices have increased marginally over the last several
months as a result of the industry-wide reduction in inventories and the
improving supply/demand outlook, we believe that our nitrogen segment's
financial results in the near term will continue to be adversely affected by
low nitrogen prices and high natural gas costs. Material improvement in
nitrogen margins is possible during the spring 2000 planting season; however,
the extent of any such improvement is impossible to predict due to the
difficulty of projecting natural gas costs, nitrogen product availability
and demand. On October 4, 1999, our No. 2 ammonia plant in Donaldsonville,
Louisiana, resumed production after a two-month shutdown, with the continued
operation of that facility dependent on nitrogen market conditions and natural
gas prices.
We anticipate that DAP prices will also continue in the near term to
adversely affect our phosphate segment's financial results. Although we believe
that the market has overreacted to the DAP capacity additions that are scheduled
to come on-line in Australia and India in the next several months, it will take
some time for the market to sort out the long-term effect of these capacity
additions. In order to reduce inventories, on October 18, 1999, we extended a
shutdown of our DAP facility by approximately five days followed by
approximately two weeks of production at reduced levels. We will continue to
monitor market conditions to determine whether additional shutdowns or
curtailments of our DAP facility are advisable.
Finally, we believe that the financial results of our potash segment will
show near-term improvement as a result of reduced production costs caused
primarily by mining higher ore grade and lower maintenance and labor spending.
In authorizations granted in May 1995, March 1996, and September 1998, our
board of directors authorized the purchase of up to 8,000,000 shares of our
common stock in the open market, in privately negotiated transactions or
otherwise at prices and at times determined by us to be appropriate. As of
October 31, 1998, we had repurchased a total of 3,700,009 shares pursuant to
those authorizations. No shares have been repurchased since that date. The
unused authorization to repurchase 4,299,991 shares remains available to us.
RESULTS OF OPERATIONS
Our results of operations have historically been influenced by a number of
factors beyond our control, which can significantly alter our operating results.
Fertilizer demand and prices are highly dependent upon a variety of conditions
in the agricultural industry such as grain prices, planted acreage, projected
grain stocks, U.S. Government policies, weather, and changes in agricultural
production methods. Our results of operations can also be affected by (i) the
volatility of natural gas prices, (ii) mechanical operating difficulties, (iii)
the relative value of the U.S. dollar, (iv) foreign agricultural policies (in
particular, policies of the Governments of India and China regarding fertilizer
imports), (v) capacity expansions by competitors, (vi) pricing policies of
domestic and foreign competitors (especially Russia), and (vii) the
unpredictable nature of international and local economies.
Following are summaries of our sales results by product categories:
<TABLE>
Three months ended
September 30,
--------------------
1999 1998
-------- --------
<S> <C> <C>
Net Sales (in thousands):
Nitrogen $ 42,022 $ 49,856
DAP 35,755 30,783
Potash 18,939 23,679
Other 282 397
-------- --------
Net Sales $ 96,998 $104,715
======== ========
</TABLE>
<TABLE>
Three months ended
September 30,
---------------------
1999 1998
-------- --------
<S> <C> <C>
Tons Sold (in thousands):
Nitrogen:
Ammonia 172 184
Ammonium nitrate 84 113
Urea 134 108
Nitrogen solutions 88 7
Nitric acid 14 21
--- ---
Total Nitrogen 492 433
DAP 229 172
Potash 217 265
</TABLE>
<TABLE>
Three months ended
September 30,
---------------------
1999 1998
------- -------
<S> <C> <C>
Average Sales Price Per Ton:
Nitrogen $ 85 $ 115
DAP $ 156 $ 179
Potash $ 87 $ 89
</TABLE>
NET SALES. Our net sales decreased 7% to $97.0 million for the quarter
ended September 30, 1999, from $104.7 million for the quarter ended September
30, 1998. This decrease is explained by lower sales prices in the current year
for our nitrogen and DAP products and lower sales volumes for our potash
products, partially offset by higher sales volumes for our nitrogen and DAP
products. During the current year, our average sales prices for ammonia
decreased 18%, ammonium nitrate decreased 17%, urea decreased 27% and nitrogen
solutions decreased 21%, resulting in a 26% reduction in the weighted average
sales price per ton of nitrogen compared to the prior year due to the mix of
products sold. Nitrogen fertilizer sales volumes increased 14% during the
current year through increased sales volumes for nitrogen solutions and urea.
Nitrogen solutions sales volumes increased approximately 81,000 short tons in
the current year as a result of customers purchasing inventory previously in
consignment apparently in anticipation of higher pricing in the coming months.
Urea sales volumes increased 23% in the current year due to improving market
conditions. Ammonium nitrate sales volumes decreased 25% during the current
year due to customers delaying their purchasing decisions given the uncertainty
of the availability of cheap Russian imports and due to dry weather conditions
in our principal marketing area. Ammonia sales volumes decreased 7% during the
current year, primarily the result of curtailing production in August and
September at our No. 2 ammonia plant at the Donaldsonville, Louisiana, facility.
This lost production was partially offset by the additional tons available for
sale from Farmland MissChem as well as a reduction in inventory balances during
the quarter. On October 4, 1999, our No. 2 ammonia plant at the Donaldsonville
facility resumed production after its two-month shutdown. The continued
operation of this facility will be dependent upon nitrogen market conditions and
natural gas prices.
During the current year, DAP sales increased 16%, compared to the prior
year, due to a 33% increase in sales volumes partially offset by a 13% decrease
in sales prices. DAP sales volumes increased in the current year as a result
of increased product availability as well as carryover tonnage from the last
quarter of fiscal 1999. During the prior year, approximately 54,000 tons of
DAP inventory was damaged by Hurricane Georges. In addition, our DAP facility
did not produce for four days in the prior year quarter due to the hurricane.
During the current year, we experienced higher operating rates that also
contributed to increased product availability. The decline in sales prices
during the current year was the result of large inventories at the beginning of
the quarter caused in part by low application rates by farmers in the spring
season. DAP prices were further depressed by the anticipated start-up of new
production capacity in India and Australia.
Potash sales decreased 20% during the quarter ended September 30, 1999,
as compared to the quarter ended September 30, 1998. This decrease was the
result of an 18% decrease in sales volumes and a 2% decrease in sales prices.
Sales volumes decreased in the current year, primarily through reduced product
availability and reduced domestic product demand. During the prior year
quarter, we sold approximately 34,000 tons of inventory from the Eddy facility,
which suspended operations in December 1997. Those inventories have now been
depleted. Dry weather conditions in the southwest during the current year also
contributed to lower sales volumes.
COST OF PRODUCTS SOLD. Our cost of products sold increased to $93.4
million for the quarter ended September 30, 1999, from $84.0 million for the
quarter ended September 30, 1998. As a percentage of net sales, cost of
products sold increased to 96% for the quarter ended September 30, 1999, from
80% for the quarter ended September 30, 1998. Cost of sales increased as a
percentage of net sales due to lower sales prices for our nitrogen and DAP
products and higher production costs for our potash products. This increase
was partially offset by lower DAP and nitrogen costs per ton during the current
year. Nitrogen costs per ton decreased 2% in the current year as compared to
the prior year, primarily the result of higher earnings at our joint venture
ammonia plant in Trinidad. We record these earnings as a reduction in our cost
of products sold. Our half of the earnings from Farmland MissChem was $6.2
million and included $3.5 million related to a business interruption claim for
downtime that occurred in March and April of 1999. These higher equity
earnings were partially offset by higher natural gas costs at our domestic
production facilities. DAP costs per ton decreased 10% in the current year as
compared to the prior year. This decrease was primarily the result of lower
raw material costs for ammonia and phosphate rock and higher production rates
in the current year. Ammonia costs were lower as a result of weak market
conditions. Phosphate rock costs were lower due to the pricing formula in
our phosphate rock supply contract that is based on the phosphate rock costs
incurred by certain other domestic phosphate producers and the financial
performance of our phosphate operations. Potash costs per ton increased 20%
in the current year as compared to the prior year. This increase was primarily
the result of our west mine incurring higher maintenance and labor spending in
the current year. Production was also lower than anticipated in the current
year as a result of a temporary decline in ore grade.
SELLING, GENERAL AND ADMINISTRATIVE. Our selling, general and
administrative expenses decreased to $8.6 million for the quarter ended
September 30, 1999, from $9.5 million for the quarter ended September 30, 1998.
This decrease was primarily the result of lower use taxes and lower employee
incentives during the current year, partially offset by costs incurred related
to the reorganization of our sales, marketing and distribution division. As a
percentage of net sales, selling, general and administrative expenses were 9%
for the quarter ended September 30, 1999, and 9% for the quarter ended
September 30, 1998.
OTHER. Our other operating costs increased to $2.5 million for the
quarter ended September 30, 1999, from $157,000 for the quarter ended
September 30, 1998. This increase was the result of idle plant costs
associated with the curtailment of production in August and September of one
of our ammonia plants in Donaldsonville, Louisiana. Operations were resumed
at this plant on October 4, 1999.
OPERATING (LOSS) INCOME. As a result of the above factors, we incurred
an operating loss of $7.6 million for the quarter ended September 30, 1999,
as compared to operating income of $11.0 million for the quarter ended
September 30, 1998.
INTEREST. For the quarter ended September 30, 1999, our net interest
expense increased to $6.0 million from $3.5 million for the quarter ended
September 30, 1998. This increase was primarily the result of no interest
being capitalized in the current year as a result of the completion of major
construction projects during the prior fiscal year. We capitalized $1.8
million of interest costs during the prior year quarter. Higher average debt
levels during the current year also contributed to increased interest costs.
OTHER (EXPENSE) INCOME. For the quarter ended September 30, 1999, other
income was $635,000, compared to other expense of $754,000 for the quarter
ended September 30, 1998. This change was primarily the result of higher
earnings at our unconsolidated affiliates during the current year.
In addition, the prior year quarter includes expenses associated with damage
caused by Hurricane Georges at our Pascagoula, Mississippi, facility.
INCOME TAX (BENEFIT) EXPENSE. For the quarter ended September 30, 1999,
our income tax benefit was $7.4 million, as compared to income tax expense of
$2.5 million for the quarter ended September 30, 1998. This change was the
result of incurring a loss in the current year as well as recording a one-time
benefit during the current year in the amount of $2.0 million related to
settlement agreements made with the Internal Revenue Service for fiscal years
1994, 1995 and 1996.
NET (LOSS) INCOME. As a result of the foregoing, we incurred a net loss
of $5.6 million for the quarter ended September 30, 1999, as compared to net
income of $4.2 million for the quarter ended September 30, 1998.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1999, we had cash and cash equivalents of $1.7 million,
compared to $1.6 million at June 30, 1999, an increase of $100,000.
OPERATING ACTIVITIES. For the three months ended September 30, 1999, our
net cash used in operating activities was $14.6 million compared to $14.3
million for the three months ended September 30, 1998.
INVESTING ACTIVITIES. Our net cash provided by investing activities was
$196,000 for the three months ended September 30, 1999, compared to $41.1
million for the three months ended September 30, 1998. During the prior year,
we collected $54.6 million on a note receivable obtained as a result of a sale
of our undeveloped phosphate rock property. Investing activities for the prior
year also included $3.8 million related to our investment in Farmland MissChem
Limited. During the current year, our capital expenditures were $4.6 million
compared to $9.7 million during the prior year. Our current year expenditures
were for normal improvements and modifications to our facilities.
FINANCING ACTIVITIES. Our net cash provided by financing activities was
$14.5 million for the three months ended September 30, 1999, and our net cash
used in financing activities was $28.7 million for the three months ended
September 30, 1998. During the current year, the amounts provided by financing
activities included $108.9 million in debt proceeds. These proceeds were
partially offset by $91.8 million in debt payments and $2.6 million in cash
dividends. During the prior year, the amounts used in financing activities
included $172.3 million in debt payments, $12.0 million for the purchase of
treasury stock and $2.7 million in cash dividends. These amounts were
partially offset by $158.3 million in debt proceeds.
On November 25, 1997, we issued $200.0 million 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 $300.0 million shelf
registration statement filed with the Securities and Exchange Commission in
November 1997.
In August 1997, we issued $14.5 million in industrial revenue bonds, a
portion of which were tax-exempt, to finance the development of our new
phosphogypsum disposal facility at our Pascagoula, Mississippi, DAP
manufacturing plant. On April 1, 1998, we 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 5.8% fixed rate. The bonds
may be redeemed at our 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.
We have an unsecured revolving credit facility (the "Facility") with
Harris Trust and Savings Bank and a syndicate of other commercial banks
totaling $200.0 million. This Facility is a five-year facility which matures
on November 25, 2002, and bears interest at rates related to the Prime Rate,
the London Interbank Offered Rate or Federal Funds Rate. At September 30,
1999, we had $108.9 million outstanding under the Facility.
The Facility includes certain financial covenants (the "Covenants") which
require us to maintain threshold ratios on free cash flow (earnings before
interest, taxes, depreciation and amortization (EBITDA) minus capital
expenditures) to interest coverage and cash flow (EBITDA) to total debt. Our
compliance with the Covenants is determined on a quarterly basis. On June 10,
1999, and September 17, 1999, the Facility was amended in order to modify the
threshold ratios and avoid a possible noncompliance by us with either of the
Covenants.
OUTLOOK. Based on current industry conditions, we may not comply with
the current financial ratios required by the Covenants for the quarters ended
December 31, 1999, and/or March 31, 2000. We, therefore, believe it is
advisable to negotiate further modifications of the Covenants or arrange
replacement credit facilities. We are currently evaluating both options. Based
on current financing conditions, we believe we can either obtain satisfactory
new credit facilities or a satisfactory modification of the Covenants. Our
effective interest rate will increase regardless of which of these options is
chosen by the Company.
We believe that we will be able to satisfy our financing requirements for
our operations and capital projects through fiscal 2000 and the foreseeable
future. We estimate our capital expenditure requirements for the remainder of
fiscal 2000 to be approximately $16.0 million. The great majority of the
anticipated capital expenditures are for essential improvements and
modifications to our facilities. Minimum price payments for our ammonia
purchases from Farmland MissChem, made pursuant to the offtake agreement, are
expected to continue to reduce our available cash in fiscal 2000.
YEAR 2000
Through our Year 2000 Committee ("Y2K Committee"), made up of management
personnel from various departments, we have made substantial progress in
evaluating and addressing the effect of Year 2000-related issues on our
operations. The Y2K Committee's efforts to date have included (i) identifying,
overseeing and tracking the cost of remediation work to our computer systems
necessary to achieve Year 2000 readiness; (ii) assessing Year 2000-related
exposures in the event that one or more of our computer systems, or any of our
vendors, customers or creditors, experience a Year 2000-related problem; and
(iii) developing a contingency plan in the event that our efforts to identify
and correct Year 2000-related problems are not successful.
Our Year 2000-related costs total approximately $300,000. We believe that
we have accomplished all remediation work necessary to run all computer systems
with the current systems and software into the year 2000. We will continue to
monitor the recommendations of our major system suppliers for any future Y2K
updates that may apply to our specific configuration. We will implement these
corrections to our hardware and/or software as we deem necessary.
Although the assessment of the Year 2000 readiness of our vendors,
customers and creditors is substantially complete, we continue to monitor the
efforts of certain third parties. At this time, we do not expect to be
materially affected by any Year 2000-related problem experienced by our vendors,
customers or creditors. However, despite our best efforts, and since the
Year 2000 readiness of any third party is outside our control, there is no
guarantee or assurance that we will not be materially impacted by a third
party's failure to adequately address Year 2000-related issues.
We could sustain what is expected to be nonmaterial operational
inconveniences and inefficiencies and/or be involved in nonmaterial business
disputes as a result of Year 2000-related failures. A contingency plan
developed with the assistance of an outside consultant was finalized in
July 1999 and will be implemented in the event we experience Year 2000 problems
that are related to either our or a third party's computer system. The Y2K
Committee believes that the contingency plan will minimize any adverse effect
to us arising from a Year 2000-related problem.
THE ABOVE REFERENCE TO YEAR 2000 ISSUES, EVEN IF INCORPORATED BY REFERENCE
INTO OTHER DOCUMENTS OR DISCLOSURES, IS A YEAR 2000 READINESS DISCLOSURE AS
DEFINED UNDER THE YEAR 2000 INFORMATION AND READINESS DISCLOSURE ACT OF 1998.
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 our
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, (i) the relative unpredictability of international and
local economic conditions, (ii) changes in matters which affect the supply and
demand of fertilizer products, (iii) weather, (iv) the volatility of the
natural gas market, (v) environmental regulation, (vi) price competition from
both domestic and international competitors, (vii) possible unscheduled plant
outages and other operating difficulties, and (viii) other important factors
affecting the fertilizer industry and us as detailed under "Outlook and
Uncertainties" and elsewhere in our most recent annual report on Form 10-K
which is on file with the Securities and Exchange Commission.
<PAGE>
Item 3. Quantitative and Qualitative Disclosure about Market Risk.
We are exposed to market risk, including changes in interest rates and
natural gas prices. To manage the risks related to these exposures, we enter
into derivative transactions. We do not hold or issue derivative financial
instruments for trading purposes. We maintain formal policies with respect to
entering into and monitoring derivative transactions. The derivative
transactions are intended to hedge our future production and interest costs.
For more information about how we manage specific risk exposures, see Note 14 -
Hedging Activities, and Note 7 - Credit Agreements and Long-Term Debt, in our
Notes to Consolidated Financial Statements contained in our Annual Report for
the fiscal year ended June 30, 1999.
At September 30, 1999, we believe that the fair value of our fixed rate
long-term debt and interest rate swap agreements had not significantly changed
from its fair value at June 30, 1999.
We use natural gas futures contracts to reduce the impact of changes in
natural gas prices. We prepared a sensitivity analysis to estimate our market
risk exposure arising from these instruments. The fair value of open contracts
was 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 market prices. We estimate that this adverse change in prices would have
reduced the fair value of open contracts by $1.7 million at September 30, 1999.
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits filed as part of this report are listed below.
SEC Exhibit
Reference No. Description
Exhibit Index to Form 10-Q
10 Second Amendment, effective as of September 17, 1999,
to 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.
27 Financial Data Schedule.
(b) No reports on Form 8-K have been filed during the quarter for which
this report is filed.
SIGNATURES
Pursuant to the requirements of the Securities and 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
Date:November 15, 1999 /s/ Timothy A. Dawson
----------------------- --------------------------------
Timothy A. Dawson
Senior Vice President and
Chief Financial Officer
Date:November 15, 1999 /s/ Rosalyn B. Glascoe
---------------------- -------------------------------
Rosalyn B. Glascoe
Corporate Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains year-to-date summary financial information extracted from
Mississippi Chemical Corporation fiscal 2000 first quarter Form 10-Q and is
qualified in its entirety by reference to such Form 10-Q filing.
</LEGEND>
<CIK> 0000066895
<NAME> MISSISSIPPI CHEMICAL CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> SEP-30-1999
<CASH> 1,724
<SECURITIES> 0
<RECEIVABLES> 35,565
<ALLOWANCES> 1,949
<INVENTORY> 85,929
<CURRENT-ASSETS> 157,927
<PP&E> 839,910
<DEPRECIATION> 373,434
<TOTAL-ASSETS> 891,845
<CURRENT-LIABILITIES> 59,802
<BONDS> 214,500
0
0
<COMMON> 280
<OTHER-SE> 411,782
<TOTAL-LIABILITY-AND-EQUITY> 891,845
<SALES> 96,998
<TOTAL-REVENUES> 96,998
<CGS> 93,445
<TOTAL-COSTS> 104,597
<OTHER-EXPENSES> (635)
<LOSS-PROVISION> 94
<INTEREST-EXPENSE> 6,027
<INCOME-PRETAX> (12,991)
<INCOME-TAX> (7,439)
<INCOME-CONTINUING> (5,552)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,552)
<EPS-BASIC> (0.21)
<EPS-DILUTED> (0.21)
</TABLE>
MISSISSIPPI CHEMICAL CORPORATION
SECOND AMENDMENT TO CREDIT AGREEMENT
Harris Trust and Savings Bank,
individually and as Administrative Agent
Chicago, Illinois
The From Time to Time Lenders Party
to the Credit Agreement described below
Ladies and Gentlemen:
Reference is hereby made to that certain Credit Agreement dated as of
November 25, 1997, as amended (the "Credit Agreement"), by and among the
undersigned, Mississippi Chemical Corporation, a Mississippi corporation (the
"Borrower"), and Harris Trust and Savings Bank, individually and in its
capacity as administrative agent thereunder, Bank of Montreal, Chicago Branch,
in its capacity as syndication agent thereunder, and Credit Agricole Indosuez
(formerly known as Caisse Nationale de Credit Agricole) in its capacity as
co-agent thereunder, and you (all of said banks except Bank of Montreal,
including Harris Trust and Savings Bank in its individual capacity, being
referred to collectively as the "Banks" and individually as a "Bank", and said
Harris Trust and Savings Bank as administrative agent for the Banks under the
Credit Agreement being hereinafter referred to in such capacity as the
"Administrative Agent"). All defined terms used herein shall have the same
meaning as in the Credit Agreement unless otherwise defined herein.
The Borrower, the Administrative Agent and the Banks wish to amend the
Credit Agreement to provide for securing the Borrower's obligations in certain
circumstances, to add a borrowing base requirement, to amend certain financial
covenants and to amend certain other provisions of the Credit Agreement, all on
the terms and conditions of this Amendment.
SECTION 1. AMENDMENTS.
Upon the satisfaction of all of the conditions precedent set forth in
Section 2 of this Amendment the Credit Agreement shall be amended as follows:
1.1. The Credit Agreement shall be amended by adding the following
provision thereto as Section 3.4(e):
"(e) Mandatory Prepayments-Asset Coverage Ratio. If on any
Borrowing Base Report received by the Administrative Agent the Borrower's Asset
Coverage Ratio shall be less than 0.95 to 1 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
necessary so that after giving effect to such prepayments and, if necessary,
pledge of cash collateral, the Borrower's Asset Coverage Ratio shall be equal
to or greater than 0.95 to 1."
1.2. Section 3.6 of the Credit Agreement shall be amended by adding the
following provision at the end thereof:
"Anything contained herein to the contrary notwithstanding, all proceeds
of the Collateral and all payments and collections received in respect of the
indebtedness evidenced by the Notes and the Reimbursement Obligations and
received, in each instance, by the Administrative Agent or any of the Banks
after the occurrence and during the continuance of an Event of Default shall be
remitted to the Administrative Agent and distributed as follows:
(a) first to the payment of any outstanding costs and expenses
incurred by the Administrative Agent or any security trustee in monitoring,
verifying, protecting, preserving or enforcing the liens on the Collateral or
in protecting, preserving or enforcing rights under this Agreement, the
Security Documents or the Notes and in any event including all costs and
expenses of a character which the Borrower has agreed to pay under
Section 11.8 hereof (such funds to be retained by the Administrative Agent for
its own account unless it has previously been reimbursed for such costs and
expenses by the Banks, in which event such amounts shall be remitted to the
Banks to reimburse them for payments theretofore made to the Administrative
Agent);
(b) second to the payment of any outstanding interest or other
fees or amounts due under the Notes, the Security Documents, the L/C Agreements
or this Agreement other than for principal, ratably as among the Banks in
accord with the amount of such interest and other fees or amounts owing each;
(c) third, to the payment of the principal of the Notes and the
Reimbursement Obligations ratably as among the Notes and Reimbursement
Obligations;
(d) fourth, to the Banks ratably in accord with the amounts of
any other indebtedness, obligations or liabilities of the Borrower owing to
each of them and secured by the Security Documents unless and until all such
indebtedness, obligations and liabilities have been fully paid and satisfied;
and
(e) fifth, to the Borrower or whoever may be lawfully entitled
thereto."
1.3. Section 4.1 of the Credit Agreement shall be amended by adding the
following definitions thereto:
" "Asset Coverage Ratio" shall mean, as of any time it is to be
determined, the ratio of the Borrowing Base at such time to the Total
Outstandings at such time.
"Borrowing Base" shall mean, as of any time it is to be determined, the
sum (without duplication) of:
(a) 85% of the amount of the accounts receivable of the Borrower
and its Subsidiaries; plus
(b) 70% of the value of inventory of the Borrower and its
Subsidiaries; plus
(c) 55% of the net book value of the net fixed assets of the
Borrower and its Subsidiaries.
For purposes of determining the Borrowing Base, the accounts receivable,
inventory and net fixed assets of the Borrower and its Subsidiaries shall be
the amount shown on the Borrower's consolidated balance sheet for the relevant
fiscal quarter, prepared in accordance with GAAP.
"Borrowing Base Report" shall mean a Borrowing Base Report in the form of
Exhibit N hereto.
"Collateral" shall mean the collateral security provided to the
Administrative Agent for the benefit of the Banks pursuant to this agreement
and the Security Documents.
"Material Property" shall mean (a) the production facilities located in
Donaldsonville, Louisiana, Yazoo City, Mississippi, Pascagoula, Mississippi and
Carlsbad, New Mexico, and (b) any other facility owned or leased by the
Borrower or any of its Subsidiaries having an aggregate net book value or fair
market value (whichever is greater) at the time it is required to be encumbered
pursuant to Section 7.26(a) hereof of not less than $3,000,000.
"Mortgages" shall have the meaning specified in Section 7.26(a) hereof.
"Security Agreement" shall have the meaning specified in Section 7.26(a)
hereof.
"Security Documents" shall mean the Mortgages, the Security Agreement, and
any and all other security agreements, mortgages, deeds of trust, deeds of
secured debt, pledge agreements, assignments, financing statements, and other
instruments or documents at any time delivered to the Administrative Agent or
any Bank to provide collateral security for any indebtedness, obligations and
liabilities of the Borrower or any Guarantor under the Loan Documents.
"Year 2000 Problem" means any significant risk that computer hardware,
software, or equipment containing embedded microchips essential to the business
or operations of the Borrower or any of its Subsidiaries will not, in the case
of dates or time periods occurring after December 31, 1999, effectively process
dates at least as efficiently and reliably as in the case of dates or time
periods occurring before January 1, 2000, including the making of accurate leap
year calculations."
1.4. The table appearing in the definition of the term "Applicable Margin"
contained in Section 4.1 of the Credit Agreement shall be amended to read as
follows:
LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V LEVEL VI
>2.25x >3.0x >3.75x >4.25x
- - - -
and and and and
Pricing Ratio <2.25x <3.0x <3.75x <4.25x <5.00x >5.00x
-
Fed Funds Rate
Loans .575% .725% 1.00% 1.20% 1.60% 2.00%
Base Rate Loans 0% 0% .25% .35% .45% .55%
Eurodollar
Loans .575% .725% 1.00% 1.20% 1.60% 2.00%
Facility Fee .15% .20% .25% .30% .40% .50%
The Applicable Margins shall be redetermined on the effective date of this
Amendment on the basis of the most recent Compliance Certificate delivered to
the Banks.
1.5. The definition of the term "Loan Documents" contained in Section 4.1
of the Credit Agreement shall be amended to read as follows:
" "Loan Documents" shall mean this Agreement and any and all exhibits
hereto, the Notes, the L/C Agreement, the Guaranty and, if in effect pursuant
to Section 7.26 hereof, the Security Documents."
1.6. The Credit Agreement shall be amended by adding the following
provision thereto as Section 5.17:
"Section 5.17. Year 2000 Assessment. The Borrower has conducted a compre-
hensive review and assessment of the computer applications of the Borrower and
its Subsidiaries and has made inquiry of their material suppliers, vendors
(including data processors) and customers, with respect to any defect in
computer software, data bases, hardware, controls and peripherals related to
the occurrence of the year 2000 or the use at any time of any date which is
before, on and after December 31, 1999, in connection therewith. Based on the
foregoing review, assessment and inquiry, the Borrower believes that no such
defect could reasonably be expected to have a material adverse effect on the
business or financial affairs of the Borrower and its Subsidiaries taken on a
consolidated basis."
1.7. Section 7.4 of the Credit Agreement shall be amended by deleting the
word "and" appearing after the semi-colon at the end of subsection (e) thereof,
by replacing the period appearing at the end of subsection (f) thereof with the
phrase "; and" and by adding the following provision thereto as subsection (g):
"(g) no later than 45 days after the end of each fiscal quarter of the
Borrower, commencing with the fiscal quarter ending September 30, 1999, a
Borrowing Base Report setting forth the computation of the Borrowing Base and
the Asset Coverage Ratio as of the last day of such fiscal quarter, certified
as correct by the chief financial officer of the Borrower; provided, that the
Borrower shall not be required to deliver any Borrowing Base Reports after the
Borrower's Leverage Ratio has been less than 4.0 to 1 for three consecutive
fiscal quarters."
1.8. Section 7.9 of the Credit Agreement shall be amended by deleting the
word "and' appearing after the semi-colon at the end of subsection (j) thereof,
by replacing the period appearing at the end of subsection (k) thereof with the
phrase "; and" and by adding the following provision thereto as subsection (l):
"(l) liens, mortgages and security interests in the Collateral in favor of
(i) the Administrative Agent for the benefit of the Banks and (ii) the holders
of the Borrower's Senior Notes (or a security trustee on their behalf),
provided, that such liens, mortgages and security interests shall secure all of
the Borrower's and the Guarantors' indebtedness, obligations and liabilities to
the Administrative Agent and the Banks, on the one hand, and to the holders of
the Borrower's Senior Notes, on the other hand, equally and ratably in
accordance with the Indenture executed in connection with the Senior Notes and
pursuant to written provisions satisfactory to the Required Banks."
1.9. Sections 7.20 and 7.21 of the Credit Agreement shall be amended to
read as follows:
"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 the ratio specified for such date below:
LEVERAGE RATIO SHALL NOT BE
FISCAL QUARTER ENDING GREATER THAN
September 30, 1999 5.50 to 1
December 31, 1999 6.00 to 1
March 31, 2000 5.50 to 1
June 30, 2000 5.50 to 1
September 30, 2000 6.00 to 1
December 31, 2000 6.00 to 1
March 31, 2001 4.75 to 1
June 30, 2001 4.50 to 1
September 30, 2001 4.50 to 1
December 31, 2001 4.50 to 1
March 31, 2002 and 4.00 to 1
thereafter
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 the ratio specified for such date below:
INTEREST COVERAGE RATIO SHALL
FISCAL QUARTER ENDING NOT BE LESS THAN
September 30, 1999 1.25 to 1
December 31, 1999 1.25 to 1
March 31, 2000 1.35 to 1
June 30, 2000 1.35 to 1
September 30, 2000 1.35 to 1
December 31, 2000 1.35 to 1
March 31, 2001 1.50 to 1
June 30, 2001 1.50 to 1
September 30, 2001 and 1.75 to 1"
thereafter
1.10. The Credit Agreement shall be amended by adding the following
provisions thereto as Sections 7.25 and 7.26:
"Section 7.25. Year 2000 Compliance. The Borrower shall continue to
monitor its computer-based and other systems (and those of all Subsidiaries)
for any Year 2000 Problem and the Borrower shall take commercially reasonable
measures to attempt to avoid a Year 2000 Problem that could cause a material
adverse effect on the business or financial affairs of the Borrower and its
Subsidiaries taken on a consolidated basis. At the request of the
Administrative Agent, the Borrower will provide the Administrative Agent with
written assurances and substantiations (including, but not limited to, the
results of internal or external audit reports prepared in the ordinary course
of business) reasonably acceptable to the Administrative Agent as to the
capability of the Borrower and its Subsidiaries to conduct its and their
businesses and operations before, on and after January 1, 2000, without
experiencing a Year 2000 Problem causing a material adverse effect on the
business or financial affairs of the Borrower and its Subsidiaries taken on a
consolidated basis.
Section 7.26. Springing Lien. (a) If the Borrower's Leverage Ratio, as
shown in the Compliance Certificate delivered pursuant to Section 7.4(c)
hereof, is equal to or greater than 5.0 to 1 for three consecutive fiscal
quarters, within 60 days after the date the Administrative Agent receives such
Compliance Certificate the Borrower will, and will cause each Subsidiary to,
execute and deliver to the Administrative Agent, for the benefit of the Banks,
(i) a Security Agreement in the form of Exhibit O hereto (a "Security
Agreement") to grant to the Administrative Agent for the benefit of the Banks
a security interest in all of the Borrower's and such Subsidiaries' Collateral
(each as more fully described therein), together with such UCC financing
statements as the Administrative Agent may reasonably request to perfect its
security interest thereunder and (ii) a Deed of Trust and Security Agreement
with Assignment of Rents in the form of Exhibit P hereto (or with respect to
real Property located in a mortgage state, a Mortgage and Security Agreement
with Assignment of Rents in the form of Exhibit P with such changes as shall
be necessary to reflect the fact that it is a mortgage rather than a deed of
trust) (each a "Mortgage"), as appropriate, with regard to all of the then
unencumbered (other than pursuant to mechanics' liens, tax liens,
materialmen's liens and similar liens arising by operation of law) Material
Properties then owned by the Borrower and its Subsidiaries, together with such
financing statements as the Administrative Agent may reasonably request to
perfect its security interest thereunder.
(b) Together with the Security Documents required to be delivered
pursuant to Section 7.26(a) hereof, the Borrower, at its expense, shall, and
shall cause each Subsidiary to, deliver to the Administrative Agent as to each
of the Material Properties:
(i) as to each of the Mortgages, a mortgagee's policy (or
policies) of title insurance (or binding commitment(s) therefor) in an amount
(or aggregate amount if there is more than one such policy) equal to the lower
of (A) 100% of the appraised value of the real estate subject to such Mortgage
and (B) the aggregate amount of the Loans, Reimbursement Obligations and
Revolving Credit Commitments, if any, then existing hereunder, with a waiver of
coinsurance (if reasonably available), insuring the liens of those Security
Documents creating liens on real property to be valid first liens subject to no
defects or objections (except for matters permitted under Section 7.9(c), (d),
(e), (f), (g), (i) and (j) hereof and other customary exceptions) which are
unacceptable to the Administrative Agent, together with such direct access
reinsurance agreements and endorsements (including without limitation a
revolving credit endorsement, letter of credit endorsement, and doing business,
usury and zoning endorsements) as the Administrative Agent may reasonably
require, which policies may contain an endorsement in form acceptable to the
Administrative Agent which limits the total amount payable under all such
policies to 100% of the appraised fair market value of the Material Properties
(or if the Banks' Revolving Credit Commitments have been terminated or reduced,
such lower amount equal to the aggregate principal amount of all Loans,
Reimbursement Obligations then outstanding and Banks' Revolving Credit
Commitments then in effect) and costs which the title company issuing such
policies is required to pay pursuant thereto;
(ii) appraisals meeting all regulatory requirements
applicable to each of the Banks, current ALTA surveys and current Phase I
environmental inspection reports;
(iii) written evidence of any consents and approvals obtained
in connection with the execution, delivery and recordation of each of the
Security Documents;
(iv) copies, certified as true, correct and complete by the
Secretary or Assistant Secretary of the Borrower and each of its Subsidiaries
pledging Collateral, of resolutions (or equivalent action) regarding the
transactions contemplated by the Security Documents, duly adopted by the Board
of Directors (or equivalent body) of the Borrower and each of its Subsidiaries
and satisfactory in form and substance to the Required Banks;
(v) an incumbency and signature certificate for the
Borrower and each of its Subsidiaries pledging Collateral satisfactory in form
and substance to the Administrative Agent;
(vi) an opinion of counsel to the Borrower and its
Subsidiaries, in substantially the form of Exhibit Q attached hereto, subject
to such modifications as may be necessary to reflect changes in law, judicial
decisions or practice; and
(vii) evidence of insurance required by the Security
Documents.
(c) If after the Borrower is required to execute and deliver the
Security Documents pursuant to Section 7.26(a) hereof the Borrower's Leverage
Ratio is less than 5.0 to 1 for three consecutive fiscal quarters of the
Borrower as shown in the Compliance Certificate delivered pursuant to Section
7.4(c) of this Agreement, the Administrative Agent and the Banks shall, within
60 days of their receipt of the Borrower's Compliance Certificate for the third
such fiscal quarter, release all security interests and liens in the Collateral
and shall execute all documents necessary to effect such release, provided,
that (i) no Event of Default or Potential Default shall have occurred and be
continuing, and (ii) concurrently with such release the holders of the
Borrower's Senior Notes (or a security trustee on their behalf) shall also
release its liens and security interests in the Collateral.
(d) Nothing contained in this Section 7.26 shall constitute a
waiver of, or an agreement to waive, any Event of Default or Potential Default
hereunder, including without limitation any Potential Default or Event of
Default under Section 7.20 of this Agreement.
(e) The Borrower will not, and will not permit any Subsidiary to,
enter into, assume or agree to be bound by any agreement or covenant that would
prohibit the Borrower or any Subsidiary from granting to the Administrative
Agent or to the holders of the Borrower's Senior Notes (or a security trustee
on their behalf) a security interest in any unencumbered Property of the
Borrower or any Subsidiary pursuant to Section 7.26(a) hereof.
(f) No provision of Sections 7.26(a), (c) and (f) may be amended,
modified or waived without the prior written consent of all of the Banks. In
addition, no provision of any of the Security Documents may be amended,
modified or waived without the prior written consent of all of the Banks if
the effect of such amendment, modification or waiver would be to release all
or any substantial part (in value) of the Collateral subject thereto, except
(i) as required by Section 7.26(c) hereof and (ii) in connection with any sale
or disposition permitted or required by this Agreement or the Security
Documents.
(g) 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 the Security Documents 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 counsel to the Administrative Agent.
(h) Notwithstanding any provision of this Agreement to the
contrary, the Borrower shall apply 100% of the proceeds of any sale or other
disposition of any Collateral (net of any costs, expenses and taxes incurred in
connection with such sale or other disposition) (other than sales of inventory
in the ordinary course of business and sales of Receivables pursuant to
Receivables Securitization Programs permitted under this Agreement) in excess
of $10,000,000 in any fiscal year ("Excess Proceeds") either (i) within 180
days of its receipt of such Excess Proceeds, to the acquisition of Property of
a like type that is concurrently with its acquisition encumbered as provided
in this Section 7.26 ("Replacement Property"), or (ii) if the Borrower is not
going to use such Excess Proceeds to acquire Replacement Property, to the
prepayment of Loans outstanding hereunder within 2 Business Days of their
receipt by the Borrower or any of its Subsidiaries (at which time the
Revolving Credit Commitments shall automatically and permanently reduce by an
amount equal to the amount of such prepayment and each Bank's Revolving Credit
Commitment shall reduce by its Commitment Percentage of such reduction). If
the Borrower elects to acquire Replacement Property with such proceeds the
Borrower shall (x) give the Administrative Agent written notice of its
intention to use such Excess Proceeds to acquire Replacement Property within 2
Business Days of its receipt of such Excess Proceeds, and (y) either use such
Excess Proceeds to repay the Loans outstanding hereunder until such time as
such Replacement Property is acquired or place such Excess Proceeds in an
escrow arrangement to the extent doing so would reduce or avoid the payment
of income taxes with respect to profits realized in connection with
such sale. Any Excess Proceeds that have not been used to acquire Replacement
Property by the end of such 180 day period shall be used to prepay Loans
hereunder. Concurrently with each prepayment of Loans required by this
Section 7.26(h) upon the expiration of a 180-day period the Revolving Credit
Commitments shall automatically and permanently reduce by an amount equal to
the amount of such prepayment, and each Bank's Revolving Credit Commitment
shall reduce by its Commitment Percentage of such reduction."
1.11. Section 8.1(b) of the Credit Agreement shall be amended to read as
follows:
"(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 or 7.26 hereof or any
provisions of any Security Documents requiring the maintenance of insurance on
the Collateral subject thereto as dealing with the use or remittance of
proceeds of Collateral;".
1.12. Section 8.1 of the Credit Agreement shall be amended by deleting the
word "and" appearing after the semi-colon at the end of subsection (j) thereof,
by replacing the period at the end of subsection (k) thereof with the phrase
"; or" and by adding the following provision thereto as subsection (l):
"(l) The Borrower or any Subsidiary shall disavow, repudiate,
breach or purport to terminate any of its obligations under any of the Security
Documents to which it is a party or any part thereof, or any lien or security
interest granted or created pursuant to the Security Agreement or any Mortgage
shall not be valid and enforceable for any reason (other than the termination
or release thereof in accordance with this Section 7.26 or any action or
inaction by the Administrative Agent or any Bank) upon any party thereto."
1.13. Section 11.8(a) of the Credit Agreement shall be amended to read as
follows:
"(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 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, the Notes, the other Loan Documents 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."
1.14. The Credit Agreement shall be amended by adding thereto as
Exhibits N, O, P and Q the forms attached to this Amendment as Exhibits N, O,
P and Q, respectively.
SECTION 2. CONDITIONS PRECEDENT.
This Amendment shall become effective upon the satisfaction of all of the
following conditions precedent:
2.1. The Borrower, the Administrative Agent and the Required Banks shall
have executed this Amendment (such execution may be in several counterparts and
the several parties hereto may execute on separate counterparts).
2.2. The Administrative Agent shall have received for the account of each
Bank that has executed this Amendment (each a "Consenting Bank") an amendment
fee equal to 0.15% of each Consenting Bank's Revolving Credit Commitment.
2.3. Each of the representations and warranties set forth in Section 5 of
the Credit Agreement shall be true and correct, 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 of
the Credit Agreement.
2.4. The Borrower shall be in full compliance with all of the terms and
conditions of the Loan Documents and no Event of Default or Potential Default
shall have occurred and be continuing thereunder or shall result after giving
effect to this Amendment.
SECTION 3. MISCELLANEOUS.
3.1. Each of the Guarantors acknowledges the execution of the foregoing
Amendment by the Borrower and acknowledges that this consent is not required
under the terms of the Guaranty and that the execution hereof by the Guarantors
shall not be construed to require the Banks to obtain their acknowledgment to
any future amendment, modification or waiver of any term of the Credit
Agreement except as otherwise provided in said Guaranty. Each of the
Guarantors hereby agree that the Guaranty shall apply to all indebtedness,
obligations and liabilities of the Borrower to the Banks under the Credit
Agreement, as amended pursuant to the Amendment, and that the Guaranty shall
be and remain in full force and effect.
3.2. Reference to this specific Amendment need not be made in any note,
document, letter, certificate, the Credit Agreement itself, the Notes, or any
communication issued or made pursuant to or with respect to the Credit
Agreement, any reference to the Credit Agreement being sufficient to refer to
the Credit Agreement as amended hereby.
3.3. This Amendment may be executed in any number of counterparts, and by
the different parties on different counterparts, all of which taken together
shall constitute one and the same agreement. Any of the parties hereby may
execute this agreement by signing any such counterpart and each of such
counterparts shall for all purposes be deemed to be an original. This
agreement shall be governed by the internal laws of the State of Illinois.
Upon acceptance hereof by the Administrative Agent and the Banks in the
manner hereinafter set forth, this Amendment shall be a contract between us for
the purposes hereinabove set forth.
Dated as of ______________, 1999.
MISSISSIPPI CHEMICAL CORPORATION
By /s/ Charles O. Dunn
----------------------------------------
Its President and Chief Executive Officer
-------------------------------------
MISSISSIPPI NITROGEN, INC.
By /s/ Timothy A. Dawson
----------------------------------------
Its Vice President and Treasurer
-------------------------------------
MISSCHEM NITROGEN, L.L.C.
By /s/ Timothy A. Dawson
----------------------------------------
Its Vice President of Finance
-------------------------------------
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/ C. Scott Place
-----------------------------------------
Its Vice President
CREDIT AGRICOLE INDOSUEZ
By
-----------------------------------------
Its
---------------------------------------
By
-----------------------------------------
Its
---------------------------------------
BANQUE NATIONALE DE PARIS, HOUSTON AGENCY
By /s/ Warren G. Parham
-----------------------------------------
Its Vice President
--------------------------------------
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION
By
-----------------------------------------
Its
---------------------------------------
THE BANK OF NOVA SCOTIA, ATLANTA AGENCY
By /s/ F.C.H. Ashby
-----------------------------------------
Its Senior Manager Loan Operations
--------------------------------------
SUNTRUST BANK, ATLANTA
By /s/ Gregory L. Cannon
-----------------------------------------
Its Vice President
--------------------------------------
FIRST UNION NATIONAL BANK
By
-----------------------------------------
Its
--------------------------------------
ABN AMRO BANK N.V.
By /s/ Kevin P. Costello
-----------------------------------------
Its Vice President
--------------------------------------
By /s/ Beth H. Hurst
-----------------------------------------
Its Group Vice President
--------------------------------------
THE FUJI BANK, LIMITED
By
-----------------------------------------
Its
--------------------------------------
THE DAI-ICHI KANGYO BANK, LTD.
By /s/ Matthew G. Murphy
-----------------------------------------
Its Vice President
--------------------------------------
TRUSTMARK NATIONAL BANK
By /s/ C. Aufount
-----------------------------------------
Its First Vice President
--------------------------------------
FIRST AMERICAN NATIONAL BANK,
operating as Deposit Guaranty National Bank
By /s/ Stanley A. Herren
-----------------------------------------
Its Senior Vice President
--------------------------------------
<PAGE>
EXHIBIT N
MISSISSIPPI CHEMICAL CORPORATION
BORROWING BASE REPORT
as of _____________________
This Borrowing Base Report is furnished to Harris Trust and Savings Bank,
as administrative agent (the "Administrative Agent"), pursuant to that certain
Credit Agreement dated as of November 25, 1997, as amended, by and among
Mississippi Chemical Corporation (the "Borrower"), Harris Trust and Savings
Bank and the other Bank parties thereto (the "Agreement"). Unless otherwise
defined herein, the terms used in this Borrowing Base Report have the meanings
ascribed thereto in the Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected 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, the attached computation of
the Borrowing Base and the Asset Coverage Ratio, as each such term is
defined in Section 4.1 of the Agreement.
3. I have reviewed the terms of the Agreement and, pursuant to
such review, I have no knowledge of the existence of any condition or
event which would constitute a Potential Default or Event of Default,
except as set forth below (detailing 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):
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
4. The information above and any attached exhibits do not
contain any untrue statement of material fact or omit a material fact,
either individually or in aggregate, that would make the information or
any attached exhibits misleading.
MISSISSIPPI CHEMICAL CORPORATION
By_________________________________________
Its Chief Financial Officer
<PAGE>
ATTACHMENT TO
BORROWING BASE REPORT
($000'S OMITTED)
Computation as of ______________________
1. Total Accounts Receivable.................$__________
2. Eligible Receivable (85% of Line 1).........................$_________
3. Total Inventory...........................$__________
4. Eligible Inventory (70% of Line 3)..........................$__________
5. Net Fixed Assets..........................$__________
6. Eligible Net Fixed Assets (55% of Line 5)...................$__________
7. Borrowing Base (sum of lines 2, 4 and 6)....................$__________
8. Total Debt outstanding on Computation Date..................$__________
9. Asset Coverage Ratio (line 7 divided by line 8)............. ____ to 1
Required to be no less than 0.95 to 1
Compliance ....................Yes_________ No________
EXHIBIT O
MISSISSIPPI CHEMICAL CORPORATION
SECURITY AGREEMENT
This Security Agreement (the "Agreement") is dated as of ____________,
___, by and among Mississippi Chemical Corporation, a Mississippi corporation
(the "Borrower") and ___________________, a ____________ corporation
("_________") and ____________, a ______________ ("_______"; __________
and _________, together with their successors and assigns, being collectively
referred to herein as the "Guarantors"), and the other parties executing this
Agreement under the heading "Debtors" (the Borrower, the Guarantors and such
other parties, along with any parties who execute and deliver to the Agent an
agreement substantially in the form attached hereto as Schedule D, being
hereinafter referred to collectively as the "Debtors" and individually as a
"Debtor"), each with its mailing address as set forth on its signature page
hereto, and Harris Trust and Savings Bank, an Illinois banking corporation
("HTSB"), with its mailing address at 111 West Monroe Street, Chicago, Illinois
60603, acting as administrative agent hereunder for the Secured Creditors
hereinafter identified and defined (HTSB acting as such administrative agent
and any successor or successors to HTSB acting in such capacity being
hereinafter referred to as the "Agent");
PRELIMINARY STATEMENTS
A. The Borrower and HTSB, individually and as administrative agent,
have entered into a Credit Agreement dated as of November 25, 1997 (such Credit
Agreement as the same may be amended, modified or restated from time to time
being hereinafter referred to as the "Credit Agreement"), pursuant to which
HTSB and such other banks and financial institutions from time to time party
to the Credit Agreement (HTSB, in its individual capacity, and such other
banks and financial institutions being hereinafter referred to collectively as
the "Lenders" and individually as a "Lender") have agreed, subject to certain
terms and conditions, to extend credit and make certain other financial
accommodations available to the Borrower (the Agent and the Lenders being
hereinafter referred to collectively as the "Secured Creditors" and
individually as a "Secured Creditor").
B. The Borrower may from time to time enter into one or more interest
rate exchange, swap, cap, collar, floor or other similar agreements and one or
more foreign currency contracts, currency swap contracts or other similar
agreements with one or more of the Lenders party to the Credit Agreement, or
their affiliates, for the purpose of hedging or otherwise protecting the
Borrower against interest rate and foreign currency exposure (the liability of
the Borrower in respect of such agreements with such Lenders and their
affiliates being hereinafter referred to as the "Hedging Liability").
C. As a condition to continuing to extend credit to the Borrower under
the Credit Agreement, the Secured Creditors have required, among other things,
that each Debtor grant to the Agent for the benefit of the Secured Creditors a
lien on and security interest in the personal property of such Debtor described
herein subject to the terms and conditions hereof.
D. The Borrower owns, directly or indirectly, equity interests in each
other Debtor and provides each other Debtor with financial, management,
administrative, technical support and other similar services pursuant to a
management services agreement which enables such Debtor to conduct its business
in an orderly and efficient manner in the ordinary course.
E. Each Debtor will benefit, directly or indirectly, from credit and
other financial accommodations extended by the Secured Creditors to the
Borrower.
F. The Secured Creditors (or the Agent on their behalf) may enter into
an intercreditor agreement with the holders of the Borrower's Senior Notes
(or an agent or trustee on their behalf) to the extent such holders have a
security interest in certain of the Collateral to set forth their respective
rights relating thereto.
NOW, THEREFORE, for and in consideration of the execution and delivery by
the Secured Creditors of the Credit Agreement, and other good and valuable
consideration, receipt whereof is hereby acknowledged, the parties hereto
hereby agree as follows:
Section 1. Terms defined in Credit Agreement. All capitalized terms used
herein without definition shall have the same meanings herein as such terms
have in the Credit Agreement. The term "Debtor" and "Debtors" as used herein
shall mean and include the Debtors collectively and also each individually,
with all grants, representations, warranties and covenants of and by the
Debtors, or any of them, herein contained to constitute joint and several
grants, representations, warranties and covenants of and by the Debtors;
provided, however, that unless the context in which the same is used shall
otherwise require, any grant, representation, warranty or covenant contained
herein related to the Collateral shall be made by each Debtor only with
respect to the Collateral owned by it or represented by such Debtor as owned
by it.
Section 2. Grant of Security Interest in the Collateral; Obligations
Secured. (a) Each Debtor hereby grants to the Agent for the benefit of the
Secured Creditors a lien on and security interest in, and right of set-off
against, and acknowledges and agrees that the Agent has and shall continue to
have for the benefit of the Secured Creditors a continuing lien on and security
interest in, and right of set-off against, any and all right, title and
interest of each Debtor, whether now owned or existing or hereafter created,
acquired or arising, in and to the following:
(i) Receivables. All Receivables, whether now owned or existing
or hereafter created, acquired or arising, and however evidenced or acquired,
or in which such Debtor now has or hereafter acquires any rights (the term
"Receivables" means and includes all accounts, accounts receivable, contract
rights, instruments, notes, drafts, acceptances, documents, chattel paper, any
right of such Debtor to payment for goods sold or leased or for services
rendered, whether or not earned by performance, and all other forms of
obligations owing to such Debtor, and all of such Debtor's rights to any
merchandise or other goods (including without limitation any returned or
repossessed goods and the right of stoppage in transit) which is represented
by, arises from or is related to any of the foregoing);
(ii) General Intangibles. All General Intangibles, whether now
owned or existing or hereafter created, acquired or arising, or in which such
Debtor now has or hereafter acquires any rights (the term "General Intangibles"
means and includes all general intangibles, all patents, patent applications,
patent licenses, trademarks, trademark registrations, trademark licenses, trade
styles, trade names, copyrights, copyright registrations, copyright licenses
and other licenses and similar intangibles, all customer, client and supplier
lists (in whatever form maintained), all rights in leases and other agreements
relating to real or personal property, all causes of action and tax refunds of
every kind and nature, all privileges, franchises, immunities, licenses,
permits and similar intangibles, and all other personal property (including
things in action) not otherwise covered by this Agreement);
(iii) Inventory. All Inventory, whether now owned or existing or
hereafter created, acquired or arising, or in which such Debtor now has or
hereafter acquires any rights and all documents of title at any time evidencing
or representing any part thereof (the term "Inventory" means and includes all
inventory, farm products, and other goods which are held for sale or lease or
are to be furnished under contracts of service or consumed in such Debtor's
business, all goods which are raw materials, work-in-process, finished goods,
materials or supplies of every kind and nature, in each case used or usable in
connection with the acquisition, manufacture, processing, supply, servicing,
storing, packing, shipping, advertising, selling, leasing or furnishing of such
goods, and any constituents or ingredients thereof, and all goods which are
returned or repossessed goods);
(iv) Equipment. All Equipment, whether now owned or existing or
hereafter created, acquired or arising, or in which such Debtor now has or
hereafter acquires any rights (the term "Equipment" means and includes all
equipment and other machinery, tools, fixtures, trade fixtures, furniture,
furnishings, office equipment, vehicles (including vehicles subject to a
certificate of title law) and all other goods now or hereafter used or usable
in connection with such Debtor's business, together with all parts (other than
parts that are subject to a parts pooling agreement), accessories and
attachments relating to any of the foregoing);
(v) Investment Property. All Investment Property, whether now
owned or existing or hereafter created, acquired or arising, or in which such
Debtor now has or hereafter acquires any rights (the term "Investment Property"
means and includes all investment property and all other securities (whether
certificated or uncertificated), security entitlements, securities accounts,
commodity contracts, and commodity accounts, including all substitutions and
additions thereto, all dividends, distributions and sums distributable or
payable from, upon, or in respect of such property, and all rights and
privileges incident to such property), but excluding investments in (A) the
Bank for Cooperatives, Houston Ammonia Terminal, L.P., Precious Harvest,
Farmland MissChem Limited and FMCL Limited Liability Company, (B) MissChem
Trinidad Limited, MissChem (Barbados) SRL and MissChem Holdings Inc. to the
extent the ability of any Debtor that is an owner thereof to encumber its
equity interest therein is subject to any contractual prohibition, and
(C) and any joint ventures (or other investments) that are not Subsidiaries
to the extent the ability of any Debtor that is a joint venturer therein to
encumber its equity interests in such joint venture is subject to any
contractual prohibition;
(vi) Deposits and Property in Possession. All deposit accounts
(whether general, specific, matured or unmatured and in whatever currency
denominated) of such Debtor maintained with any of the Secured Creditors and
all sums now or hereafter on deposit therein or payable thereon, and any and
all other property and interests in property which now is or may from time
to time hereafter come into the possession, custody or control of any of the
Secured Creditors, or any agent of any of them, in any way and for any purpose
(whether for safekeeping, custody, pledge, transmission, collection or
otherwise);
(vii) Records. All supporting evidence and documents relating to
any of the above-described property, including, without limitation, computer
programs, disks, tapes and related electronic data processing media, and all
rights of such Debtor to retrieve the same from third parties, written
applications, credit information, account cards, payment records,
correspondence, delivery and installation certificates, invoice copies,
delivery receipts, notes and other evidences of indebtedness, insurance
certificates and the like, together with all books of account, ledgers and
cabinets in which the same are reflected or maintained, all whether now
existing or hereafter arising;
(viii) Accessions and Additions. All accessions and additions to
and substitutions and replacements of any and all of the foregoing, whether
now existing or hereafter arising; and
(ix) Proceeds and Products. All proceeds and products of the
foregoing and all insurance of the foregoing and proceeds thereof, whether now
existing or hereafter arising;
all of the foregoing being herein sometimes referred to as the "Collateral."
All terms which are used herein which are defined in the Uniform Commercial
Code of the State of Illinois ("UCC") shall have the same meanings herein as
such terms are defined in the UCC, unless this Agreement shall otherwise
specifically provide.
(b) This Agreement is made and given to secure, and shall secure, the
prompt payment and performance when due of (i) any and all indebtedness,
obligations and liabilities of the Debtors, and of any of them individually, to
the Secured Creditors, and to any of them individually, under or in connection
with or evidenced by the Credit Agreement, the Notes of the Borrower heretofore
or hereafter issued under the Credit Agreement and the obligations of the
Borrower to reimburse the Secured Creditors for the amount of all drawings on
all L/Cs issued pursuant to the Credit Agreement, and all other obligations of
the Borrowers under any and all applications for L/Cs, and any and all
liability of the Debtors, and of any of them individually, arising under or in
connection with or otherwise evidenced by agreements with any one or more of
the Secured Creditors or their affiliates with respect to any Hedging
Liability, and any and all liability of the Debtors, and of any of them
individually, arising under any guaranty issued by it relating to the
foregoing or any part thereof, in each case whether now existing or
hereafter arising (and whether arising before or after the filing of a
petition in bankruptcy and including all interest accrued after the petition
date), due or to become due, direct or indirect, absolute or contingent, and
howsoever evidenced, held or acquired and (ii) any and all expenses and
charges, legal or otherwise, suffered or incurred by the Secured Creditors,
and any of them individually, in collecting or enforcing any of such
indebtedness, obligations and liabilities or in realizing on or protecting or
preserving any security therefor, including, without limitation, the lien and
security interest granted hereby (all of the indebtedness, obligations,
liabilities, expenses and charges described above being hereinafter referred to
as the "Obligations"). Notwithstanding anything in this Agreement to the
contrary, the right of recovery against any Debtor under this Agreement shall
not exceed $1.00 less than the lowest amount which would render such Debtor's
obligations under this Agreement void or voidable under applicable law,
including fraudulent conveyance law.
Section 3. Covenants, Agreements, Representations and Warranties. The
Debtors hereby covenant and agree with, and represent and warrant to, the
Secured Creditors that:
(a) Each Debtor is duly organized, validly existing and in good
standing under the laws of the state of its incorporation or organization, is
the sole and lawful owner of the Collateral granted by it hereunder and has the
power and authority to enter into this Agreement and to perform each and all of
the matters and things herein provided for. Each Debtor's Federal tax
identification number is set forth under its name under Column 1 on Schedule A.
(b) Each Debtor's respective chief executive office is at the
location listed under Column 2 on Schedule A attached hereto opposite such
Debtor's name; and such Debtor has no other executive offices or places of
business other than those listed under Column 3 on Schedule A attached hereto
opposite such Debtor's name. The Collateral owned or leased by each Debtor is
and shall remain in such Debtor's possession or control at the locations listed
under Columns 2 and 3 on Schedule A attached hereto opposite such Debtor's name
(collectively for each Debtor, the "Permitted Collateral Locations"), except as
to any Collateral sold or otherwise disposed of in accordance with this
Agreement and Section 7.12 of the Credit Agreement. If for any reason any
Collateral is at any time kept or located at a location other than a Permitted
Collateral Location, the Agent shall nevertheless have and retain a lien on and
security interest therein. No Debtor shall move its chief executive office or
maintain a place of business at a location other than those specified under
Columns 2 or 3 on Schedule A or permit any Collateral to be located at a
location other than a Permitted Collateral Location, in each case without first
providing the Agent at least 30 days prior written notice of the Debtor's
intent to do so; provided that each Debtor shall at all times maintain its
chief executive office, places of business, and Permitted Collateral Locations
in the United States of America and, with respect to any new chief executive
office or place of business or location of Collateral, such Debtor shall have
taken all action reasonably requested by the Agent to maintain the lien and
security interest of the Agent in the Collateral at all times fully perfected
and in full force and effect.
(c) The Collateral and every part thereof is and shall be free
and clear of all security interests, liens (including, without limitation,
mechanics', laborers' and statutory liens), attachments, levies and
encumbrances of every kind, nature and description and whether voluntary or
involuntary, except for the lien and security interest of the Agent therein
and other Liens permitted by Section 7.9 of the Credit Agreement (herein, the
"Permitted Liens"). Each Debtor shall warrant and defend the Collateral
against any claims and demands of all persons at any time claiming the same or
any interest in the Collateral adverse to any of the Secured Creditors.
(d) Each Debtor will promptly pay when due all taxes, assessments
and governmental charges and levies upon or against it or its Collateral, in
each case before the same become delinquent and before penalties accrue
thereon, unless and to the extent that the same are being contested in good
faith by appropriate proceedings which prevent attachment of any Lien resulting
therefrom to, foreclosure on or other realization upon any Collateral and
preclude interference with the operation of its business in the ordinary
course and such Debtor shall have established adequate reserves therefor.
(e) Each Debtor agrees it will not waste or destroy the
Collateral or any part thereof and will not be negligent in the care or use
of any Collateral. Each Debtor agrees it will not use, manufacture, sell or
distribute any Collateral in violation of any statute, ordinance or other
governmental requirement applicable to such Debtor which would have a
material adverse effect on any Secured Creditor's rights under this Agreement
or on the value of the Collateral or on any Debtor's ability to use any of
the Collateral in the ordinary course of its business (a "Material Adverse
Effect"). Each Debtor will perform in all material respects its obligations
under any contract or other agreement constituting part of the Collateral,
it being understood and agreed that the Secured Creditors have no
responsibility to perform such obligations.
(f) Subject to Sections 4(d), 5(a), 6(b), 6(c), and 7(c) hereof
and the terms of the Credit Agreement (including, without limitation,
Section 7.12 thereof), each Debtor agrees it will not, without the Agent's
prior written consent, sell, assign, mortgage, lease or otherwise dispose of
the Collateral or any interest therein.
(g) Each Debtor will insure its Collateral which is insurable
against such risks and hazards as other companies similarly situated insure
against, and including in any event loss or damage by fire, theft, burglary,
pilferage, and loss in transit, in amounts and under policies containing loss
payable clauses to the Agent as its interest may appear (and, if the Agent
requests, naming the Agent as additional insureds therein) by insurers
reasonably acceptable to the Agent. All premiums on such insurance shall be
paid by the Debtors and the policies of such insurance (or certificates
therefor) delivered to the Agent. All insurance required hereby shall provide
that any loss shall be payable notwithstanding any act or negligence of the
relevant Debtor, shall provide that no cancellation thereof shall be effective
until at least 30 days after receipt by the relevant Debtor and the Agent of
written notice thereof, and shall be reasonably satisfactory to the Agent in
all other respects. In case of any material loss, damage to or destruction of
the Collateral or any part thereof in excess of $3,000,000, the relevant
Debtor shall promptly give written notice thereof to the Secured Creditors
generally describing the nature and extent of such damage or destruction.
In case of any loss, damage to or destruction of the Collateral or any part
thereof, the relevant Debtor, whether or not the insurance proceeds, if any,
received on account of such damage or destruction shall be sufficient for
that purpose, at such Debtor's cost and expense, will promptly repair,
substitute or replace the Collateral so lost, damaged or destroyed, except to
the extent such Collateral is not necessary to the conduct of such Debtor's
business in the ordinary course, or apply such proceeds to the prepayment of
the Obligations. In the absence of any Default or Event of Default, losses
shall be payable to and the relevant Debtor shall be entitled to retain such
insurance proceeds for the purpose of repairing, substituting or replacing
the relevant Collateral. During the existence of any Default or Event of
Default, the relevant Debtor will immediately pay over such proceeds of
insurance to the Agent which will thereafter be applied to the reduction of
the Obligations (whether or not then due) or held as collateral security
therefor, as the Agent may then determine and as otherwise provided for in
the Credit Agreement. Each Debtor hereby authorizes the Agent, at the Agent's
option, to adjust, compromise and settle any losses under any insurance
afforded at any time after the occurrence and during the continuation of any
Event of Default, and such Debtor does hereby irrevocably constitute the
Agent, its officers, agents and attorneys, as such Debtor's attorneys-in-fact,
with full power and authority after the occurrence and during the continuation
of any Event of Default to effect such adjustment, compromise and/or
settlement and to endorse any drafts drawn by an insurer of the Collateral or
any part thereof and to do everything necessary to carry out such purposes
and to receive and receipt for any unearned premiums due under policies of
such insurance. Unless the Agent elects to adjust, compromise or settle
losses as aforesaid, any adjustment, compromise and/or settlement of any
losses under any insurance shall be made by the relevant Debtor subject to
final approval of the Agent (regardless of whether or not an Event of Default
shall have occurred) in the case of losses exceeding $3,000,000. All
insurance proceeds shall be subject to the lien and security interest of
the Agent hereunder.
(h) Each Debtor will at all times allow the Secured Creditors and
their respective representatives free access to and right of inspection of the
Collateral at such reasonable times and intervals as the Agent or any other
Secured Creditor may designate and, in the absence of any existing Default or
Event of Default, with reasonable prior written notice to the relevant Debtor.
(i) If any Collateral is in the possession or control of any
agents or processors of a Debtor and the Agent so requests, such Debtor agrees
to notify such agents or processors in writing of the Agent's security interest
therein and during the existence of a Default or an Event of Default, instruct
them to hold all such Collateral for the Agent's account and subject to the
Agent's instructions. Each Debtor will, upon the request of the Agent,
authorize and instruct all bailees and any other parties, if any, at any time
processing, labeling, packaging, holding, storing, shipping or transferring all
or any part of the Collateral to permit the Secured Creditors and their
respective representatives to examine and inspect any of the Collateral then in
such party's possession and to verify from such party's own books and records
any information concerning the Collateral or any part thereof which the Secured
Creditors or their respective representatives may seek to verify. As to any
premises not owned by a Debtor wherein any of the Collateral having an
aggregate value in excess of $1,000,000 at any location or $3,000,000 in the
aggregate for all locations is located, if any, such Debtor shall, upon the
Agent's request, shall take commercially reasonable measures designed to cause
each party having any right, title or interest in, or lien on, any of such
premises to enter into an agreement whereby such party disclaims any right,
title and interest in, and lien on, the Collateral, allowing the removal of
such Collateral by the Agent or its agents or representatives and otherwise in
form and substance reasonably acceptable to the Agent.
(j) Upon the Agent's request, each Debtor agrees from time to
time (but not more frequently than monthly as of such month's end) to deliver
to the Agent such evidence of the existence, identity and location of its
Collateral and of its availability as collateral security pursuant hereto
(including, without limitation, schedules describing all Receivables created
or acquired by such Debtor, copies of customer invoices or the equivalent and
original shipping or delivery receipts for all merchandise and other goods
sold or leased or services rendered by it, together with such Debtor's
warranty of the genuineness thereof, and reports stating the book value of
its Inventory and Equipment by major category and location), in each case as
the Agent may reasonably request. The Agent shall have the right to verify
all or any part of the Collateral in any manner, and through any medium,
which the Agent considers appropriate and reasonable, and each Debtor agrees
to furnish all assistance and information, and perform any acts, which the
Agent may require in connection therewith.
(k) Each Debtor will comply in all material respects with the
terms and conditions of any and all leases, easements, right-of-way agreements
and other agreements binding upon such Debtor or affecting the Collateral, in
each case which cover the premises wherein the Collateral is located, and any
orders, ordinances, laws or statutes of any city, state or other governmental
entity, department or agency having jurisdiction with respect to such premises
or the conduct of business thereon applicable to such Debtor which violation
would have a Material Adverse Effect.
(l) No Debtor has invoiced Receivables or otherwise transacted
business, and does not invoice Receivables or otherwise transact business,
under any trade names other than its name set forth on its signature page to
this Agreement or as otherwise set forth on Schedule B hereto. Each Debtor
agrees it will not change its name or transact business under any other trade
name, in each case without first giving the Agent at least 30 days prior
written notice of its intent to do so.
(m) Each Debtor agrees to execute and deliver to the Agent such
further agreements, assignments, instruments and documents, and to do all such
other things, as the Agent may reasonably deem necessary or appropriate to
assure the Agent its lien and security interest hereunder, including without
limitation, (i) executing such financing statements, effective financing
statements or other instruments and documents as the Agent may from time to
time reasonably require to comply with the UCC, the Food Security Act of 1985
as amended, and any other applicable law, and (ii) executing such patent,
trademark, and copyright agreements as the Agent may from time to time
reasonably require to comply with the filing requirements of the United States
Patent and Trademark Office and the United States Copyright Office. Each
Debtor hereby agrees that a carbon, photographic or other reproduction of
this Agreement or any such financing statement is sufficient for filing as a
financing statement or effective financing statement by the Agent without prior
notice thereof to such Debtor wherever the Agent deems necessary or desirable
to perfect or protect the security interest granted hereby. In the event for
any reason the law of any jurisdiction other than Illinois becomes or is
applicable to the Collateral or any part thereof, or to any of the
Obligations, each Debtor agrees to execute and deliver all such instruments
and documents and to do all such other things as the Agent deems necessary or
appropriate to preserve, protect and enforce the security interest of the
Agent under the law of such other jurisdiction.
(n) On failure of a Debtor to perform any of the covenants and
agreements herein contained, the Agent may, at its option, perform the same
and in so doing may expend such commercially reasonable sums as the Agent deems
advisable in the performance thereof, including, without limitation, the
payment of any insurance premiums, the payment of any taxes, liens and
encumbrances, expenditures made in defending against any adverse claims, and
all other expenditures which the Agent may be compelled to make by operation
of law or which the Agent may make by agreement or otherwise for the
protection of the security hereof. All such sums and amounts so expended
shall be repayable by such Debtor immediately upon demand, shall constitute
additional Obligations secured hereunder, and shall bear interest from the
date said amounts are expended at the rate per annum (computed on the basis
of a year of 365 or 366 days, as the case may be, for the actual number of
days elapsed) determined by adding 2% to the Base Rate from time to time in
effect plus the Applicable Margin, with any change in such rate per annum as
so determined by reason of a change in such Base Rate to be effective on the
date of such change in said Base Rate (such rate per annum as so determined
being hereinafter referred to as the "Default Rate"). No such performance of
any covenant or agreement by the Agent on behalf of a Debtor, and no such
advancement or expenditure therefor, shall relieve any Debtor of any default
under the terms of this Agreement or in any way obligate any Secured Creditor
to take any further or future action with respect thereto. The Agent in
making any payment hereby authorized may do so according to any bill,
statement or estimate procured from the appropriate public office or holder
of the claim to be discharged without inquiry into the accuracy of such bill,
statement or estimate or into the validity of any tax assessment, sale,
forfeiture, tax lien or title or claim. The Agent in performing any act
hereunder shall be the sole judge of whether the relevant Debtor is required
to perform the same under the terms of this Agreement so long as the Agent
makes such determination in good faith. The Agent is hereby authorized to
charge any depository or other account of any Debtor maintained with any
Secured Creditor for the amount of such sums and amounts so expended.
Section 4. Special Provisions Re: Receivables. (a) As of the time any
Receivable becomes subject to the security interest provided for hereby and at
all times thereafter, each Debtor shall be deemed to have warranted as to each
and all of its Receivables that all warranties of such Debtor set forth in this
Agreement are true and correct with respect to each such Receivable; that each
of its Receivable and all papers and documents relating thereto are genuine and
in all material respects what they purport to be; that each of its Receivable is
valid and existing and, if such Receivable is an account, arises out of a bona
fide sale of goods sold and delivered by such Debtor to, or in the process of
being delivered to, or out of and for services theretofore actually rendered by
such Debtor to, the account debtor named therein; and that no surety bond was
required or given in connection with such Receivable or the contracts or
purchase orders out of which the same arose.
(b) To the extent any Receivables or other item of Collateral is
evidenced by an instrument or chattel paper, each Debtor shall cause such
instrument to be pledged and delivered to the Agent; provided, however, that,
prior to the existence of a Default or Event of Default and thereafter until
otherwise required by the Agent or the Secured Creditors, a Debtor shall not
be required to deliver any such instrument or chattel paper if and only so
long as the aggregate unpaid principal balance of all such instruments and
chattel paper held by the Debtors and not delivered to the Agent under the
Collateral Documents is less than $1,000,000 at any one time outstanding.
(c) If any Receivable arises out of a contract with the United States of
America or any of its departments, agencies or instrumentalities, the relevant
Debtor agrees to, at the request of the Agent or the Secured Creditors, execute
whatever instruments and documents are required by the Agent in order that such
Receivable shall be assigned to the Agent and that proper notice of such
assignment shall be given under the federal Assignment of Claims Act (or any
successor statute) or any similar statute relating to the assignment of such
Receivables.
(d) Unless and until an Event of Default hereunder occurs and is
continuing, any merchandise or other goods which are returned by a customer or
account debtor or otherwise recovered may be resold by the relevant Debtor in
the ordinary course of its business as presently conducted in accordance with
Section 6(b) hereof; upon the occurrence and during the continuation of any
Event of Default hereunder, such merchandise and other goods shall be set aside
at the request of the Agent and held by such Debtor as trustee for the Secured
Creditors and shall remain part of the Collateral. Unless and until an Event
of Default hereunder occurs and is continuing, the relevant Debtor may settle
and adjust disputes and claims with its customers and account debtors, handle
returns and recoveries and grant discounts, credits and allowances in the
ordinary course of its business as presently conducted for amounts and on terms
which such Debtor in good faith considers advisable. Upon the occurrence and
during the continuation of any Event of Default hereunder, at the request of
the Agent, each Debtor shall notify the Agent promptly of all returns and
recoveries and at the Agent's request deliver any such merchandise or other
goods to the Agent. Upon the occurrence and during the continuation of any
Event of Default hereunder, at the Agent's request, each Debtor shall also
notify the Agent promptly of all disputes and claims and settle or adjust
them at no expense to the Secured Creditors hereunder, but no discount, credit
or allowance other than on normal trade terms in the ordinary course of
business as presently conducted shall be granted to any customer or account
debtor and no returns of merchandise or other goods shall be accepted by any
Debtor without the Agent's consent. The Agent may, at all times upon the
occurrence and during the continuation of any Event of Default hereunder,
settle or adjust disputes and claims directly with customers or account
debtors for amounts and upon terms which the Agent considers advisable.
(e) The Agent agrees that its security interest in any Receivables that
are sold by any Debtor pursuant to a Receivables Securitization Program
permitted by the Credit Agreement shall be automatically released upon such
sale; provided that any Receivables returned to any Debtor under a Receivables
Securitization Program shall be subject to the Agent's security interest
hereunder upon such return.
Section 5. Collection of Receivables. (a) Except as otherwise provided
in this Agreement, each Debtor shall make collection of all of its Receivables
and may use the same to carry on its business in accordance with sound business
practice and otherwise subject to the terms hereof.
(b) During the existence of any Default or Event of Default, immediately
upon the Agent's request, each Debtor hereby agrees that:
(i) all instruments and chattel paper at any time constituting
part of the Receivables (including any postdated checks) shall, upon receipt by
such Debtor, be immediately endorsed to and deposited with Agent; and
(ii) such Debtor shall instruct all of its customers and account
debtors to remit all payments in respect of its Receivables to a lockbox or
lockboxes under the sole custody and control of Agent and which are maintained
at post offices selected by the Agent.
(c) Upon the occurrence and during the continuation of any Default or
Event of Default hereunder, whether or not the Agent has exercised any or all
of its rights under other provisions of this Section 5, the Agent or its
designee may notify the relevant Debtor's customers and account debtors at any
time that Receivables have been assigned to the Agent or of the Agent's
security interest therein, and either in its own name, or such Debtor's name,
or both, demand, collect (including, without limitation, through a lockbox
analogous to that described in Section 5(b)(ii) hereof), receive, receipt for,
sue for, compound and give acquittance for any or all amounts due or to become
due on Receivables, and in the Agent's discretion file any claim or take any
other action or proceeding which the Agent may deem necessary or appropriate
to protect and realize upon the security interest of the Agent in the
Receivables.
(d) Any proceeds of Receivables or other Collateral transmitted to or
otherwise received by the Agent pursuant to any of the provisions of
Sections 5(b) or 5(c) hereof may be handled and administered by the Agent in
and through a remittance account or accounts maintained at the Agent or by the
Agent at a commercial bank or banks selected by the Agent (collectively the
"Depositary Banks" and individually a "Depositary Bank"), and each Debtor
acknowledges that the maintenance of such remittance accounts by the Agent is
solely for the Agent's convenience and that the Debtors do not have any right,
title or interest in such remittance accounts or any amounts at any time
standing to the credit thereof. During the existence of any Default or Event
of Default, the Agent may apply all or any part of any proceeds of Receivables
or other Collateral received by it from any source to the payment of the
Obligations (whether or not then due and payable), such applications to be made
in such amounts, in such manner and order and at such intervals as the Agent
may from time to time in its discretion determine in accordance with the terms
of the Credit Agreement. The Agent need not apply or give credit for any item
included in proceeds of Receivables or other Collateral until the Depositary
Bank has received final payment therefor at its office in cash or final solvent
credits current at the site of deposit acceptable to the Agent and the
Depositary Bank as such. However, if the Agent does permit credit to be given
for any item prior to a Depositary Bank receiving final payment therefor and
such Depositary Bank fails to receive such final payment or an item is charged
back to the Agent or any Depositary Bank for any reason, the Agent may at its
election in either instance charge the amount of such item back against any
such remittance accounts or any depository account of any Debtor maintained
with any Secured Creditor, together with interest thereon at the Default Rate.
Concurrently with each transmission by a Debtor of any proceeds of Receivables
or other Collateral to any such remittance account, upon the Agent's request,
the relevant Debtor shall furnish the Agent with a report in such form as Agent
shall reasonably require identifying the particular Receivable or such other
Collateral from which the same arises or relates. Each Debtor hereby
indemnifies the Secured Creditors from and against all liabilities, damages,
losses, actions, claims, judgments, and all reasonable costs, expenses, charges
and attorneys' fees suffered or incurred by any Secured Creditor because of the
maintenance of the foregoing arrangements described in this Section 5(d);
provided, however, that no Debtor shall be required to indemnify any Secured
Creditor for any of the foregoing to the extent they arise solely from the
gross negligence or willful misconduct of the person seeking to be
indemnified. The Secured Creditors shall have no liability or responsibility
to any Debtor for the Agent or any other Depositary Bank accepting any check,
draft or other order for payment of money bearing the legend "payment in full"
or words of similar import or any other restrictive legend or endorsement
whatsoever or be responsible for determining the correctness of any remittance.
Section 6. Special Provisions Re: Inventory and Equipment. (a) Each
Debtor shall at its own cost and expense take commercially reasonable measures
to maintain, keep and preserve its Inventory located at its facilities in good
and merchantable condition, subject to annual shrinkage not to exceed 5%, and
the Debtors shall take commercially reasonable measures designed to cause third
parties taking Inventory on consignment or storage to maintain, keep and
preserve such Inventory. Each Debtor shall keep and preserve its Equipment in
good repair, working order and condition, ordinary wear and tear excepted, and,
without limiting the foregoing, make all commercially reasonable, necessary and
proper repairs, replacements and additions to its Equipment so that the
efficiency thereof shall be preserved and maintained in all material respects.
(b) Each Debtor may, until an Event of Default has occurred and is
continuing and thereafter until otherwise notified by the Agent, use, consume
and sell the Inventory in the ordinary course of its business, but a sale in
the ordinary course of business shall not under any circumstance include any
transfer or sale in satisfaction, partial or complete, of a debt owing by such
Debtor, provided that a transfer or sale of Inventory as part of product swaps
or payment in kind transactions made in the ordinary course of business shall
not constitute a transfer or sale in satisfaction of a debt owing by a Debtor.
(c) Each Debtor may, until an Event of Default has occurred and is
continuing and thereafter until otherwise notified by the Agent, sell
(x) obsolete, worn out or unusable Equipment and (y) Equipment to the extent
permitted by Section 7.12 of the Credit Agreement.
(d) As of the time any Inventory or Equipment of a Debtor becomes subject
to the security interest provided for hereby and at all times thereafter, such
Debtor shall be deemed to have warranted as to any and all of such Inventory
and Equipment that all warranties of such Debtor set forth in this Agreement
are true and correct with respect to such Inventory and Equipment; that all of
such Inventory and Equipment is located at a location set forth pursuant to
Section 3(b) hereof.
(e) Upon the Agent's or the Secured Creditors' request and if the
aggregate value of all Collateral subject to a certificate of title law exceeds
$3,000,000, each Debtor shall at its own cost and expense cause the lien of the
Agent in and to any portion of its Collateral subject to a certificate of title
law to be duly noted on such certificate of title or to be otherwise filed in
such manner as is prescribed by law in order to perfect such lien and will
cause all such certificates of title and evidences of lien to be deposited
with the Agent.
(f) Except for Equipment from time to time located on the real estate
described on Schedule C attached hereto or as otherwise hereafter disclosed to
the Secured Creditors in writing, none of the Equipment is or will be attached
to real estate in such a manner that the same may become a fixture.
(g) If any of the Inventory is at any time evidenced by a document of
title, such document shall be promptly delivered by the relevant Debtor to the
Agent; provided, however, that prior to the existence of a Default or Event of
Default and thereafter until otherwise required by the Agent or the Secured
Creditors, a Debtor shall not be required to deliver any such document of title
if and only so long as the aggregate value of Inventory evidenced thereby that
have not been delivered to the Agent under the Collateral Documents is less
than $1,000,000 at any time.
Section 7. Special Provisions Re: Investment Property. (a) Unless and
until an Event of Default has occurred and is continuing and thereafter until
notified to the contrary by the Agent pursuant to Section 9(d) hereof:
(i) each Debtor shall be entitled to exercise all voting and/or
consensual powers pertaining to its Investment Property or any part thereof,
for all purposes not inconsistent with the terms of this Agreement, the Credit
Agreement or any other document evidencing or otherwise relating to any
Obligations; and
(ii) each Debtor shall be entitled to receive and retain all cash
dividends paid upon or in respect of its Investment Property.
(b) Certificates for all securities now or at any time constituting
Investment Property and part of the Collateral hereunder shall be promptly
delivered by the relevant Debtor to the Agent duly endorsed in blank for
transfer or accompanied by an appropriate assignment or assignments or an
appropriate undated stock power or powers, in every case sufficient to transfer
title thereto, including, without limitation, all stock received in respect of
a stock dividend or resulting from a split-up, revision or reclassification of
the Investment Property or any part thereof or received in addition to, in
substitution of or in exchange for the Investment Property or any part thereof
as a result of a merger, consolidation or otherwise. With respect to any
Investment Property held by a securities intermediary, commodity intermediary,
or other financial intermediary of any kind, the relevant Debtor shall execute
and deliver, and shall cause any such intermediary to execute and deliver, an
agreement among such Debtor, the Agent, and such intermediary in form and
substance satisfactory to the Agent which provides, among other things, for the
intermediary's agreement that it will comply with such entitlement orders, and
apply any value distributed on account of any Investment Property maintained in
an account with such intermediary, as directed by the Agent without further
consent by such Debtor. The Agent may, at any time after the occurrence and
during the continuation of an Event of Default at any time when the Obligations
are, or have been declared to be, due and payable in full, cause to be
transferred into its name or the name of its nominee or nominees any and all of
the Investment Property hereunder.
(c) Unless and until an Event of Default has occurred and is continuing,
each Debtor may sell or otherwise dispose of any of its Investment Property to
the extent permitted by the Credit Agreement, provided that no Debtor shall
sell or otherwise dispose of any capital stock or other equity interest in any
direct or indirect Subsidiary without the prior written consent of the Agent.
During the existence of any Event of Default, no Debtor shall sell all or any
part of the Investment Property without the prior written consent of the Agent.
(d) Each Debtor represents that on the date of this Agreement, none of
its Investment Property consists of margin stock (as such term is defined in
Regulation U of the Board of Governors of the Federal Reserve System) except
to the extent such Debtor has delivered to the Agent a duly executed and
completed Form U-1 with respect to such stock. If at any time the Investment
Property or any part thereof consists of margin stock, the relevant Debtor
shall promptly so notify the Agent and deliver to the Agent a duly executed
and completed Form U-1 and such other instruments and documents reasonably
requested by the Agent in form and substance satisfactory to the Agent.
Section 8. Power of Attorney. In addition to any other powers of
attorney contained herein, each Debtor hereby appoints the Agent, its nominee,
or any other person whom the Agent may designate as such Debtor's attorney-in-
fact, with full power during the existence of any Default or Event of Default
to sign such Debtor's name on verifications of accounts and other Collateral;
to send requests for verification of Collateral to such Debtor's customers,
account debtors and other obligors; to endorse such Debtor's name on any
checks, notes, acceptances, money orders, drafts and any other forms of
payment or security that may come into the Agent's possession; to endorse the
Collateral in blank or to the order of the Agent or its nominee; to sign such
Debtor's name on any invoice or bill of lading relating to any Collateral, on
claims to enforce collection of any Collateral, on notices to and drafts
against customers and account debtors and other obligors, on schedules and
assignments of Collateral, on notices of assignment and on public records;
to notify the post office authorities to change the address for delivery of
such Debtor's mail to an address designated by the Agent; to receive, open
and dispose of all mail addressed to such Debtor; and to do all things
necessary to carry out this Agreement. Each Debtor hereby ratifies and
approves all acts of any such attorney and agrees that neither the Agent nor
any such attorney will be liable for any acts or omissions nor for any error
of judgment or mistake of fact or law other that such person's gross
negligence or willful misconduct. The Agent may file one or more financing
statements and/or effective financing statements disclosing its security
interest in any or all of the Collateral without any Debtor's signature
appearing thereon, and each Debtor also hereby grants the Agent a power of
attorney to execute any such financing statements and/or effective financing
statements, or amendments and supplements to financing statements and/or
effective financing statements, on behalf of such Debtor without notice
thereof to any Debtor. The foregoing powers of attorney, being coupled with
an interest, are irrevocable until the Obligations have been fully paid and
satisfied and the commitments of the Lenders to extend credit to or for
the account of the Borrower under the Credit Agreement have expired or
otherwise terminated.
Section 9. Defaults and Remedies. (a) The occurrence of any event or
the existence of any condition which is specified as an "Event of Default"
under the Credit Agreement shall constitute an "Event of Default" hereunder.
(b) Upon the occurrence and during the continuation of any Event of
Default, the Agent shall have, in addition to all other rights provided herein
or by law, the rights and remedies of a secured party under the UCC (regardless
of whether the UCC is the law of the jurisdiction where the rights or remedies
are asserted and regardless of whether the UCC applies to the affected
Collateral), and further the Agent may, without demand and, to the extent
permitted by applicable law, without advertisement, notice, hearing or process
of law, all of which each Debtor hereby waives to the extent permitted by
applicable law, at any time or times, sell and deliver any or all Collateral
held by or for it at public or private sale, at any securities exchange or
broker's board or at any Secured Creditor's office or elsewhere, for cash, upon
credit or otherwise, at such prices and upon such terms as the Agent deems
advisable, in its sole discretion. Upon the occurrence and during the
continuation of any Event of Default, in addition to any other right or
remedies set forth herein or by applicable law, the Agent may by written
demand direct any securities intermediary, commodities intermediary, or other
financial intermediary at any time holding any Investment Property, or any
issuer thereof, to deliver such Collateral, or any part thereof, to the Agent
and/or liquidate such Collateral, or any part thereof, and deliver the
proceeds thereof to the Agent. In the exercise of any such remedies, the
Agent may sell the Collateral as a unit even though the sales price thereof
may be in excess of the amount remaining unpaid on the Obligations. Also, if
less than all the Collateral is sold, the Agent shall have no duty to marshal
or apportion the part of the Collateral so sold as between the Debtors, or any
of them, but may sell and deliver any or all of the Collateral without regard
to which of the Debtors are the owners thereof. In addition to all other sums
due any Secured Creditor hereunder, each Debtor shall pay the Secured
Creditors all costs and expenses incurred by the Secured Creditors, including
reasonable attorneys' fees and court costs, in obtaining, liquidating or
enforcing payment of Collateral or the Obligations or in the prosecution or
defense of any action or proceeding by or against any Secured Creditor or any
Debtor concerning any matter arising out of or connected with this Agreement
or the Collateral or the Obligations, including, without limitation, any of
the foregoing arising in, arising under or related to a case under the United
States Bankruptcy Code (or any successor statute). Any requirement of
reasonable notice shall be met if such notice is personally served on or
mailed, postage prepaid, to the Debtors in accordance with Section 13(b) hereof
at least 10 days before the time of sale or other event giving rise to the
requirement of such notice; provided, however, no notification need be given
to a Debtor if such Debtor has signed, after an Event of Default hereunder
has occurred, a statement renouncing any right to notification of sale or
other intended disposition. The Agent shall not be obligated to make any
sale or other disposition of the Collateral regardless of notice having been
given. Any Secured Creditor may be the purchaser at any such sale. Each
Debtor hereby waives all of its rights of redemption from any such sale.
The Agent may postpone or cause the postponement of the sale of all or
any portion of the Collateral by announcement at the time and place of such
sale, and such sale may, without further notice, be made at the time and place
to which the sale was postponed or the Agent may further postpone such sale by
announcement made at such time and place. In the event any of the Collateral
shall constitute restricted securities within the meaning of any applicable
securities laws, any disposition thereof in compliance with such laws shall
not render the disposition commercially unreasonable.
(c) Without in any way limiting the foregoing, upon the occurrence and
during the continuation of any Event of Default hereunder, the Agent shall have
the right, in addition to all other rights provided herein or by law, to take
physical possession of any and all of the Collateral and anything found
therein, the right for that purpose to enter without legal process any
premises where the Collateral may be found (provided such entry be done
lawfully), and the right to maintain such possession on the relevant Debtor's
premises (each Debtor hereby agreeing, to the extent it may lawfully do so,
to lease such premises without cost or expense to the Agent or its designee
if the Agent so requests) or to remove the Collateral or any part thereof to
such other places as the Agent may desire. Upon the occurrence and during the
continuation of any Event of Default hereunder, the Agent shall have the right
to exercise any and all rights with respect to deposit accounts of each
Debtor maintained with any Secured Creditor, including, without limitation,
the right to collect, withdraw and receive all amounts due or to become due
or payable under each such deposit account. Upon the occurrence and during
the continuation of any Event of Default hereunder, each Debtor shall, upon
the Agent's demand, assemble the Collateral and make it available to the
Agent at a place reasonably designated by the Agent. If the Agent exercises
its right to take possession of the Collateral, each Debtor shall also at its
expense perform any and all other steps requested by the Agent to preserve
and protect the security interest hereby granted in the Collateral, such as
placing and maintaining signs indicating the security interest of the Agent,
appointing overseers for the Collateral and maintaining Collateral records.
(d) Without in any way limiting the foregoing, upon the occurrence and
during the continuation of any Event of Default at any time when the
Obligations are, or have been declared to be, due and payable in full, all
rights of a Debtor to exercise the voting and/or consensual powers which it is
entitled to exercise pursuant to Section 7(a)(i) hereof and/or to receive and
retain the distributions which it is entitled to receive and retain pursuant to
Section 7(a)(ii) hereof, shall, at the option of the Agent, cease and thereupon
become vested in the Agent, which, in addition to all other rights provided
herein or by law, shall then be entitled solely and exclusively to exercise all
voting and other consensual powers pertaining to the Investment Property and/or
to receive and retain the distributions which such Debtor would otherwise have
been authorized to retain pursuant to Section 7(a)(ii) hereof and shall then be
entitled solely and exclusively to exercise any and all rights of conversion,
exchange or subscription or any other rights, privileges or options pertaining
to any Investment Property as if the Agent were the absolute owner thereof
including, without limitation, the rights to exchange, at its discretion, any
and all of the Investment Property upon the merger, consolidation,
reorganization, recapitalization or other readjustment of the respective issuer
thereof or upon the exercise by or on behalf of any such issuer or the Agent of
any right, privilege or option pertaining to any Investment Property and, in
connection therewith, to deposit and deliver any and all of the Investment
Property with any committee, depositary, transfer agent, registrar or other
designated agency upon such terms and conditions as the Agent may determine.
(e) Without in any way limiting the foregoing, each Debtor hereby grants
to the Secured Creditors a royalty-free irrevocable license and right to use
all of such Debtor's patents, patent applications, patent licenses, trademarks,
trademark registrations, trademark licenses, trade names, trade styles, and
similar intangibles in connection with any foreclosure or other realization by
the Agent or the Secured Creditors on all or any part of the Collateral to the
extent permitted by law. The license and right granted the Secured Creditors
hereby shall be without any royalty or fee or charge whatsoever.
(f) Failure by the Agent to exercise any right, remedy or option under
this Agreement or any other agreement between any Debtor and the Agent or
provided by law, or delay by the Agent in exercising the same, shall not
operate as a waiver; and no waiver shall be effective unless it is in writing,
signed by the party against whom such waiver is sought to be enforced and then
only to the extent specifically stated. Neither any Secured Creditor, nor any
party acting as attorney for any Secured Creditor, shall be liable hereunder
for any acts or omissions or for any error of judgment or mistake of fact or
law other than their gross negligence or willful misconduct. The rights and
remedies of the Secured Creditors under this Agreement shall be cumulative
and not exclusive of any other right or remedy which any Secured Creditor may
have.
Section 10. Application of Proceeds. The proceeds and avails of the
Collateral at any time received by the Agent upon the occurrence and during the
continuation of any Event of Default shall, when received by the Agent in cash
or its equivalent, be applied by the Agent in reduction of, or held as
collateral security for, the Obligations in accordance with the terms of the
Credit Agreement and, if applicable, any intercreditor agreement between the
Secured Parties (or the Agent on their behalf) and any other holders of a
security interest in the Collateral or any part thereof. The Debtors shall
remain liable to the Secured Creditors for any deficiency. Any surplus
remaining after the full payment and satisfaction of the Obligations shall be
returned to the Borrower, as agent for the Debtors, or to whomsoever the Agent
reasonably determines is lawfully entitled thereto.
Section 11. Continuing Agreement. This Agreement shall be a continuing
agreement in every respect and shall remain in full force and effect until the
earlier to occur of (i) the Borrower satisfies the provisions of
Section 7.26(c) of the Credit Agreement, or (ii) all of the Obligations, both
for principal and interest, have been fully paid and satisfied and the
commitments of the Lenders to extend credit to or for the account of the
Borrower under the Credit Agreement have expired or otherwise terminated.
Upon such termination of this Agreement, the Agent shall, upon the request and
at the expense of the Debtors, forthwith release its security interest
hereunder.
Section 12. The Agent. In acting under or by virtue of this Agreement,
the Agent shall be entitled to all the rights, authority, privileges and
immunities provided in the Credit Agreement, all of which provisions of said
Credit Agreement (including, without limitation, Section 10 thereof) are
incorporated by reference herein with the same force and effect as if set
forth herein in their entirety. The Agent hereby disclaims any representation
or warranty to the other Secured Creditors or any other holders of the
Obligations concerning the perfection of the liens and security interests
granted hereunder or in the value of any of the Collateral.
Section 13. Miscellaneous. (a) This Agreement cannot be changed or
terminated orally. This Agreement shall create a continuing lien on and
security interest in the Collateral and shall be binding upon each Debtor, its
successors and assigns and shall inure, together with the rights and remedies
of the Secured Creditors hereunder, to the benefit of the Secured Creditors and
their successors and permitted assigns; provided, however, that no Debtor may
assign its rights or delegate its duties hereunder without the Agent's prior
written consent. Without limiting the generality of the foregoing, and subject
to the provisions of the Credit Agreement, any Lender may assign or otherwise
transfer any indebtedness held by it secured by this Agreement to any other
person, and such other person shall thereupon become vested with all the
benefits in respect thereof granted to such Lender herein or otherwise.
(b) All communications provided for herein shall be in writing, except as
otherwise specifically provided for hereinabove, and shall be deemed to have
been given or made, if to any Debtor when given to the Borrower in accordance
with Section 11.7 of the Credit Agreement, or if to any Secured Creditor, when
given to such party in accordance with Section 11.7 of the Credit Agreement.
(c) No Lender shall have the right to institute any suit, action or
proceeding in equity or at law for the foreclosure or other realization upon
any Collateral subject to this Agreement or for the execution of any trust or
power hereof or for the appointment of a receiver, or for the enforcement of
any other remedy under or upon this Agreement; it being understood and
intended that no one or more of the Lenders shall have any right in any manner
whatsoever to affect, disturb or prejudice the lien and security interest of
this Agreement by its or their action or to enforce any right hereunder, and
that all proceedings at law or in equity shall be instituted, had and
maintained by the Agent in the manner herein provided for the benefit of the
Secured Creditors.
(d) In the event that any provision hereof shall be deemed to be invalid
or unenforceable by reason of the operation of any law or by reason of the
interpretation placed thereon by any court, this Agreement shall be construed
as not containing such provision, but only as to such jurisdictions where such
law or interpretation is operative, and the invalidity or unenforceability of
such provision shall not affect the validity of any remaining provisions
hereof, and any and all other provisions hereof which are otherwise lawful and
valid shall remain in full force and effect. Without limiting the generality
of the foregoing, in the event that this Agreement shall be deemed to be
invalid or otherwise unenforceable with respect to any Debtor, such invalidity
or unenforceability shall not affect the validity of this Agreement with
respect to the other Debtors.
(e) The lien and security interest herein created and provided for stand
as direct and primary security for the Obligations of the Borrower arising
under or otherwise relating to the Credit Agreement as well as for any of the
other Obligations secured hereby. No application of any sums received by the
Secured Creditors in respect of the Collateral or any disposition thereof to
the reduction of the Obligations or any part thereof shall in any manner
entitle any Debtor to any right, title or interest in or to the Obligations
or any collateral or security therefor, whether by subrogation or otherwise,
unless and until all Obligations have been fully paid and satisfied and all
agreements of the Secured Creditors to extend credit to or for the account of
the Borrower under the Credit Agreement have expired or otherwise terminated.
Each Debtor acknowledges that the lien and security interest hereby created
and provided are absolute and unconditional and shall not in any manner be
affected or impaired by any acts of omissions whatsoever of any Secured
Creditor or any other holder of any Obligations, and without limiting the
generality of the foregoing, the lien and security interest hereof shall not
be impaired by any acceptance by the Secured Creditors or any other holder of
any Obligations of any other security for or guarantors upon any of the
Obligations or by any failure, neglect or omission on the part of any Secured
Creditor or any other holder of any Obligations to realize upon or protect
any of the Obligations or any collateral or security therefor (including,
without limitation, impairment of collateral or failure to perfect security
interest in collateral). The lien and security interest hereof shall not in
any manner be impaired or affected by (and the Secured Creditors, without
notice to anyone, are hereby authorized to make from time to time) any sale,
pledge, surrender, compromise, settlement, release, renewal, extension,
indulgence, alteration, substitution, exchange, change in, modification or
disposition of any of the Obligations or of any collateral or security
therefor, or of any guaranty thereof, or of any instrument or agreement
setting forth the terms and conditions pertaining to any of the foregoing.
The Secured Creditors may at their discretion at any time grant credit to the
Borrower without notice to the other Debtors in such amounts and on such terms
as the Secured Creditors may elect (all of such to constitute additional
Obligations hereby secured) without in any manner impairing the lien and
security interest created and provided for herein. In order to realize hereon
and to exercise the rights granted the Secured Creditors hereunder and under
applicable law, there shall be no obligation on the part of any Secured
Creditor or any other holder of any Obligations at any time to first resort
for payment to the Borrower or to any other Debtor or to any guaranty of the
Obligations or any portion thereof or to resort to any other collateral,
security, property, liens or any other rights or remedies whatsoever, and
the Secured Creditors shall have the right to enforce this Agreement against
any Debtor or any of its Collateral irrespective of whether or not other
proceedings or steps seeking resort to or realization upon or from any of
the foregoing are pending.
(f) In the event the Secured Creditors shall at any time in their
discretion permit a substitution of Debtors hereunder or a party shall wish to
become a Debtor hereunder, such substituted or additional Debtor shall, upon
executing an agreement in the form attached hereto as Schedule D, become a
party hereto and be bound by all the terms and conditions hereof to the same
extent as though such Debtor had originally executed this Agreement and, in
the case of a substitution, in lieu of the Debtor being replaced. Any such
agreement shall contain information as to such Debtor necessary to update
Schedules A, B and C hereto with respect to it. No such substitution shall
be effective absent the written consent of Agent nor shall it in any manner
affect the obligations of the other Debtors hereunder.
(g) This Agreement shall be deemed to have been made in the State of
Illinois and shall be governed by, and construed in accordance with, the laws
of the State of Illinois. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning of any
provision hereof.
(h) Each Debtor hereby submits to the non-exclusive jurisdiction of the
United States District Court for the Northern District of Illinois and of any
Illinois state court sitting in Cook County, Illinois for purposes of all legal
proceedings arising out of or relating to this Agreement or the transactions
contemplated hereby. Each Debtor 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 form.
(i) This Agreement may be executed in any number of counterparts and by
different parties hereto on separate counterpart signature pages, each
constituting an original, but all together one and the same agreement.
[SIGNATURE PAGES TO FOLLOW]
IN WITNESS WHEREOF, each Debtor has caused this Agreement to be duly
executed and delivered as of the date first above written.
"DEBTORS"
MISSISSIPPI CHEMICAL CORPORATION
By_____________________________________
Name:________________________________
Title:_______________________________
Address:
_______________________________________
_______________________________________
Attention: _________________
Telephone: _________________
Telecopy: _________________
_______________________________________
By_____________________________________
Name:________________________________
Title:_______________________________
Address:
_______________________________________
_______________________________________
Attention: _________________
Telephone: _________________
Telecopy: _________________
_______________________________________
By_____________________________________
Name:________________________________
Title:_______________________________
Address:
_______________________________________
_______________________________________
Attention: _________________
Telephone: _________________
Telecopy: _________________
<PAGE>
Accepted and agreed to in Chicago, Illinois as of the date first above
written.
HARRIS TRUST AND SAVINGS BANK, as Agent
By______________________________________
Name__________________________________
Title_________________________________
Address:
111 West Monroe Street
Chicago, IL 60603
Attention: Agribusiness Division
Telephone: _________________
Telecopy: _________________
<PAGE>
SCHEDULE A
LOCATIONS
COLUMN 1 COLUMN 2 COLUMN 3
NAME OF DEBTOR CHIEF
(AND FEDERAL TAX EXECUTIVE ADDITIONAL PLACES
I.D. NUMBER) OFFICE OF BUSINESS
Mississippi Chemical Corporation ______________ ___________
Tax ID #________________ ______________
________________________________ ______________ ___________
Tax ID #________________ ______________
<PAGE>
SCHEDULE B
TRADE NAMES
TRADE NAMES OF
NAME OF DEBTOR SUCH DEBTOR
<PAGE>
SCHEDULE C
REAL ESTATE LEGAL DESCRIPTIONS
<PAGE>
SCHEDULE D
ASSUMPTION AND SUPPLEMENTAL SECURITY AGREEMENT
THIS AGREEMENT dated as of this _____ day of __________________, _____
from [NEW DEBTOR], a _______________ corporation (the "New Debtor"), to Harris
Trust and Savings Bank ("HTSB"), as agent for the Secured Creditors (defined
in the Security Agreement hereinafter identified and defined) (HTSB acting as
such agent and any successor or successors to HTSB in such capacity being
hereinafter referred to as the "Agent");
WITNESSETH THAT:
WHEREAS, Mississippi Chemical Corporation and ___________________________
(together the "Debtors") and certain other parties have executed and delivered
to the Agent that certain Security Agreement dated as of ___________, ____
(such Security Agreement, as the same may from time to time be amended,
modified, or restated, including supplements thereto which add additional
parties as Debtors thereunder, being hereinafter referred to as the "Security
Agreement") pursuant to which such parties (the "Existing Debtors") have
granted to the Agent for the benefit of the Secured Creditors a lien on and
security interest in each such Existing Debtor's Collateral (as such term is
defined in the Security Agreement) to secure the Obligations (as such term is
defined in the Security Agreement); and
WHEREAS, the Borrower provides the New Debtor with substantial financial,
managerial, administrative, and technical support and the New Debtor will
directly and substantially benefit from credit and other financial
accommodations extended and to be extended by the Secured Creditors to the
Borrower;
NOW, THEREFORE, FOR VALUE RECEIVED, and in consideration of advances made
or to be made, or credit accommodations given or to be given, to the Borrower
by the Secured Creditors from time to time, the New Debtor hereby agrees as
follows:
1. The New Debtor acknowledges and agrees that it shall become a
"Debtor" party to the Security Agreement effective upon the date the New
Debtor's execution of this Agreement and the delivery of this Agreement to the
Agent, and that upon such execution and delivery, all references in the
Security Agreement to the terms "Debtor" or "Debtors" shall be deemed to
include the New Debtor. Without limiting the generality of the foregoing,
the New Debtor hereby repeats and reaffirms all grants (including the grant
of a lien and security interest), covenants, agreements, representations and
warranties contained in the Security Agreement as amended hereby, each and
all of which are and shall remain applicable to the Collateral from time to
time owned by the New Debtor or in which the New Debtor from time to time has
any rights. Without limiting the foregoing, in order to secure payment of
the Obligations, whether now existing or hereafter arising, the New Debtor
does hereby grant to the Agent for the benefit of itself and the other Secured
Creditors, and hereby agrees that the Agent has and shall continue to have
for the benefit of itself and the other Secured Creditors a continuing lien
on and security interest in, among other things, all of the New Debtor's
Collateral (as such term is defined in the Security Agreement), including,
without limitation, all of the New Debtor's Receivables, General
Intangibles, Inventory and Farm Products, Equipment, Investment Property,
and all of the other Collateral described in Section 2 of the Security
Agreement, each and all of such granting clauses being incorporated herein
by reference with the same force and effect as if set forth in their entirety
except that all references in such clauses to the Existing Debtors or any of
them shall be deemed to include references to the New Debtor. Nothing
contained herein shall in any manner impair the priority of the liens and
security interests heretofore granted in favor of the Agent under the Security
Agreement.
2. Schedules A (Locations), B (Trade Names) and C (Real Estate) to the
Security Agreement shall be supplemented by the information stated below with
respect to the New Debtor:
SUPPLEMENT TO SCHEDULE A
NAME OF DEBTOR CHIEF
(AND FEDERAL TAX EXECUTIVE ADDITIONAL PLACES
I.D. NUMBER) OFFICE OF BUSINESS
________________________ ____________________ ______________________
________________________ ____________________ ______________________
SUPPLEMENT TO SCHEDULE B
TRADE MAMES OF
NAME OF DEBTOR SUCH DEBTOR
___________________________________ ______________________________
SUPPLEMENT TO SCHEDULE C
REAL ESTATE LEGAL DESCRIPTIONS
__________________________________
__________________________________
3. The New Debtor hereby acknowledges and agrees that the Obligations
are secured by all of the Collateral according to, and otherwise on and subject
to, the terms and conditions of the Security Agreement to the same extent and
with the same force and effect as if the New Debtor had originally been one of
the Existing Debtors under the Security Agreement and had originally executed
the same as such an Existing Debtor.
4. All capitalized terms used in this Agreement without definition
shall have the same meaning herein as such terms have in the Security
Agreement, except that any reference to the term "Debtor" or "Debtors" and any
provision of the Security Agreement providing meaning to such term shall be
deemed a reference to the Existing Debtors and the New Debtor. Except as
specifically modified hereby, all of the terms and conditions of the Security
Agreement shall stand and remain unchanged and in full force and effect.
5. The New Debtor agrees to execute and deliver such further
instruments and documents and do such further acts and things as the Agent
may deem necessary or proper to carry out more effectively the purposes of
this Agreement.
6. No reference to this Agreement need be made in the Security Agreement
or in any other document or instrument making reference to the Security
Agreement, any reference to the Security Agreement in any of such to be deemed
a reference to the Security Agreement as modified hereby.
7. This Agreement shall be governed by and construed in accordance with
the State of Illinois (without regard to principles of conflicts of law).
[NEW DEBTOR]
By____________________________________
Name________________________________
Title_______________________________
Accepted and agreed to as of the date first above written.
HARRIS TRUST AND SAVINGS BANK, as Agent
By_____________________________________
Name_________________________________
Title________________________________
EXHIBIT P
DEED OF TRUST AND SECURITY AGREEMENT WITH
ASSIGNMENT OF RENTS
This Deed of Trust and Security Agreement with Assignment of Rents (the
"Deed of Trust") dated ___________________, _____ from ___________, a
___________ with its principal place of business and mailing address at
__________________ (hereinafter referred to as "Grantor") to
___________________, a _____________ with its principal place of business and
mailing address at ____________________, as Trustee (the "Trustee") and in
trust for the benefit of Harris Trust and Savings Bank, an Illinois banking
corporation with its principal place of business at 111 West Monroe Street,
Chicago, Illinois 60690, (hereinafter referred to as "Harris") for itself and
as agent hereunder for the Lenders hereinafter defined (Harris acting as such
agent and any successor or successors to Harris in such capacity being
hereinafter referred to as "Beneficiary");
W I T N E S S E T H T H A T:
WHEREAS, Mississippi Chemical Corporation, a Mississippi corporation (the
"Borrower") has entered into with Harris (individually and as administrative
agent for itself and the lenders who may from time to time be parties to the
Credit Agreement described below (individually a "Lender" and collectively the
"Lenders")) that certain Credit Agreement dated as of November 25, 1997, as the
same may from time to time be amended (as so amended, the "Credit Agreement")
pursuant to which the Lenders commit, subject to certain terms and conditions,
to make a revolving credit facility (the "Revolving Credit") in the aggregate
principal amount of $______________ available to the Borrower; and
WHEREAS, Harris may, pursuant to the Credit Agreement and as part of the
Revolving Credit referred to above, issue letters of credit (individually an
"L/C" and collectively the "L/Cs") for the account of the Borrower in an
aggregate face amount not to exceed $__________ and with expiry dates of not
more than one year from the date of issuance thereof, but in no event later
than _________________, _______, which L/Cs are to be issued upon and subject
to the terms of separate applications and agreements for L/Cs to be executed
by the Grantor (individually an "Application" and collectively the
"Applications"); and
WHEREAS, pursuant to the Credit Agreement Harris commits, subject to
certain terms and conditions and as part of the Revolving Credit referred to
above, to make swingline loans (the "Swingline Loans") to the Borrower in an
aggregate principal amount outstanding at any time not to exceed
$________________; and
WHEREAS, pursuant to the Credit Agreement the Lenders may, but are not
obligated to, make competitive bid loans ("Bid Loans" and, together with all
loans made under the Revolving Credit and all Swingline Loans, individually a
"Loan" and collectively the "Loans") to the Borrower in an aggregate principal
amount outstanding at any time which, together with the aggregate principal
amount of all other Loans then outstanding shall not exceed $________________;
and
WHEREAS, all Loans made to the Borrower under the Credit Agreement are to
be evidenced by Revolving Credit Notes of the Borrower, aggregating
$__________, dated ____________, _____, payable to the order of the respective
Lender named thereon and maturing in no event later than _______________,
________ and bearing interest thereon at the rates and payable at the times
provided in the Credit Agreement (such promissory notes and any and all
promissory notes issued in renewal thereof or in substitution or replacement
therefor being hereinafter referred to collectively as the "Notes" and
individually as a "Note"); and
WHEREAS, Grantor, _________ and ________ (individually a "Guarantor" and
collectively the "Guarantors") have executed and delivered to the Lenders a
Guaranty Agreement dated _____________, ____ (such Guaranty Agreement, as the
same may from time to time be amended, the "Guaranty"), pursuant to which the
Guarantors guaranty the payment when due of all of the Borrower's indebtedness,
obligations and liabilities to the Lenders under the Credit Agreement, the
Notes and the Applications; and
WHEREAS, the Borrower owns, directly or indirectly, equity interests in
the Grantor and provides Grantor with financial, management, administrative,
technical support and other services pursuant to a management services
agreement which enables Grantor to conduct its business in an orderly and
efficient manner in the ordinary course; and
WHEREAS, Grantor will benefit, directly or indirectly, from credit and
other financial accommodations extended by the Lenders to the Borrower; and
WHEREAS the Lenders (or the Beneficiary on their behalf) may enter into
an intercreditor agreement with the holders of the Borrower's Senior Notes
(or an agent or trustee on their behalf) to the extent such holders have a
security interest in certain of the Mortgaged Premises to set forth their
respective rights relating thereto; and
NOW, THEREFORE, to secure (i) the payment of the principal of and interest
on the Notes as and when the same become due and payable (whether by lapse of
time, acceleration or otherwise) and all advances now or hereafter evidenced
thereby, (ii) the payment of all sums owing in connection with the L/Cs
(collectively, the "Reimbursement Obligations") as and when the same become due
and payable, (iii) the obligation of the Borrower to pay Beneficiary and the
Lenders certain fees, costs, expenses, indemnities and other amounts pursuant
to the Credit Agreement and the Applications, (iv) the payment and performance
by the Guarantors of all of their indebtedness, obligations and liabilities
under the Guaranty, (v) the payment of all other indebtedness, obligations and
liabilities which this Deed of Trust secures pursuant to any of its terms and
(vi) the observance and performance of all covenants and agreements contained
herein or in the Notes, the Credit Agreement, the Applications or in any other
instrument or document at any time evidencing or securing any of the foregoing
or setting forth terms and conditions applicable thereto (all of such
indebtedness, obligations and liabilities being hereinafter collectively
referred to as the "indebtedness hereby secured"), Grantor does hereby grant,
bargain, sell, convey, mortgage, warrant, assign, and pledge unto Trustee, its
successors and assigns, in trust, with power of sale as hereinafter set forth,
all of Grantor's right, title and interest in and to the properties, rights,
interests and privileges described in Granting Clauses I, II, III, IV, V, VI
and VII below, all of the same being collectively referred to herein as the
"Mortgaged Premises":
GRANTING CLAUSE I
That certain real estate lying and being in ____________, County of
____________ and State of Mississippi more particularly described in Schedule I
attached hereto and made a part hereof.
GRANTING CLAUSE II
All buildings and improvements of every kind and description heretofore or
hereafter erected or placed on the property described in Granting Clause I and
all materials intended for construction, reconstruction, alteration and repairs
of the buildings and improvements now or hereafter erected thereon, all of
which materials shall be deemed to be included within the premises immediately
upon the delivery thereof to the said real estate, and all fixtures, machinery,
apparatus, equipment, fittings and articles of personal property of every kind
and nature whatsoever now or hereafter attached to or contained in or used or
useful in connection with said real estate and the buildings and improvements
now or hereafter located thereon and the operation, maintenance and protection
thereof, including but not limited to all machinery, motors, fittings,
radiators, awnings, shades, screens, all gas, coal, steam, electric, oil and
other heating, cooking, power and lighting apparatus and fixtures, all fire
prevention and extinguishing equipment and apparatus, all cooling and
ventilating apparatus and systems, all plumbing, incinerating, and sprinkler
equipment and fixtures, all elevators and escalators, all communication and
electronic monitoring equipment, all window and structural cleaning rigs and
all other machinery and equipment of every nature and fixtures and
appurtenances thereto and all items of furniture, appliances, draperies,
carpets, other furnishings, equipment and personal property used or useful
in the operation, maintenance and protection of the said real estate and the
buildings and improvements now or hereafter located thereon and all renewals
or replacements thereof or articles in substitution therefor, whether or not
the same are or shall be attached to said real estate, buildings or
improvements in any manner, and all proceeds thereof; it being mutually agreed,
intended and declared that all the aforesaid property shall, so far as
permitted by law, be deemed to form a part and parcel of the real estate and
for the purpose of this Deed of Trust to be real estate and covered by this
Deed of Trust; and as to the balance of the property aforesaid, this Deed of
Trust is hereby deemed to be as well a Security Agreement under the provisions
of the Uniform Commercial Code of the State of Illinois for the purpose of
creating hereby a security interest in said property, which is hereby granted
by Grantor as debtor to Beneficiary as secured party, securing the indebtedness
hereby secured. The addresses of Grantor (debtor) and Beneficiary (secured
party) appear at the beginning hereof.
GRANTING CLAUSE III
All right, title and interest of Grantor now owned or hereafter acquired
in and to all and singular the estates, tenements, hereditaments, privileges,
easements, licenses, franchises, appurtenances and royalties, mineral, oil, and
water rights belonging or in any wise appertaining to the property described in
the preceding Granting Clause I and the buildings and improvements now or
hereafter located thereon and the reversions, rents, issues, revenues and
profits thereof, including all interest of Grantor in all rents, issues and
profits of the aforementioned property and all rents, issues, profits,
revenues, royalties, bonuses, rights and benefits due, payable or accruing
(including all deposits of money as advanced rent or for security) under any
and all leases or subleases and renewals thereof of, or under any contracts or
options for the sale of all or any part of, said property (including during
any period allowed by law for the redemption of said property after any
foreclosure or other sale), together with the right, but not the obligation,
to collect, receive and receipt for all such rents and other sums and apply
them to the indebtedness hereby secured and to demand, sue for and recover the
same when due or payable; provided that the assignments made hereby shall not
impair or diminish the obligations of Grantor under the provisions of such
leases or other agreements nor shall such obligations be imposed upon Trustee
or Beneficiary. By acceptance of this Deed of Trust, Trustee agrees, not as a
limitation or condition hereof, but as a personal covenant available only to
Grantor that until an Event of Default shall occur giving Trustee the power of
sale or the right to foreclose this Deed of Trust, Grantor may collect, receive
(but not more than 30 days in advance) and enjoy such rents.
GRANTING CLAUSE IV
All judgments, awards of damages, settlements and other compensation
heretofore or hereafter made resulting from condemnation proceedings or the
taking of the property described in Granting Clause I or any part thereof or
any building or other improvement now or at any time hereafter located thereon
or any easement or other appurtenance thereto under the power of eminent
domain, or any similar power or right (including any award from the United
States Government at any time after the allowance of the claim therefor, the
ascertainment of the amount thereof and the issuance of the warrant for the
payment thereof), whether permanent or temporary, or for any damage (whether
caused by such taking or otherwise) to said property or any part thereof or the
improvements thereon or any part thereof, or to any rights appurtenant thereto,
including severance and consequential damage, and any award for change of grade
of streets (collectively, "Condemnation Awards").
GRANTING CLAUSE V
All property and rights, if any, which are by the express provisions of
this Deed of Trust required to be subjected to the lien hereof and any
additional property and rights that may from time to time hereafter, by
installation or writing of any kind, be subjected to the lien hereof by Grantor
or by anyone in Grantor's behalf.
GRANTING CLAUSE VI
All rights in and to common areas and access roads on adjacent properties
heretofore or hereafter granted to Grantor and any after-acquired title or
reversion in and to the beds of any ways, roads, streets, avenues and alleys
adjoining the property described in Granting Clause I or any part thereof.
GRANTING CLAUSE VII
All proceeds of the conversion, voluntary or involuntary, of any of the
foregoing into cash or other liquidated claims, including, without limitation,
all proceeds and payments of insurance.
TO HAVE AND TO HOLD the Mortgaged Premises and the properties, rights and
privileges hereby granted, bargained, sold, conveyed, mortgaged, warranted,
pledged and assigned, and in which a security interest is granted, or intended
so to be, unto Trustee, its successors and assigns, forever.
IN TRUST NEVERTHELESS, upon the terms and trust herein set forth, for the
equal and proportionate benefit, security and protection of all present and
future holders of the indebtedness hereby secured; provided, however, that this
instrument is upon the express condition that if either (i) the provisions of
Section 7.26(c) of the Credit Agreement are satisfied, or (ii) all of the
indebtedness hereby secured shall have been paid and performed in full
(including all sums payable under or according to the provisions of the
Applications), all L/C's issued pursuant to the Applications shall have expired
and any commitment in the Credit Agreement to advance funds shall have
terminated, then this instrument and the estate and rights hereby granted shall
cease, determine and be void and upon the written request and at the expense of
Grantor, the Beneficiary shall request Trustee to release this Deed of Trust,
the Trustee to then release this Deed of Trust without further inquiry or
liability; otherwise this Deed of Trust is to remain in full force and effect.
Grantor hereby covenants and agrees with Trustee and Beneficiary as
follows:
1. Payment of the Indebtedness. The indebtedness hereby secured will
be promptly paid as and when the same becomes due.
2. Further Assurances. Grantor will execute and deliver such further
instruments and do such further acts as may be reasonably necessary or proper
to carry out more effectively the purpose of this Deed of Trust and, without
limiting the foregoing, to make subject to the lien hereof any property agreed
to be subjected hereto or covered by the Granting Clauses hereof.
3. Ownership of the Mortgaged Premises. Grantor covenants and warrants
that it is lawfully seized of and has good and marketable fee title to the
Mortgaged Premises free and clear of all liens, charges and encumbrances
whatsoever except encumbrances in the policy of title insurance accepted by the
Beneficiary and those permitted under the Credit Agreement (collectively,
"Permitted Encumbrances") and Grantor has good title, full power and authority
to convey, transfer and mortgage the same to Trustee for the uses and purposes
set forth in this Deed of Trust; and Grantor will warrant and defend the title
to the Mortgaged Premises against all claims and demands whatsoever.
4. Possession. Provided no Event of Default has occurred and is
continuing hereunder, Grantor shall be suffered and permitted to remain in full
possession, enjoyment and control of the Mortgaged Premises, subject always to
the observance and performance of the terms of this Deed of Trust.
5. Payment of Taxes. Grantor shall pay before any penalty attaches, all
general taxes and all special taxes, special assessments, water, drainage and
sewer charges and all other charges of any kind whatsoever, ordinary or
extraordinary, which may be levied, assessed, imposed or charged on or against
the Mortgaged Premises or any part thereof and which, if unpaid, might by law
become a lien or charge upon the Mortgaged Premises or any part thereof, and
shall, upon written request, exhibit to Beneficiary official receipts
evidencing such payments, except that, unless and until foreclosure,
distraint, sale or other similar proceedings shall have been commenced, no
such charge or claim need be paid if being contested (except to the extent any
full or partial payment shall be required by law), after notice to Beneficiary,
by appropriate proceedings which shall operate to prevent the collection
thereof or the sale or forfeiture of the Mortgaged Premises or any part
thereof to satisfy the same, conducted in good faith and with due diligence
and if Grantor shall have furnished such security, if any, as may be required
in the proceedings or requested by Trustee or Beneficiary.
6. Payment of Taxes on Notes, Deed of Trust or Interest of Trustee,
Beneficiary or Lender. Grantor agrees that if any tax, assessment or
imposition upon this Deed of Trust or the indebtedness hereby secured, or
the Notes or Applications arising by virtue of the fact that this Deed of
Trust has been executed and delivered, or the interest of Trustee or
Beneficiary in the Mortgaged Premises or upon Trustee, Beneficiary or any
Lender by reason of or as a holder of any of the foregoing (excepting
therefrom any income tax on interest payments on the principal portion of the
indebtedness hereby secured imposed by the United States or any state) is
levied, assessed or charged, then, unless all such taxes are paid by Grantor
to, for or on behalf of Trustee, Beneficiary or such Lender, as the case may
be, as they become due and payable (which Grantor agrees to do upon demand of
Trustee, Beneficiary or such Lender, to the extent permitted by law), or
Trustee, Beneficiary or such Lender, as the case may be, is reimbursed for
any such sum advanced by Trustee or Beneficiary, all sums hereby secured
shall become immediately due and payable, at the option of Trustee or
Beneficiary upon ninety (90) days' notice to Grantor, notwithstanding
anything contained herein or in any law heretofore or hereafter enacted,
including any provision thereof forbidding Grantor from making any such
payment. Grantor agrees to exhibit to Trustee, Beneficiary or any Lender,
upon request, official receipts showing payment of all taxes and charges
which Grantor is required to pay hereunder.
7. Recordation and Payment of Taxes and Expenses Incident Thereto.
Grantor will cause this Deed of Trust, all deeds of trust supplemental hereto
and any financing statement or other notice of a security interest required by
Trustee or Beneficiary at all times to be kept, recorded and filed at its own
expense in such manner and in such places as may be required by law for the
recording and filing or for the rerecording and refiling of a mortgage,
security interest, assignment or other lien or charge upon the Mortgaged
Premises, or any part thereof, in order fully to preserve and protect the
rights of Trustee and Beneficiary hereunder and, without limiting the
foregoing, Grantor will pay or reimburse Trustee or Beneficiary for the
payment of any and all taxes, fees or other charges incurred in connection
with any such recordation or rerecordation, including any documentary stamp
tax or tax imposed upon the privilege of having this Deed of Trust or any
instrument issued pursuant hereto recorded.
8. Insurance. Grantor will, at its expense, keep all buildings,
improvements, equipment and other property now or hereafter constituting part
of the Mortgaged Premises insured against loss or damage by fire, lightning,
windstorm, explosion, flood, earthquake, mechanical and electrical breakdown,
and such other risks as are usually included under "all risk" policies, or
which are usually insured against by owners of like property. Such coverage
shall be in amounts sufficient to prevent Grantor, Trustee or Beneficiary
from becoming a co-insurer of any loss under applicable policies and such
coverage shall provide that the losses are to be adjusted and paid on the
basis of replacement value without deduction for physical depreciation.
Losses shall be payable to Borrower and Beneficiary, such rights to be
evidenced by the usual standard non-contributory form of mortgage clause to
be attached to each policy. Grantor shall not carry separate insurance
concurrent in kind or form and contributing in the event of loss, with any
insurance required hereby. Grantor shall also obtain and maintain public
liability and workers' compensation insurance (or qualified self-insurance)
in each case in form and content reasonably satisfactory to Beneficiary and
in amounts as are customarily carried by owners of like property. All
insurance required hereby shall be maintained with good and responsible
insurance companies reasonably satisfactory to Beneficiary. Policies shall
be issued such that: (i) no deductible amount shall be in excess of
$3,000,000 unless approved in writing by Beneficiary, (ii) any losses shall
be payable notwithstanding any act or negligence of Grantor, and (iii) no
cancellation or non-renewal thereof shall be effective until at least
thirty (30) days after receipt by Grantor and Beneficiary of written notice
thereof, and shall be reasonably satisfactory to Beneficiary in all other
material respects. Upon the execution of this Deed of Trust and thereafter
not less than fifteen (l5) days prior to the expiration date of any policy
delivered pursuant to this Deed of Trust, Grantor will deliver to Beneficiary
certificates of insurance showing that Grantor has in effect insurance
required by this Deed of Trust. In the event of foreclosure, Grantor
authorizes and empowers Beneficiary to effect insurance upon the Mortgaged
Premises in amounts aforesaid for a period covering the time of redemption
from foreclosure sale provided by law, and if necessary therefor to cancel
any or all existing insurance policies to the extent that they apply to the
Mortgaged Premises.
9. Damage to or Destruction of Mortgaged Premises.
(a) Notice. In case of any material damage to or destruction of
the Mortgaged Premises or any part thereof having a replacement cost value in
excess of $3,000,000, Grantor shall promptly give written notice thereof to
Beneficiary, generally describing the nature and extent of such damage or
destruction, except to the extent said Mortgaged Premises (i) prior to its
damage or destruction are uneconomical, obsolete or worn-out or (ii) are not
necessary for or of importance to the proper conduct of Mortgagor's business in
the ordinary course and all other parts of the Mortgaged Premises damaged or
destroyed during the preceding twelve (12) calendar months had an a replacement
cost value, prior to its damage or destruction, of less than $3,000,000.
(b) Restoration. In case of any damage to or destruction of the
Mortgaged Premises or any part thereof, Grantor, whether or not the insurance
proceeds, if any, received on account of such damage or destruction shall be
sufficient for the purpose, at Grantor's expense, will promptly commence and
complete (subject to unavoidable delays occasioned by strikes, lockouts, acts
of God, inability to obtain labor or materials, governmental restrictions and
similar causes beyond the reasonable control of Grantor) the restoration,
replacement or rebuilding of the Mortgaged Premises as nearly as possible to
its value, condition and character immediately prior to such damage or
destruction, except to the extent such property is not necessary to the
conduct of the Grantor's business in the ordinary course, or apply such
proceeds to the prepayment of the indebtedness hereby secured.
(c) Adjustment of Loss. Grantor shall have the right to adjust
and compromise any losses under any insurance afforded pursuant hereto, but any
adjustment and/or compromise of losses involving damage or destruction of the
Mortgaged Premises or any part thereof in excess of $3,000,000 shall be subject
to final approval of Beneficiary.
(d) Application of Insurance Proceeds. Net insurance proceeds
received by Beneficiary under the provisions of this Deed of Trust or any
instruments supplemental hereto or thereto or under any policy or policies of
insurance covering the Mortgaged Premises or any part thereof shall first be
applied toward the payment of the amount owing on the indebtedness hereby
secured in such order of application as Beneficiary may elect whether or not
the same may then be due or be otherwise adequately secured; provided,
however, that such proceeds shall be made available for the restoration of
the portion of the Mortgaged Premises damaged or destroyed if written
application for such use is made within thirty (30) days of receipt of such
proceeds and no Event of Default or event which, with the passage of time,
giving of notice, or both would constitute an Event of Default, shall have
occurred and be continuing and, if the replacement cost of the portion of
the Mortgaged Premises damaged or destroyed exceeds $10,000,000, the
following conditions are satisfied: (i) Grantor has in effect business
interruption insurance covering the income to be lost during the restoration
period as a result of the damage or destruction to the Mortgaged Premises
(subject to deductibles that do not impair the Borrower's ability to pay its
obligations during the restoration period) or provides Beneficiary with other
evidence satisfactory to it that Grantor has cash resources sufficient to pay
its obligations during the restoration period; (ii) the effect of the damage
to or destruction of the Mortgaged Premises giving rise to receipt of the
insurance proceeds is not to terminate, or give a lessee the option to
terminate, any lease of all or any portion of the Mortgaged Premises; (iii) if
an Event of Default, or event which, with the lapse of time, the giving
of notice, or both, would constitute an Event of Default, shall occur during
restoration Beneficiary may, at its election, apply any insurance proceeds then
remaining in its hands to the reduction of the indebtedness evidenced by the
Notes and the other indebtedness hereby secured; (iv) Grantor shall have
submitted to Beneficiary plans and specifications for the restoration which
shall be satisfactory to it; and (v) Grantor shall submit to Beneficiary fixed
price contracts with good and responsible contractors and materialmen covering
all work and materials necessary to complete restoration and providing for a
total completion price not in excess of the amount of insurance proceeds
available for restoration, or, if a deficiency shall exist, Grantor shall have
deposited the amount of such deficiency with Beneficiary. Any insurance
proceeds to be released pursuant to the foregoing provisions may at the option
of Beneficiary be disbursed from time to time as restoration progresses to pay
for restoration work completed and in place and such disbursements may at
Beneficiary's option be made directly to Grantor or to or through any
contractor or materialman to whom payment is due or to or through a
construction escrow to be maintained by a title insurer acceptable to
Beneficiary. Beneficiary may impose such further conditions upon the release
of insurance proceeds (including the receipt of title insurance) as are
customarily imposed by prudent construction lenders to insure the completion
of the restoration work free and clear of all liens or claims for lien. All
title insurance charges and other costs and expenses paid to or for the
account of Grantor in connection with the release of such insurance proceeds
shall constitute so much additional indebtedness hereby secured to be payable
upon demand with interest at the rate applicable to the Notes at the time such
costs or expenses are incurred. Beneficiary may deduct any such costs and
expenses from insurance proceeds at any time standing in its hands. If
Grantor fails to request that insurance proceeds be applied to the restoration
of the improvements or if Grantor makes such a request but fails to complete
restoration within a reasonable time, Beneficiary shall have the right, but
not the duty, to release the proceeds thereof for use in restoring the
Mortgaged Premises or any part thereof for or on behalf of Grantor in lieu of
applying said proceeds to the indebtedness hereby secured and for such purpose
may do all acts necessary to complete such restoration, including advancing
additional funds in a commercially reasonable manner and in good faith, and
any additional funds so advanced shall constitute part of the indebtedness
hereby secured and shall be payable on demand with interest at the Default
Rate or such lower rate of interest as Grantor and all of the Lenders may
agree at the time such funds are advanced.
10. Eminent Domain. Grantor acknowledges that Condemnation Awards have
been assigned to Trustee and Beneficiary, which awards Trustee and Beneficiary
are hereby irrevocably authorized to collect and receive, and to give
appropriate receipts and acquittances therefor, and at Beneficiary's option,
to apply the same toward the payment of the amount owing on account of the
indebtedness hereby secured in such order of application as Beneficiary may
elect and whether or not the same may then be due and payable or otherwise
adequately secured, and Grantor covenants and agrees that Grantor will give
Beneficiary immediate notice of the actual or threatened commencement of any
proceedings under condemnation or eminent domain affecting all or any part of
the Mortgaged Premises including any easement therein or appurtenance thereof
or severance and consequential damage and change in grade of streets, and will
deliver to Beneficiary copies of any and all papers served in connection with
any such proceedings. Grantor further covenants and agrees to make, execute
and deliver to Beneficiary, at any time or times upon request, free, clear and
discharged of any encumbrances of any kind whatsoever, any and all further
assignments and/or instruments deemed necessary by Beneficiary for the purpose
of validly and sufficiently assigning all awards and other compensation
heretofore and hereafter to be made to Grantor for any taking, either permanent
or temporary, under any such proceeding.
11. Construction, Repair, Waste, Etc. Grantor agrees that no building or
other improvement on the Mortgaged Premises and constituting a part thereof and
having a fair market value in excess of $3,000,000 shall be altered, removed or
demolished nor shall any fixtures or appliances on, in or about said buildings
or improvements be severed, removed, sold or mortgaged, without the consent of
Beneficiary and in the event of the demolition or destruction in whole or in
part of any of the fixtures, chattels or articles of personal property covered
hereby, Grantor covenants that the same will be replaced promptly by similar
fixtures, chattels and articles of personal property at least equal in quality
and condition to those replaced, free from any security interest in or
encumbrance thereon or reservation of title thereto; to permit, commit or
suffer no waste, impairment or deterioration of the Mortgaged Premises or any
part thereof; to keep and maintain said Mortgaged Premises and every part
thereof in such condition that is commercially reasonable and in the ordinary
course of business for facilities in Grantor's industry; to comply in all
material respects with all statutes, orders, requirements or decrees relating
to the Mortgaged Premises by any federal, state or municipal authority; to
observe and comply in all material respects with all conditions and
requirements necessary to preserve and extend any and all rights, licenses,
permits (including, but not limited to, zoning variances, special exceptions
and non-conforming uses), privileges, franchises and concessions which are
applicable to the Mortgaged Premises or which have been granted to or
contracted for by Grantor in connection with any existing or presently
contemplated use of the Mortgaged Premises or any part thereof and not to
initiate or acquiesce in any changes to or terminations of any of the
foregoing or of zoning classifications affecting the use to which the
Mortgaged Premises or any part thereof may be put that would materially
and adversely affect the Mortgaged Premises without the prior written consent
of Beneficiary.
12. Liens and Encumbrances. Grantor will not, without the prior written
consent of Beneficiary, directly or indirectly, create or suffer to be created
or to remain and will discharge or promptly cause to be discharged any
mortgage, lien, encumbrance or charge on, pledge of, or conditional sale or
other title retention agreement with respect to, the Mortgaged Premises or any
part thereof, whether superior or subordinate to the lien hereof, except for
this Deed of Trust and the Permitted Encumbrances.
13. Right of Trustee or Beneficiary to Perform Grantor's Covenants, Etc.
If Grantor shall fail to make any payment or perform any act required to be
made or performed hereunder, Trustee or Beneficiary, without waiving or
releasing any obligation or default, may (but shall be under no obligation to)
at any time thereafter make such payment or perform such act for the account
and at the expense of Grantor, and may enter upon the Mortgaged Premises or
any part thereof for such purpose and take all such action thereon as, in the
opinion of Trustee or Beneficiary, may be reasonably necessary or appropriate
therefor. All sums so paid by Trustee or Beneficiary and all costs and
expenses (including without limitation reasonable attorneys' fees and
expenses) so incurred, together with interest thereon from the date of payment
or incurrence at the Default Rate, shall constitute so much additional
indebtedness hereby secured and shall be paid by Grantor to the party who
made such payment on demand. Trustee or Beneficiary in making any payment
authorized under this Section relating to taxes or assessments may do so
according to any bill, statement or estimate procured from the appropriate
public office without inquiry into the accuracy of such bill, statement or
estimate or into the validity of any tax assessment, sale, forfeiture, tax
lien or title or claim thereof. Trustee or Beneficiary, in performing any
act hereunder, shall be the sole judge of whether Grantor is required to
perform same under the terms of this Deed of Trust so long as it does so in
good faith.
14. After-Acquired Property. Any and all property hereafter acquired
which is of the kind or nature described in granting clauses II, III, IV, V, VI
or VII shall ipso facto, and without any further conveyance, assignment or act
on the part of Grantor, become and be subject to the lien of this Deed of Trust
as fully and completely as though specifically described herein; but
nevertheless Grantor shall from time to time, if requested by Trustee or
Beneficiary, execute and deliver any and all such further assurances,
conveyances and assignments as Trustee or Beneficiary may reasonably require
for the purpose of expressly and specifically subjecting to the lien of this
Deed of Trust all such property.
15. Inspection by Trustee or Beneficiary. Trustee, Beneficiary and any
Lender shall have the right to inspect the Mortgaged Premises at all reasonable
times, and access thereto shall be permitted for that purpose, provided that
all such inspections shall be made in compliance with applicable health and
safety laws.
16. Subrogation. Grantor acknowledges and agrees that Trustee and
Beneficiary shall be subrogated to any lien discharged out of the proceeds of
any extension of credit evidenced by the Notes or out of any advance by Trustee
or Beneficiary hereunder, irrespective of whether or not any such lien may have
been released of record.
17. Events of Default. Any one or more of the following shall constitute
an "Event of Default" hereunder:
(a) the Mortgaged Premises or any part thereof shall be sold,
transferred, or conveyed, whether voluntarily or involuntarily, by operation of
law or otherwise, except for sales permitted by the Credit Agreement or sales
of obsolete, worn out or unusable fixtures or personal property; or
(b) any indebtedness secured by a lien or charge on the Mortgaged
Premises or any part thereof which is or could become prior to the lien hereof
is not paid when due or proceedings are commenced to foreclose or otherwise
realize upon any such lien or charge or to have a receiver appointed for the
property subject thereto or to place the holder of such indebtedness or its
representative in possession thereof; or
(c) any event occurs or condition exists which is specified as
an "Event of Default" under the Credit Agreement; or
(d) the Mortgaged Premises is abandoned (within the meaning of
the laws of the jurisdiction in which the Mortgaged Premises are located).
For the purposes of this Deed of Trust, the Mortgaged Premises shall be
deemed to have been sold, transferred or conveyed in the event that more than
fifty percent of the equity interest in Grantor shall be sold, transferred or
conveyed, whether voluntarily or involuntarily, subsequent to the date hereof
whether in one or a series of related or unrelated transactions.
18. Remedies. When any Event of Default has occurred and is continuing
or (regardless of the pendency of any proceeding which has or might have the
effect of preventing Grantor from complying with the terms of this instrument
and of the adequacy of the security for the Notes, Reimbursement Obligations
and the other indebtedness hereby secured), and in addition to such other
rights as may be available under applicable law, but subject at all times to
any mandatory legal requirements:
(a) Acceleration. Beneficiary may, by written notice to Grantor,
declare the Notes, Reimbursement Obligations and all unpaid indebtedness hereby
secured, including any interest then accrued thereon, to be forthwith due and
payable, whereupon the same shall become and be forthwith due and payable,
without other notice or demand of any kind.
(b) Uniform Commercial Code. Trustee shall, with respect to any
part of the Mortgaged Premises constituting property of the type in respect of
which realization on a lien or security interest granted therein is governed by
the Uniform Commercial Code, have all the rights, options and remedies of a
secured party under the Uniform Commercial Code of Illinois, including without
limitation, the right to the possession of any such property, or any part
thereof, and the right to enter without legal process any premises where any
such property may be found. Any requirement of said Uniform Commercial Code
for reasonable notification shall be met by mailing written notice to Grantor
at its address above set forth at least ten (l0) days prior to the sale or
other event for which such notice is required. The costs and expenses of
retaking, selling, and otherwise disposing of said property, including
reasonable attorneys' fees and legal expenses incurred in connection
therewith, shall constitute so much additional indebtedness hereby secured
and shall be payable upon demand with interest at the Default Rate.
(c) Foreclosure. Trustee may proceed to protect and enforce the
rights of Trustee or Beneficiary hereunder (i) by any action at law, suit in
equity or other appropriate proceedings, whether for the specific performance
of any agreement contained herein, or for an injunction against the violation
of any of the terms hereof, or in aid of the exercise of any power granted
hereby or by law, or (ii) by the foreclosure of this Deed of Trust.
(d) Exercise of Power of Sale. After the lapse of such time as
may then be required by law, if any, and notice of default and notice of the
time, place and terms of sale having been given as then required by law,
including without limitation Section 89-1-55 of the Mississippi Code of 1972,
as amended, Trustee, without demand on Grantor, shall sell the Mortgaged
Premises on the date and at the time and place designated in the notice of
sale, either as a whole or in separate parcels, and in such order as
Beneficiary may determine, at public auction to the highest bidder, the
purchase price payable in lawful money of the United States at the time of
sale. The person conducting the sale may, for any cause deemed expedient,
postpone the sale from time to time until it shall be completed and, in
every such case, notice of postponement shall be given by public declaration
thereof by such person at the time and place last appointed for the sale.
If the Mortgaged Premises is located in two or more counties or two or more
judicial districts of the same county, the Trustee may sell the whole in any
of the counties, or in either of the judicial districts of a county in which
any part of the land lies. Trustee shall execute and deliver to the purchaser
a Trustee's Deed conveying the Property so sold, but without any covenant of
warranty, express or implied. The recitals in the Trustee's Deed of any
matters or facts shall be conclusive proof of the truthfulness thereof.
Beneficiary may bid at the sale. Trustee shall apply the proceeds of the sale
to payment of (a) the costs and expenses of exercising the power of sale and
of the sale, including the payment of the Trustee's fees and attorney fees and
costs; (b) cost of any evidence of title procured in connection with such
sale; (c) all sums expended under the terms hereof in conjunction with any
default provision hereunder, not then repaid, with accrued interest at the
Default Rate; (d) all sums then secured by this Deed of Trust, including
interest and principal on the Notes and the Reimbursement Obligations; and
(e) the remainder, if any, to the person or persons legally entitled
thereto, or Trustee, in Trustee's discretion, may deposit the balance of such
proceeds with the Chancery Clerk of __________ County, Mississippi.
(e) Appointment of Receiver. Trustee or Beneficiary shall, as a
matter of right, without notice and without giving bond to Grantor or anyone
claiming by, under or through it, and without regard to the solvency or
insolvency of Grantor or the then value of the Mortgaged Premises, be entitled
to have a receiver appointed of all or any part of the Mortgaged Premises and
the rents, issues and profits thereof, with such power as the court making such
appointment shall confer, and Grantor hereby consents to the appointment of
such receiver and shall not oppose any such appointment. Any such receiver
may, to the extent permitted under applicable law, without notice, enter upon
and take possession of the Mortgaged Premises or any part thereof by force,
summary proceedings, ejectment or otherwise, and may remove Grantor or other
persons and any and all property therefrom, and may hold, operate and manage
the same and receive all earnings, income, rents, issues and proceeds accruing
with respect thereto or any part thereof, whether during the pendency of any
foreclosure or until any right of redemption shall expire or otherwise.
(f) Taking Possession, Collecting Rents, Etc. Trustee or
Beneficiary or their agent may enter and take possession of the Mortgaged
Premises or any part thereof and manage, operate, insure, repair and improve
the same and take any action which, in Trustee's or Beneficiary's judgment, is
reasonably necessary or proper to conserve the value of the Mortgaged Premises.
Beneficiary may also take possession of, and for these purposes use, any and
all personal property contained in the Mortgaged Premises and used in the
operation, rental or leasing thereof or any part thereof. Trustee or
Beneficiary or their agent shall be entitled to collect and receive all
earnings, revenues, rents, issues and profits of the Mortgaged Premises or
any part thereof (and for such purpose Grantor does hereby irrevocably
constitute and appoint Beneficiary its true and lawful attorney-in-fact for
it and in its name, place and stead to receive, collect and receipt for all
of the foregoing, Grantor irrevocably acknowledging that any payment made to
Beneficiary hereunder shall be a good receipt and acquittance against Grantor
to the extent so made) and to apply same to the reduction of the indebtedness
hereby secured. The right to enter and take possession of the Mortgaged
Premises and use any personal property therein, to manage, operate and
conserve the same, and to collect the rents, issues and profits thereof, shall
be in addition to all other rights or remedies of Trustee or Beneficiary
hereunder or afforded by law, and may be exercised concurrently therewith or
independently thereof. The costs and expenses (including any receiver's fees,
counsels' fees, costs and agent's compensation) incurred pursuant to the
powers herein contained shall be so much additional indebtedness hereby
secured which Grantor promises to pay upon demand together with interest at
the Default Rate. Trustee or Beneficiary shall not be liable to account to
Grantor for any action taken pursuant hereto other than to account for any
rents actually received by Trustee or Beneficiary. Without taking possession
of the Mortgaged Premises, Trustee or Beneficiary may, in the event the
Mortgaged Premises becomes vacant or is abandoned, take such steps as it deems
commercially reasonably appropriate to protect and secure the Mortgaged
Premises (including hiring watchmen therefor) and all costs incurred in so
doing shall constitute so much additional indebtedness hereby secured payable
upon demand with interest thereon at the Default Rate.
19. Waiver of Right to Redeem From Sale - Waiver of Appraisement,
Valuation, Etc. Grantor shall not and will not apply for or avail itself of
any appraisement, valuation, stay, extension or exemption laws, or any
so-called "Moratorium Laws," now existing or hereafter enacted in order to
prevent or hinder the enforcement or foreclosure of this Deed of Trust, but
hereby waives the benefit of such laws. Grantor for itself and all who may
claim through or under it waives any and all right to have the property and
estates comprising the Mortgaged Premises marshalled upon any foreclosure of
the lien hereof and agrees that any court having jurisdiction to foreclose
such lien may order the Mortgaged Premises sold as an entirety. In the event
of any sale made under or by virtue of this Deed of Trust, the whole of the
Mortgaged Premises may be sold in one parcel as an entirety or in separate
lots or parcels at the same or different times, all as the Beneficiary may
determine. Beneficiary shall have the right to become the purchaser at any
sale made under or by virtue of this Deed of Trust and Beneficiary so
purchasing at any such sale shall have the right to be credited upon the
amount of the bid made therefor by Beneficiary with the amount payable to
Trustee by Grantor out of the net proceeds of such sale. In the event of any
such sale, the Notes, Reimbursement Obligations and the other indebtedness
hereby secured, if not previously due, shall be and become immediately due and
payable without demand or notice of any kind. Grantor hereby waives any and
all rights of redemption prior to or from sale under any order or decree of
foreclosure pursuant to rights herein granted, on behalf of Grantor, and each
and every person acquiring any interest in, or title to the Mortgaged Premises
described herein subsequent to the date of this Deed of Trust, and on behalf
of all other persons to the extent permitted by applicable law.
20. Costs and Expenses of Foreclosure. In case of any sale of the
Mortgaged Premises, or any part thereof, pursuant to any judgment or decree of
any court or pursuant to the power of sale herein contained or in connection
with the enforcement of any of the terms of this Deed of Trust or otherwise or
by virtue of this Deed of Trust, there shall be allowed and included as
additional indebtedness to be paid out of the proceeds of such sale, reasonable
Trustee's fees incurred in connection with any exercise of the power of sale
granted hereunder for all services rendered by Trustee, its agents, attorneys
and counsel in and about foreclosure, enforcement or other protection of this
Deed of Trust and all expenditures and expenses which may be paid or incurred
by or on behalf of Trustee and/or Beneficiary and any Lender for attorneys'
fees, appraisers' fees, environmental auditors' fees, outlays for documentary
and expert evidence, stenographic charges, publication costs and costs (which
may be estimated as the items to be expended after such Trustee's sale or the
entry of any foreclosure order or the decree) of procuring all such abstracts
of title, title searches and examination, guarantee policies, and similar
data and assurances with respect to title as Trustee or Beneficiary may deem
to be reasonably necessary either to prosecute any foreclosure action or to
evidence to the bidder at any sale pursuant thereto the true condition of the
title to or the value of the Mortgaged Premises, all of which expenditures
shall become so much additional indebtedness hereby secured which Grantor
agrees to pay and all of such shall be immediately due and payable with
interest thereon from the date of expenditure until paid at the Default Rate.
21. Application of Proceeds. The proceeds of any foreclosure or other
sale of the Mortgaged Premises or of any sale of property pursuant to Section
17(b) hereof shall be distributed as provided in Section 3.6 of the Credit
Agreement and, if applicable, any intercreditor agreement between the Lenders
(or the Beneficiary on their behalf) and any other holders of a lien or
security interest in the Mortgaged Premises or any part thereof.
22. Deficiency Decree. If at any foreclosure proceeding the Mortgaged
Premises shall be sold for a sum less than the total amount of indebtedness for
which judgment is therein given, the judgment creditor shall be entitled to the
entry of a deficiency decree against Grantor and against the property of
Grantor for the amount of such deficiency; and Grantor does hereby irrevocably
consent to the appointment of a receiver for the Mortgaged Premises and the
property of Grantor and of the rents, issues and profits thereof after such
sale and until such deficiency decree is satisfied in full.
23. Trustee's, Beneficiary's and Lenders' Remedies Cumulative - No
Waiver. No remedy or right of Trustee, Beneficiary or any Lender shall be
exclusive of but shall be cumulative and in addition to every other remedy or
right now or hereafter existing at law or in equity or by statute or
otherwise. No delay in the exercise or omission to exercise any remedy or
right accruing on any default shall impair any such remedy or right or be
construed to be a waiver of any such default or acquiescence therein, nor
shall it affect any subsequent default of the same or a different nature.
Every such remedy or right may be exercised concurrently or independently,
and when and as often as may be deemed expedient by Trustee and Beneficiary.
24. Trustee and Beneficiary Party to Suits. If Trustee or Beneficiary
shall be made a party to or shall intervene in any action or proceeding
affecting the Mortgaged Premises or the title thereto or the interest of
Trustee and Beneficiary under this Deed of Trust (including probate and
bankruptcy proceedings), or if Trustee and Beneficiary employs an attorney to
collect any or all of the indebtedness hereby secured or to enforce any of the
terms hereof or realize hereupon or to protect the lien hereof, or if Trustee
and Beneficiary shall incur any costs or expenses in preparation for the
commencement of any foreclosure proceedings or for the defense of any
threatened suit or proceeding which might affect the Mortgaged Premises or the
security hereof, whether or not any such foreclosure or other suit or
proceeding shall be actually commenced, then in any such case, Grantor agrees
to pay to Trustee and Beneficiary, immediately and without demand, all
reasonable costs, charges, expenses and attorney's fees incurred by Trustee
and Beneficiary in any such case, and the same shall constitute so much
additional indebtedness hereby secured payable upon demand with interest at
the Default Rate.
25. Modifications Not to Affect Lien. Trustee and Beneficiary, without
notice to anyone, and without regard to the consideration, if any, paid
therefor, or the presence of other liens on the Mortgaged Premises, may in its
discretion release any part of the Mortgaged Premises or any person liable for
any of the indebtedness hereby secured, may extend the time of payment of any
of the indebtedness hereby secured and may grant waivers or other indulgences
with respect hereto and thereto, and may agree with Grantor to modifications
to the terms and conditions contained herein or otherwise applicable to any
of the indebtedness hereby secured (including modifications in the rates of
interest applicable thereto), without in any way affecting or impairing the
liability of any party liable upon any of the indebtedness hereby secured or
the priority of the lien of this Deed of Trust upon all of the Mortgaged
Premises not expressly released, and any party acquiring any direct or
indirect interest in the Mortgaged Premises shall take same subject to all of
the provisions hereof.
26. Notices. Except as otherwise specified herein, all notices hereunder
shall be in writing (including, without limitation, notice by telecopy) and
shall be given to the relevant party, and shall be deemed to have been made
when given to the relevant party, in accordance with Section 11.7 of the
Credit Agreement.
27. Environmental Matters.
(a) Definitions. The following terms when used herein shall have the
following meanings:
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C. SectionSection9601 et seq., and any
future amendments.
"Environmental Claim" means any investigation, notice, violation, demand,
allegation, action, suit, injunction, judgment, order, consent decree, penalty,
fine, lien, proceeding or claim (whether administrative, judicial or private in
nature) arising (a) pursuant to, or in connection with an actual or alleged
violation of, any Environmental Law, (b) in connection with any Hazardous
Material, (c) from any abatement, removal, remedial, corrective or response
action in connection with a Hazardous Material, Environmental Law or order of a
governmental authority, or (d) from any actual or alleged damage, injury,
threat or harm to health, safety, natural resources or the environment.
"Environmental Law" means any current or future Legal Requirement
pertaining to (a) the protection of health, safety and the indoor or outdoor
environment, (b) the conservation, management or use of natural resources and
wildlife, (c) the protection or use of surface water or groundwater, (d) the
management, manufacture, possession, presence, use, generation, transportation,
treatment, storage, disposal, Release, threatened Release, abatement, removal,
remediation or handling of, or exposure to, any Hazardous Material, or (e)
pollution (including any Release to air, land, surface water or groundwater),
and any amendment, rule, regulation, order or directive issued thereunder.
"Environmental Reports" means the Phase I Environmental Assessments of the
Mortgaged Premises described in Granting Clause I conducted and delivered
pursuant to the Credit Agreement.
"Hazardous Material" means any substance, chemical, compound, product,
solid, gas, liquid, waste, byproduct, pollutant, contaminant or material which
is hazardous or toxic, and includes, without limitation, (a) asbestos,
polychlorinated biphenyls and petroleum (including crude oil or any fraction
thereof) and (b) any material classified or regulated as "hazardous" or "toxic"
or words of like import pursuant to an Environmental Law.
"Hazardous Material Activity" means any activity, event or occurrence
involving a Hazardous Material, including, without limitation, the manufacture,
possession, presence, use, generation, transportation, treatment, storage,
disposal, Release, threatened Release, abatement, removal, remediation,
handling of or corrective or response action to any Hazardous Material.
"Legal Requirement" means any treaty, convention, statute, law,
regulation, ordinance, license, permit, governmental approval, injunction,
judgment, order, consent decree or other requirement of any governmental
authority, whether federal, state, or local.
"Material Adverse Effect" means any change or effect that individually or
in the aggregate is or is reasonably likely to be materially adverse to (a) the
assets, operations, income, condition (financial or otherwise) or business
prospects of the Grantor and its subsidiaries, taken as a whole, (b) the lien
of any mortgage, deed of trust or other security agreement covering the
Mortgaged Premises or any part thereof, (c) the ability of the Grantor and its
subsidiaries taken as a whole, to perform their obligations under 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 Grantor and it subsidiaries taken as a whole,
owing to the Lenders or setting forth terms and conditions applicable thereto
or otherwise relating thereto, or (d) the condition or fair market value of
the Mortgaged Premises.
"RCRA" means the Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act of 1976 and Hazardous and Solid Waste Amendments
of 1984, 42 U.S.C. SectionSection6901 et seq., and any future amendments.
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, migration, dumping, or
disposing into the indoor or outdoor environment, including, without
limitation, the abandonment or discarding of barrels, drums, containers, tanks
or other receptacles containing or previously containing any Hazardous
Material.
(b) Representations and Warranties. Except as set forth in the
Environmental Reports, the Grantor represents and warrants that: (i) the
Grantor and the Mortgaged Premises comply in all material respects with all
applicable Environmental Laws; (ii) the Grantor has obtained all governmental
approvals required for its operations and the Mortgaged Premises by any
applicable Environmental Law except for such approvals which if not obtained
could not reasonably be expected to have a Material Adverse Effect; (iii) the
Grantor has not, and has no knowledge of any other person who has, caused any
Release, threatened Release or disposal of any Hazardous Material at, on,
about, or off the Mortgaged Premises that could reasonably be expected to have
a Material Adverse Effect on the Mortgaged Premises and, to the knowledge of
the Grantor, the Mortgaged Premises is not adversely affected by any Release,
threatened Release or disposal of a Hazardous Material originating or emanating
from any other property that has not been properly remediated; (iv) to
Grantor's knowledge, the Mortgaged Premises does not contain and has not
contained any: (1) underground storage tank, (2) amounts of asbestos
containing building material, (3) any landfills or dumps, (4) hazardous waste
management facility as defined pursuant to RCRA or any comparable state law, or
(5) site on or nominated for the National Priority List promulgated pursuant to
CERCLA or any state remedial priority list promulgated or published pursuant to
any comparable state law; (v) except in the ordinary course of business but
always in compliance in all material respects with all applicable laws, rules
and regulations, the Grantor has not used a material quantity of any Hazardous
Material and has conducted no Hazardous Material Activity at the Mortgaged
Premises; (vi) the Grantor has no material liability for response or corrective
action, natural resource damage or other harm pursuant to CERCLA, RCRA or any
comparable state law; (vii) the Grantor is not subject to, has no notice or
knowledge of and is not required to give any notice of any Environmental Claim
involving the Grantor or the Mortgaged Premises, and to Grantor's knowledge
there are no conditions or occurrences at the Mortgaged Premises which could
reasonably be anticipated to form the basis for an Environmental Claim against
the Grantor or the Mortgaged Premises; (viii) the Mortgaged Premises is not
subject to any, and the Grantor has no knowledge of any imminent, restriction
on the ownership, occupancy, use or transferability of the Mortgaged Premises
in connection with any (1) Environmental Law or (2) Release, threatened
Release or disposal of a Hazardous Material; and (ix) to Grantor's knowledge,
there are no conditions or circumstances at the Mortgaged Premises which pose
an unreasonable risk to the environment or the health or safety of persons.
(c) Covenants. The Grantor shall at all times do the following:
(i) comply in all material respects with, and maintain the Mortgaged Premises
in compliance in all material respects with, all applicable Environmental Laws;
(ii) require that each tenant and subtenant, if any, of the Mortgaged Premises
or any part thereof comply in all material respects with all applicable
Environmental Laws; (iii) obtain and maintain in full force and effect all
governmental approvals required by any applicable Environmental Law for
operations at the Mortgaged Premises except for such approvals which if not
obtained or maintained could not be reasonably expected to have a Material
Adverse Effect; (iv) cure any violation by it or at the Mortgaged Premises of
applicable Environmental Laws; (v) except as permitted by applicable
Environmental Law, not allow the presence or operation at the Mortgaged
Premises of any (1) landfill or dump or (2) hazardous waste management
facility or solid waste disposal facility as defined pursuant to RCRA or any
comparable state law; (vi) not manufacture, use, generate, transport, treat,
store, release, dispose or handle any Hazardous Material at the Mortgaged
Premises except in the ordinary course of its business and in compliance in
all material respects at all times with all applicable laws, rules or
regulations; (vii) within 10 business days notify the Beneficiary in writing
of and provide any requested documents upon learning of any of the following
in connection with the Grantor or the Mortgaged Premises which could
reasonably be anticipated to have a Material Adverse Effect: (1) any liability
for response or corrective action, natural resource damage or other harm
pursuant to CERCLA, RCRA or any comparable state law, (2) any Environmental
Claim, (3) any violation of an Environmental Law or Release, threatened
Release or disposal of a Hazardous Material, (4) any restriction on the
ownership, occupancy, use or transferability arising pursuant to any
(x) Release, threatened Release or disposal of a Hazardous Substance or
(y) Environmental Law, or (5) any environmental, natural resource, health or
safety condition; (viii) conduct at its expense any investigation, study,
sampling, testing, abatement, cleanup, removal, remediation or other response
action necessary to remove, remediate, clean up or abate any Release,
threatened Release or disposal of a Hazardous Material as required by any
applicable Environmental Law; (ix) abide by and observe any restrictions on
the use of Mortgaged Premises imposed by any governmental authority as set
forth in a deed or other instrument affecting the Grantor's interest therein;
(x) promptly provide or otherwise make available to the Beneficiary any
requested environmental record concerning the Mortgaged Premises which the
Grantor possesses or can reasonably obtain; and (xi) perform, satisfy, and
implement any operation or maintenance actions required by any governmental
authority or Environmental Law, or included in any no further action letter
or covenant not to sue issued by any governmental authority under any
Environmental Law. Notwithstanding the foregoing, Grantor shall be permitted
to store and use Hazardous Materials on the Mortgaged Premises in the ordinary
course of business and in compliance with all applicable laws.
28. Liens Absolute, Etc. The Grantor acknowledges and agrees that the
liens and security interests hereby created are absolute and unconditional and
shall not in any manner be affected or impaired by any acts or omissions
whatsoever of the Trustee, Beneficiary or any other holders of any of the
indebtedness hereby secured, and without limiting the generality of the
foregoing, the lien and security hereof shall not be impaired by any acceptance
by the Trustee, Beneficiary or any other holder of any of the indebtedness
hereby secured of any other security for or guarantors upon any of the
indebtedness hereby secured or by any failure, neglect or omission on the part
of the Trustee, Beneficiary or any other holder of any of the indebtedness
hereby secured to realize upon to protect any of the indebtedness hereby
secured or any collateral security therefor. The lien and security hereof
shall not in any manner be impaired or affected by any sale, pledge,
surrender, compromise, settlement, release, renewal, extension, indulgence,
alteration, substitution, exchange, change in, modification or disposition of
any of the indebtedness hereby secured, or of any collateral security
therefor, or of any guaranty thereof, or of any loan agreement executed in
connection therewith. In order to realize hereon and to exercise the rights
granted Trustee and Beneficiary hereby and under applicable law, there shall
be no obligation on the part of Trustee, Beneficiary or any other holder of
any of the indebtedness hereby secured at any time to first resort for
payment to the obligor on any note evidencing any of the indebtedness hereby
secured or to any guaranty of any of the indebtedness hereby secured or any
part thereof or to resort to any other collateral security, property, liens
or any other rights or remedies whatsoever, and Trustee shall have the right
to enforce this instrument irrespective of whether or not other proceedings
or steps are pending seeking resort to or realization upon or from any of the
foregoing.
29. Direct and Primary Security - No Subrogation. The lien and security
herein created and provided for stands as direct and primary security for the
Notes and the Applications as well as for any of the other indebtedness hereby
secured. No application of any sums received by the Trustee or Beneficiary in
respect of the Mortgaged Premises or any disposition thereof to the reduction
of the indebtedness hereby secured or any part thereof shall in any manner
entitle Grantor to any right, title or interest in or to the indebtedness
hereby secured or any collateral security therefor, whether by subrogation or
otherwise, unless and until all indebtedness hereby secured has been fully
paid and satisfied.
30. Substitute Trustee. Trustee, or any substitute Trustee, may be
removed at any time with or without cause, at the option of Beneficiary, by
written declaration of such removal signed by Beneficiary and duly recorded in
the same records as this Deed of Trust, without any notice to or demand upon
Trustee or substitute Trustee so removed, or Grantor or any other person. If
at any time Trustee or any substitute Trustee should be so removed, or should
absent himself from ____________, die, or refuse, fail or be unable to act as
such Trustee or substitute Trustee, Beneficiary may appoint any person as
substitute Trustee hereunder, without any formality other than a written
declaration of such appointment executed by Beneficiary and duly recorded in
the same records as this Deed of Trust; and immediately upon such appointment,
the substitute Trustee so appointed shall automatically become vested with all
the estate and title in the Property, and with all of the rights, powers,
privileges, authority, options and discretions, and charged with all of the
duties and liabilities, vested in or imposed upon Trustee by this Deed of
Trust, and any conveyance executed by such substitute Trustee, including the
recitals therein contained, shall have the same effect and validity as if
executed by Trustee.
31. Revolving Credit Loan. The Deed of Trust is given to secure, among
other things, a revolving credit loan and shall secure not only presently
existing indebtedness under the Credit Agreement but also future advances,
whether such advances are obligatory or to be made at the option of
Beneficiary, or otherwise, as are made within twenty (20) years from the date
hereof, to the same extent as if such future advances were made on the date of
the execution of this mortgage, although there may be no advance made at the
time of execution of this Deed of Trust and although there may be no
indebtedness hereby secured outstanding at the time any advance is made.
The lien of this Deed of Trust shall be valid as to all indebtedness hereby
secured, including future advances, from the time of its filing for record in
the recorder's or registrar's office of the county in which the Mortgaged
Premises are located. The total amount of indebtedness hereby secured may
increase or decrease from time to time, but the total unpaid balance of
indebtedness hereby secured (including disbursements which Beneficiary may
make under this Deed of Trust, the Credit Agreement, the Applications or any
other documents related thereto) at any one time outstanding shall not exceed
a maximum principal amount of _____________________ Dollars ($____________)
plus interest thereon and any disbursements made for payment of taxes,
special assessments or insurance on the Mortgaged Premises and interest
on such disbursements, together with any fees, costs or expenses which may be
payable hereunder (all such indebtedness being hereinafter referred to as the
"maximum amount secured hereby"). This Deed of Trust shall be valid and have
priority over all subsequent liens and encumbrances, including statutory liens,
excepting solely taxes and assessments levied on the Mortgaged Premises, to the
extent of the maximum amount secured hereby.
32. Multisite Real Estate Transaction. Grantor acknowledges that this
Deed of Trust is one of several mortgages and other security documents (the
aforesaid being together called the "Other Security Documents") which secure
the indebtedness evidenced by the Notes, the Credit Agreement and the
Applications. Grantor agrees that the lien of this Deed of Trust shall be
absolute and unconditional and shall not in any manner be affected or impaired
by any acts or omissions whatsoever of the Trustee or Beneficiary and, without
limiting the generality of the foregoing, the lien hereof shall not be impaired
by any acceptance by the Trustee or Beneficiary of any security for or
guarantors upon any of the indebtedness hereby secured, or by any failure,
neglect or omission on the part of the Trustee or Beneficiary to realize upon
or protect any of the indebtedness hereby secured or any security therefor
including the Other Security Documents. The lien hereof shall not in any
manner be impaired or affected by any release (except as to the property
released), sale, pledge, surrender, compromises, settlement, renewal,
extension, indulgence, alteration, changing, modification or disposition of
any of the indebtedness hereby secured or of any of the collateral security
therefor, including, without limitation, the Other Security Documents or of
any guarantee thereof, and the Trustee or Beneficiary may at its discretion
foreclose, exercise any power of sale, or exercise any other remedy available
to it under any or all of the Other Security Documents without first
exercising or enforcing any of its rights and remedies hereunder. Such
exercise of Trustee's or Beneficiary's rights and remedies under any or all
of the Other Security Documents shall not in any manner impair the
indebtedness hereby secured, except to the extent of payment, or the lien of
this Deed of Trust and any exercise of the rights or remedies of Trustee or
Beneficiary hereunder shall not impair the lien of any of the Other Security
Documents or any of Trustee's or Beneficiary's rights and remedies thereunder.
Grantor specifically consents and agrees that Beneficiary may exercise its
rights and remedies hereunder and under the Other Security Documents separately
or concurrently and in any order that it may deem appropriate.
33. Default Rate. For purposes of this Deed of Trust, the term "Default
Rate" shall mean the rate per annum determined by adding 2% to the rate per
annum announced from time to time by Harris Trust and Savings Bank as its prime
commercial rate, with any change in such rate per annum as so determined by
reason of a change in such prime commercial rate to become effective on the
date of such change in said prime commercial rate.
34. Governing Law. The creation of the Deed of Trust, the perfection of
the lien or security interest in the Mortgaged Premises, and the rights and
remedies of Trustee or Beneficiary with respect to the Mortgaged Premises, as
provided herein and by the laws of the state in which the Mortgaged Premises is
located, shall be governed by and construed in accordance with the internal
laws of the state in which the Mortgaged Premises is located without regard to
principles of conflicts of law. Otherwise, the Credit Agreement, the Notes,
the Applications, and all other obligations of Grantor (including, but not
limited to, the liability of Grantor for any deficiency following a foreclosure
of all or any part of the Mortgaged Premises) shall be governed by and
construed in accordance with the internal laws of the State of Illinois
without regard to principles of conflicts of laws, such state being the state
where such documents were executed and delivered.
35. Agent. Beneficiary has been appointed as agent pursuant to the
Credit Agreement. In acting under or by virtue of this Deed of Trust,
Beneficiary shall be entitled to all the rights, authority, privileges and
immunities provided in Sections 10.1 through 10.14 of the Credit Agreement,
all of which provisions of said Sections 10.1 through 10.14 are incorporated
by reference herein with the same force and effect as if set forth herein.
Beneficiary hereby disclaims any representation or warranty to Lenders
concerning the perfection of the security interest granted hereunder or the
value of the Mortgaged Premises.
36. Partial Invalidity. All rights, powers and remedies provided herein
are intended to be limited to the extent necessary so that they will not render
this Deed of Trust invalid, unenforceable or not entitled to be recorded,
registered or filed under any applicable law. If any term of this Deed of
Trust shall be held to be invalid, illegal or unenforceable, the validity and
enforceability of the other terms of this Deed of Trust shall in no way be
affected thereby.
37. Successors and Assigns. Whenever any of the parties hereto is
referred to, such reference shall be deemed to include the successors and
assigns of such party; and all the covenants, promises and agreements in this
Deed of Trust contained by or on behalf of Grantor, or by or on behalf of
Trustee or Beneficiary, shall bind and inure to the benefit of the respective
successors and assigns of such parties, whether so expressed or not.
38. Headings. The headings in this instrument are for convenience of
reference only and shall not limit or otherwise affect the meaning of any
provision hereof.
39. Changes, Etc. This instrument and the provisions hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought.
40. Acceptance of Trust. Trustee accepts this Trust when this Deed of
Trust, duly executed and acknowledged, is made a public record as provided by
law. Trustee is not obligated to notify any party hereto of pending sale under
any other deed of trust or any action or proceeding in which Grantor,
Beneficiary, or Trustee shall be a party, unless brought by Trustee.
IN WITNESS WHEREOF, Grantor has caused these presents to be signed and
sealed the day and year first above written.
By ______________________
Its ___________________
[SEAL]
Attest:
_______________________________
________________ Secretary
STATE OF __________ )
) SS
COUNTY OF _________ )
I, ___________________________, a Notary Public in and for said County in
the State aforesaid, do hereby certify that __________________________,
____________________ of _____________________, who is personally known to me to
be the same person whose name is subscribed to the foregoing instrument as such
____________________, appeared before me this day in person and acknowledged
that he signed and delivered the same instrument as his own free and voluntary
act and as the free and voluntary act and deed of said corporation for the uses
and purposes therein set forth.
Given under my hand and notarial seal this _________ day of _____________,
____.
__________________________________________
Notary Public
_________________________________________
(Type or Print Name)
(SEAL)
Commission expires:
______________________
<PAGE>
SCHEDULE I
LEGAL DESCRIPTION
Property Address: ___________________________________
___________________________________
P.I.N. No.: _______________________________
EXHIBIT Q
___________, ____
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois 60690
The From Time to Time Banks Party
to the Credit Agreement described below
Ladies and Gentlemen:
I have served as counsel to Mississippi Chemical Corporation, a
Mississippi corporation (the "Borrower"), ___________, a _____________
("_________") and ____________, a _____________ ("___________" and, together
with the Borrower, individually a "Company" and collectively the "Companies")
in connection with the execution and delivery to you by the Companies of the
following documents (individually a "Security Document" and collectively the
"Security Documents"):
(a) Security Agreement from the Companies to Harris Trust and Savings
Bank, as agent (the "Agent") for the Lenders (the "Security Agreement");
(b) Deed of Trust and Security Agreement with Assignment of Rents from
_________, as grantor, to ___________, as trustee for the benefit of the Agent
encumbering the property commonly known as ________________, Mississippi;
(c) Mortgage and Security Agreement with Assignment of Rents from
_____________, as mortgagor, to the Agent, as mortgagee, encumbering the
property commonly known as ______________, Louisiana; and
[(D) DESCRIBE ALL OTHER DEEDS OF TRUST AND MORTGAGES.]
The Security Documents have been executed and delivered pursuant to Section
7.26(a) of the Credit Agreement dated as of November 25, 1997, as amended
(the "Credit Agreement") among the Borrower, Harris Trust and Savings Bank,
individually and as Agent, and the from time to time Banks party thereto.
As counsel to the Companies I am familiar with the Articles of
Incorporation and Bylaws of the Borrower, the Articles of Incorporation and
Bylaws of ___________ and the Certificate of formation and Limited Liability
Company Agreement of ________ (respectively, the "Organizational Documents").
I have also examined such other factual matters and matters of law as I deem
necessary or pertinent to the formulation of the opinions hereinafter
expressed.
In my examination, I have assumed the genuineness of all signatures (other
than those of the Companies), the authenticity of all documents submitted to me
as originals, and the conformity with authentic original documents of all
documents submitted to me as copies. Also, I have relied upon statements and
certifications of government officials and upon representations made in or
pursuant to the Security Documents and by representatives of the Companies with
respect to the Security Documents.
In rendering the opinions expressed below, I have assumed with respect to
all documents referred to herein that (except with respect to the Companies):
(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 to execute, deliver, and perform such documents.
Based upon the foregoing and subject to the qualifications and exceptions
set forth below, I am of the opinion that:
1. Each Company is a corporation or limited liability company duly
organized and validly existing and in good standing under the laws of the State
of its organization with full and adequate corporate or limited liability
company power and authority to carry on its respective business as now
conducted.
2. Each Company is duly qualified to transact the business in which it
is engaged and in good standing as a foreign corporation in each jurisdiction
wherein the conduct of its respective business or the assets and properties
owned or leased by it require such qualification, except to the extent the
failure to be so qualified would not have a material adverse effect on the
business or financial condition of the Companies taken as a whole.
3. Each Company has full right, power and corporate or limited liability
company authority to encumber its assets to secure the obligations of the
Borrower under the Credit Agreement and to observe and perform all of the
matters and things provided for in the Security Documents executed by it.
4. The execution and delivery of each Security Document executed by each
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 Companies taken
as a whole, or of the respective Organizational Documents of the Companies
(there being no other agreements under which each Company is organized), or, to
my knowledge, of any material agreement binding upon or affecting each Company
or any of its properties or assets.
5. Each Security Document executed by each Company has been duly
authorized by all necessary corporate or limited liability company action of
each Company and has been executed and delivered by the proper officer or member
of each Company.
6. Each Security Document executed by each Company constitutes a valid
and binding agreement of such Company enforceable against such Company in
accordance with its terms, subject to bankruptcy, insolvency, and other laws
affecting creditors' rights generally and to principles of equity.
7. Based solely upon my review of those statutes, rules, and regulations
that are generally applicable to transactions in the nature of those
contemplated by the Security Documents, no order known by me, authorization,
consent, license or exemption of, or filing or registration with, any court or
governmental department, agency, instrumentality or regulatory body, whether
state or federal, is or will be required in connection with the lawful
execution and delivery of the Security Documents or the observance and
performance by the Companies of any of the terms thereof, except (a) the
filing of Uniform Commercial Code financing statements, (b) the recordation of
each mortgage or deed of trust in the office of the recorder or registrar of
deeds in each county in which the real property subject thereto is located,
and (c) such as have already been obtained or, if not obtained, would not have
a material adverse effect on the properties, business, operations, or
financial condition of the Companies taken as a whole.
8. Except as set forth on Schedule 5.3 to the Credit Agreement, to my
knowledge, there is no action, suit, proceeding or investigation, at law or in
equity, of which we have been directly notified in writing or which has been
served upon us, before or by any court or public body, pending or threatened
against or affecting any Company or any of its assets and properties which, if
adversely determined, could result in any material adverse change in the
properties, business, operations or financial condition of the Companies taken
as a whole.
[9. THE LAWS OF THE STATE OF [NEW MEXICO] [MISSISSIPPI] [LOUISIANA] DO
NOT IMPAIR THE RIGHT OF THE BANKS TO PROCEED AGAINST ANY GUARANTOR OF THE
BORROWER'S INDEBTEDNESS, OBLIGATIONS AND LIABILITIES UNDER THE CREDIT
AGREEMENT AND THE OTHER LOAN DOCUMENTS (AS DEFINED IN THE CREDIT AGREEMENT)
OR TO SECURE A DEFICIENCY JUDGMENT AFTER REALIZING UPON THE RIGHTS OF THE
AGENT UNDER THE SECURITY DOCUMENTS, IN ANY MANNER PERMITTED UNDER THE LAWS
OF THE STATE OF [NEW MEXICO] [MISSISSIPPI] [LOUISIANA].](1)
I express no opinion herein as to the legality, validity, binding nature
or enforceability of provisions of any Security Document (i) relating to
indemnification, exculpation, or contribution, to the extent such provisions
may be held unenforceable as contrary to public policy or federal or state
securities laws, (ii) relating to the release of a party from, or the
indemnification of a party against, liability for its own wrongful or negligent
acts under certain circumstances, (iii) insofar as it provides for the payment
or reimbursement of costs and expenses or for claims, losses, or liabilities in
excess of a reasonable amount determined by any court or other tribunal,
(iv) requiring written amendments or waivers of such documents insofar as it
suggests that oral or other modifications, amendments, or waivers could not be
effectively agreed upon by the parties or that the doctrine of promissory
estoppel might not apply, (v) waiving the right to object to venue in any
court, or (vi) relating to any consent or agreement to submit to the
jurisdiction of any court. I also express no opinion as to laws regarding
fraudulent transfers, conveyances, or obligations, or usury.
I render no opinion herein as to matters involving the laws of any
jurisdiction other than the State of Mississippi, [NEW MEXICO], [LOUISIANA] the
United States of America, and for purposes of opinion paragraphs 1, 3, and 5
above, the State of Delaware. I am not admitted to practice law in the State
of Delaware; however, I am generally familiar with the Delaware General
Corporation Law and the Delaware Limited Liability Company Act as presently in
effect, and I have made such inquiries as I consider necessary to render the
opinions contained in opinion paragraphs 1, 3, and 5 above. This opinion is
limited to the effect of the present state of the laws of the State of
Mississippi, [NEW MEXICO], [LOUISIANA] the United States of America, and to
the limited extent set forth above in this paragraph, the State of Delaware
and the facts as they presently exist, and I assume no obligation to revise
or supplement this opinion in the event of future changes in such laws or the
interpretation thereof or such facts.
This opinion is rendered solely to you in connection with the Security
Documents and may not be relied upon by any person for any purpose other than
in connection with the transactions contemplated by the Security Documents
without, in each instance, my prior written consent.
Very truly yours,
[FN]
(1) To be provided only in those estates that do not have a single action
statute or an anti-deficiency statute.
<PAGE>
