SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to _______________
Commission file number 1-9164
Freeport-McMoRan Resource Partners,
Limited Partnership
(Exact name of registrant as specified in its charter)
Delaware 72-1067072
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1615 Poydras Street
New Orleans, Louisiana 70112
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (504) 582-4000
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange on
Title of Each Class Which Registered
___________________ ________________
Depositary Units New York Stock Exchange
8 3/4% Senior Subordinated Notes due 2004 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. X
-----
The aggregate market value of the Depositary Units held by non-
affiliates of the registrant was approximately $1,096,975,000 on March 8,
1996.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Annual Report to unit holders for the year
ended December 31, 1995 are incorporated by reference into Parts II and IV of
this report.
_______________________________________________________________________________
TABLE OF CONTENTS
Page
Part I.......................................................................1
Items 1 and 2. Business and Properties.................................1
Overview.......................................................1
Agricultural Minerals..........................................1
Fertilizer Business-IMC-Agrico Company.......................2
Phosphate Rock...............................................2
Phosphate Fertilizers........................................2
Animal Feed Ingredients......................................3
Marketing....................................................3
Sulphur Business...............................................4
Production...................................................4
Marketing....................................................5
Oil............................................................5
General........................................................5
Competition..................................................5
Operating Hazards............................................5
Environmental Matters........................................6
Relationship Between the Company and the FTX Group.............6
Management and Ownership.....................................6
Credit Arrangements..........................................7
Conflicts of Interest........................................7
Administrative Services Agreement............................8
Item 3. Legal Proceedings............................................8
Item 4. Submission of Matters to a Vote of Security Holders..........8
Part II......................................................................8
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters..........................................8
Item 6. Selected Financial Data......................................8
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations..........................9
Item 8. Financial Statements and Supplementary Data..................9
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure..........................9
Part III.....................................................................9
Item 10. Directors and Executive Officers of the Registrant...........9
Item 11. Executive Compensation......................................10
Item 12. Security Ownership of Certain Beneficial Owners and
Management..................................................10
Item 13. Certain Relationships and Related Transactions..............12
Part IV.....................................................................12
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K..............................................................12
Signatures.................................................................S-1
Index to Financial Statements..............................................F-1
Exhibit Index..............................................................E-1
PART I
Items 1 and 2. Business and Properties.
OVERVIEW
Freeport-McMoRan Resource Partners, Limited Partnership ("FRP" or the
"Company"), through its subsidiaries and joint venture operations, is one of
the world's leading integrated phosphate fertilizer producers. The Company is
a joint venture partner in IMC-Agrico Company ("IMC-Agrico"), the world's
largest and one of the world's lowest cost producers, marketers and
distributors of phosphate fertilizers, with operations in Central Florida and
on the Mississippi River in Louisiana. FRP's Main Pass sulphur mine, offshore
Louisiana in the Gulf of Mexico, and its Culberson mine in Texas, also make
FRP the largest producer of Frasch sulphur in the world. The combined sulphur
and phosphate mining and fertilizer production operations provide FRP with the
competitive advantages of vertical integration and operating efficiencies and
reduce the sensitivity of FRP's phosphate fertilizer costs to changes in raw
materials prices.
IMC-Agrico's business includes the mining and sale of phosphate rock and
the production, marketing and distribution of phosphate fertilizers and animal
feed ingredients. IMC-Agrico was formed as a joint venture partnership in
July 1993 when FRP and IMC Global Inc. ("IMC") contributed their respective
phosphate fertilizer businesses to IMC-Agrico. FRP believes that the
combination of its internal production of raw materials, through its sulphur
division and the IMC-Agrico joint venture, and the strategic location of IMC-
Agrico's fertilizer operations provide it with a competitive advantage over
other fertilizer producers.
FRP's sulphur operations include the mining, purchase, transportation,
terminalling and marketing of sulphur. The Main Pass deposit, which was
discovered in 1988, contains the largest known sulphur reserve in North
America. FRP's Main Pass offshore mining complex is the largest structure of
its type in the Gulf of Mexico and one of the largest in the world. The
mining complex reached full design capacity of 5,500 long tons per day in
December 1993 and has since operated at or above design level. FRP has a
58.3% interest in the Main Pass mine and serves as its manager and operator.
In January 1995, the Company began operating the Culberson mine when it
acquired substantially all of the domestic assets of Pennzoil Sulphur Co.
("Pennzoil"). As of December 31, 1995, the Main Pass and Culberson mines were
estimated to contain proved and probable sulphur reserves totaling 55.2
million long tons net to FRP.
Main Pass also contains proved oil reserves from which FRP produces and
sells oil for the Main Pass joint venture. Oil production averaged
approximately 12,400 barrels per day (6,000 barrels net to FRP) during the
year ended December 31, 1995. As of December 31, 1995, Main Pass was
estimated to contain 15.9 million barrels (6.6 million barrels net to FRP) of
proved oil reserves.
FRP continues to benefit from significant improvements in phosphate
fertilizer markets that began in late 1993 and continue into 1996. FRP's 1995
average realization for its principal fertilizer product, diammonium phosphate
("DAP"), increased approximately 55% to approximately $175 per short ton from
the 1993 average of approximately $113 per short ton. In late March 1996, the
spot market price for DAP as quoted in industry publications was approximately
$200 per short ton, FOB Central Florida.
The Company is a publicly traded Delaware limited partnership organized
in 1986, the managing general partners of which are Freeport-McMoRan Inc.
("FTX") and FMRP Inc. ("FMRP"), a wholly owned subsidiary of FTX. As of
December 31, 1995, FTX and FMRP held partnership units representing an
approximate 51.5% interest in FRP, with the remaining interest being publicly
owned and traded on the New York Stock Exchange. The public unitholders are
entitled, through the fourth quarter of 1996, to receive minimum quarterly
distributions prior to any distribution on the partnership units held by FTX
and FMRP. See "Relationship Between the Company and the FTX Group."
AGRICULTURAL MINERALS
FRP's agricultural minerals operations consists of its interest in the
IMC-Agrico joint venture and FRP's sulphur business.
Fertilizer Business-IMC-Agrico Company
In July 1993, FRP and IMC contributed to IMC-Agrico their respective
phosphate fertilizer businesses, including the mining and sale of phosphate
rock and the production, marketing and distribution of phosphate fertilizers.
At the time, FRP and IMC were among the largest and lowest cost phosphate
fertilizer producers in the world. The formation of IMC-Agrico has reduced
production costs by permitting the more efficient use of existing plant
capacity as well as eliminating duplicative administrative and marketing
functions.
IMC-Agrico makes quarterly cash distributions to FRP and IMC, based on
sharing ratios that vary from year to year until the fiscal year ending June
30, 1998. As a result of an agreement reached in January 1996, FRP's Current
Interest was increased by 0.85% effective March 1, 1996, and on July 1, 1996,
FRP's Capital Interest will also be increased by 0.85%. FRP's Current Interest
and its Capital Interest as adjusted to give effect to the increases described
above, are as follows:
Fiscal Year Current Interest Capital Interest
Ending June 30 As Adjusted As Adjusted
______________ ________________ ________________
1996 . . . . . . . . . . 53.95% 43.60%
1997 . . . . . . . . . . 54.35% 43.05%
1998 and thereafter. . . 41.45% 41.45%
The IMC-Agrico policy committee establishes policies relating to the
strategic direction of IMC-Agrico and assures that its policies are
implemented. FRP and IMC have equal representation on the policy committee.
The policy committee has the sole authority to make certain decisions
affecting IMC-Agrico, including the authorization of certain expansion capital
expenditures, incurring certain indebtedness, approving significant
acquisitions and dispositions and certain other decisions.
In January 1996, IMC-Agrico's day-to-day management was restructured so
that it operates substantially as a stand-alone entity. Included in the
restructuring was the establishment of a new office of the president of IMC-
Agrico who is responsible for managing its business affairs. The president is
appointed by IMC subject to the approval of the policy committee. An executive
officer of FRP was selected as the initial president of IMC-Agrico and has
joined IMC-Agrico in that role. The president reports to IMC who maintains
responsibility for the operation of IMC-Agrico, subject to the terms of the
partnership agreement governing IMC-Agrico and the direction of the policy
committee.
Phosphate Rock
IMC-Agrico's phosphate mining operations and production plants, located
in Polk, Hillsborough, Hardee and Manatee Counties in central Florida, produce
phosphate rock principally for the manufacture of phosphate fertilizers. IMC-
Agrico sells phosphate rock to foreign distributors, domestic animal feed
manufacturers and other phosphate fertilizer producers. IMC-Agrico uses
phosphate rock internally in the production of phosphate fertilizers at its
plants located in central Florida and in Louisiana. Phosphate rock is
generally mixed with sulphuric acid to produce phosphoric acid from which
various granulated phosphate products can be produced. IMC-Agrico's annual
phosphate rock mining capacity is approximately 27 million tons per year and
currently accounts for approximately 50% of domestic phosphate rock mining
capacity and 19% of the western world's capacity. IMC-Agrico produced
approximately 25 million tons of phosphate rock during the year ended December
31, 1995.
As of December 31, 1995, FRP's share of IMC-Agrico's proved and probable
phosphate rock reserves were approximately 186.4 million short tons that are
mineable from existing operations, plus an additional 183.8 million short tons
of phosphate rock deposits. Deposits are ore bodies which require additional
economic and mining feasibility studies before they can be classified as
reserves. These reserves are either owned by IMC-Agrico or controlled by it
through long-term lease or royalty arrangements.
Phosphate Fertilizers
IMC-Agrico manufactures phosphate fertilizers, principally DAP,
monoammonium phosphate ("MAP") and granular triple superphosphate ("GTSP"),
and related products, including sulphuric acid, phosphoric acid, anhydrous
ammonia and urea. IMC-Agrico's fertilizer operations consist of six phosphoric
acid and fertilizer manufacturing facilities, three in central Florida and
three on the Mississippi River in Louisiana.
IMC-Agrico's New Wales, Nichols and South Pierce plants are located in
Florida. The New Wales complex, located near Mulberry, Florida, primarily
produces DAP, MAP, GTSP and merchant grade phosphoric acid. The New Wales
plant also produces animal feed ingredients (see "Animal Feed Ingredients").
The Nichols plant, located in Nichols, Florida, produces DAP, sulphuric acid
and phosphoric acid. The South Pierce plant, located in Bartow, Florida,
produces GTSP, sulphuric acid and phosphoric acid.
IMC-Agrico's Faustina, Uncle Sam and Taft plants are located in
Louisiana. The Faustina plant, located in Donaldsonville, Louisiana, produces
DAP, MAP, anhydrous ammonia, urea, sulphuric acid and phosphoric acid. The
Uncle Sam plant, located at Uncle Sam, Louisiana, produces sulphuric acid and
phosphoric acid which is then shipped to the nearby Faustina and Taft plants,
where it is used to produce DAP and MAP. The Taft plant, located in Taft,
Louisiana, produces DAP and MAP. As market conditions dictate, operations at
Taft are suspended by IMC-Agrico to avoid building excessive inventories.
Phosphate rock, sulphur and ammonia are the three principal raw
materials used in the production of phosphate fertilizers. Phosphate rock is
supplied by IMC-Agrico's Florida mines. FRP supplies its share of IMC-Agrico's
sulphur requirements through its production from the Main Pass and Culberson
mines and IMC supplies IMC-Agrico with its sulphur requirements from its share
of Main Pass production and purchases from third parties, including FRP. IMC-
Agrico's ammonia needs are fulfilled by internal production from its Faustina
plant and third party domestic suppliers under long-term contracts.
IMC-Agrico's phosphoric acid capacity is approximately 4.0 million tons
of contained P2O5 (P2O5 is an industry term indicating a product's phosphate
content measured chemically in units of phosphorous pentoxide), which
represents approximately 32% of U.S. production capacity and 11% of world
capacity. IMC-Agrico operated at approximately 97% of P2O5 capacity in 1995 as
compared to 93% in 1994.
IMC-Agrico's plants have an estimated annual sustainable capacity to
produce approximately 8.2 million tons of granulated phosphates (DAP, MAP and
GTSP), 10.4 million tons of sulphuric acid, 260,000 tons of urea and 565,000
tons of anhydrous ammonia. During 1995, IMC-Agrico produced approximately 7.6
million tons of granulated phosphates, as compared to 7.1 million tons in
1994.
Animal Feed Ingredients
In October 1995, IMC-Agrico acquired the animal feed ingredients
business of Mallinckrodt Group Inc. for $110 million cash. Prior to the
acquisition, this business was IMC-Agrico's largest P2O5 customer, consuming
nearly 300,000 tons per year (approximately 7% of IMC-Agrico's capacity).
FRP's portion of the purchase price was $46.2 million and was funded by
borrowings under the Credit Facility. See "Relationship Between the Company
and the FTX Group-Credit Arrangements."
Prior to the acquisition, IMC-Agrico managed Mallinckrodt's animal feed
plant operations on a contractual basis. The principal manufacturing
facilities of the animal feed operations are located within IMC-Agrico's New
Wales complex. This newly acquired business is one of the world's largest
producers of phosphate-based animal feed ingredients and enhances IMC-Agrico's
flexibility in maximizing returns from its core phosphate production.
Marketing
IMC-Agrico sells its fertilizer products in the domestic and export
markets under spot market and long-term contract terms. IMC-Agrico markets its
products domestically throughout the eastern two-thirds of the United States.
In 1995, approximately 40% of IMC-Agrico's phosphate fertilizer shipments were
sold in the domestic market. Approximately 60% of IMC-Agrico's phosphate rock
production was used in 1995 to produce phosphate fertilizers at its plants in
Florida and Louisiana, with a majority of the remaining amount sold in the
domestic market.
Virtually all of FRP's export sales of phosphate fertilizers are
marketed through the Phosphate Chemical Export Association ("Phoschem"), a
Webb-Pomerene Act association. Since January 1995, IMC has been responsible
for marketing DAP, MAP and GTSP for PhosChem's members. This marketing
arrangement allows IMC-Agrico to interface directly with its major
international customers and enhances its ability to pursue growth and
marketing opportunities on a global basis.
Although phosphate fertilizer sales are fairly constant from month to
month, seasonal increases occur in the domestic market prior to the fall and
spring planting of crops. Generally, domestic sales taper off after the spring
planting season. However, this decline in domestic sales generally coincides
with a time when major international buyers such as China, India and Pakistan
purchase product for mid-year delivery.
In conducting business abroad, IMC-Agrico is subject to the customary
risks encountered in foreign operations, including changes in currency and
exchange controls, the availability of foreign exchange, laws, policies and
actions affecting foreign trade and government subsidies, tariffs and quotas.
All of the Company's major products are commodities, and the markets and
prices for such products have been volatile historically and may continue to
be volatile in the future. The Company's operating margins and cash flow are
subject to substantial fluctuations in response to changes in supply and
demand for its products, conditions in the domestic and foreign agriculture
industry, market uncertainties and a variety of additional factors beyond the
Company's control.
SULPHUR BUSINESS
FRP's sulphur operations include the mining, purchase, transportation,
terminalling and sale of sulphur. In January 1995, FRP acquired essentially
all of the domestic assets of Pennzoil, including the Culberson mine in Texas,
sulphur terminals and loading facilities in Galveston, Texas and Tampa,
Florida, land and marine transportation equipment and sales and other related
commercial contracts and obligations. As a result, FRP now produces sulphur
from its Main Pass and Culberson mines for sale to IMC-Agrico and to third
parties.
Production
The Main Pass and Culberson mines utilize the Frasch mining process,
which involves drilling wells and injecting superheated water into the
underground sulphur deposit to melt the solid sulphur, which is then brought
to the surface in liquid form. FRP and its predecessors have been using the
Frasch process for over 80 years. FRP has also developed technology that
allows it to use sea water in the Frasch process. FRP is not aware of any
competitor that has developed a Frasch sulphur mine using superheated sea
water.
The Main Pass deposit was discovered by FRP in 1988. The mine currently
has the highest production rate of any sulphur mine in the world and contains
the largest known existing Frasch sulphur reserve in North America. The Main
Pass offshore complex, more than a mile in length, is one of the largest
structures of its type in the world and the largest in the Gulf of Mexico. The
Main Pass mine reached full design capacity of 5,500 long tons per day in
December 1993 and has since operated at or above design capacity. During the
year ended December 31, 1995, production averaged approximately 6,000 long
tons per day. The mine is owned 58.3% by FRP, 25% by IMC and 16.7% by
Homestake Sulphur Company. At December 31, 1995, the Main Pass deposit was
estimated to contain proved and probable sulphur reserves totaling 68.1
million long tons (39.7 million long tons net to FRP).
FRP began operating the Culberson mine in January 1995 after acquiring
the mine from Pennzoil. For the year ended December 31, 1995, production at
the Culberson mine averaged approximately 2,500 long tons per day. FRP is
implementing strategies to strengthen operating efficiencies at the Culberson
mine to further reduce costs. As of December 31, 1995, the Culberson mine was
estimated to contain proved and probable sulphur reserves totaling 15.5
million long tons.
FRP also supplements its sulphur production by purchasing sulphur from
third parties who recover sulphur in the production of oil and natural gas and
the refining of petroleum products.
Marketing
Sulphur produced at the Main Pass mine is transported by barge in liquid
form to its storage, handling and shipping facilities located at Port Sulphur,
Louisiana. Sulphur production from the Culberson mine is transported in liquid
form by unit train to Galveston where storing, handling and shipping
facilities are located. At both Port Sulphur and Galveston, sulphur purchased
from others or transported for others may also be received. Sulphur is
transported from Port Sulphur by barge to IMC-Agrico's and other customers'
plants in Louisiana on the Mississippi River. Molten sulphur is also
transported from Galveston and Port Sulphur by tanker to FRP's terminals at
Tampa. Similar facilities at Pensacola, Florida are used for storage, handling
and shipping of sulphur purchased from others or transported for others. FRP
processes and transports for a fee both IMC's and Homestake's share of Main
Pass sulphur and serves as marketing agent for Homestake.
FRP's production of sulphur accounted for an estimated 30% of domestic
and 8% of world elemental sulphur production in 1995. FRP's sulphur is used
primarily to manufacture sulphuric acid, which is used primarily to produce
phosphoric acid, one of the basic materials used to produce phosphate
fertilizers. During the year ended December 31, 1995, sales to domestic
phosphate fertilizer producers, including IMC-Agrico, accounted for
approximately 65% of FRP's total sulphur sales. A small number of companies
account for a large portion of total United States sulphur consumption.
OIL
Oil reserves are associated with the same caprock reservoir as the
sulphur reserves at Main Pass. Oil production commenced in the fourth quarter
of 1991 and averaged approximately 12,400 barrels per day (6,000 barrels per
day net to FRP) during the year ended December 31, 1995. As of December 31,
1995, FRP estimated that the remaining proved recoverable oil reserves at Main
Pass were approximately 15.9 million barrels (6.6 million barrels net to FRP).
FRP currently does not intend to pursue oil operations that are not related to
Main Pass.
GENERAL
Competition
The sulphur, fertilizer and phosphate rock mining industries are highly
competitive. All of the Company's products are commodities and the markets for
such products can be volatile. Because competition is based largely on price,
maintaining low production costs is critical to competitiveness. In this
global business, IMC-Agrico faces stiff competition from overseas producers,
most of which are state supported, especially those in North Africa and the
former Soviet Union. Additionally, foreign competitors are frequently
motivated by non-market factors such as the need for hard currency. In the
United States, IMC-Agrico competes against a number of major phosphate
fertilizer producers, including large cooperatives. FRP competes in the
sulphur business with a number of domestic marketers of recovered sulphur and
with Canadian, Mexican and Venezualan imports.
Operating Hazards
The production of sulphur and phosphate fertilizer involves the handling
of hazardous or toxic substances, some of which may have the potential, if
released into the environment in sufficient quantities, to expose FRP and IMC-
Agrico to significant liability. See "Environmental Matters."
FRP's offshore sulphur mining and oil production operations, and its
marine transportation operations, are subject to marine perils, including
hurricanes and other adverse weather conditions. FRP's mining operations are
also subject to the usual risks encountered in the Frasch mining industry,
including fires, underground subsidence and blowouts. FRP's oil activities are
subject to all of the risks normally incident to the development and
production of oil, including blowouts, cratering and fires, each of which
could result in injury to personnel and/or damage to property and the
environment.
The Company has in place programs to minimize the risks associated with
its businesses. In addition, it has the benefit of certain liability, property
damage, business interruption and other insurance coverage in types and
amounts that it considers reasonable and believes to be customary in the
Company's business. This insurance provides protection against loss from some,
but not all, potential liabilities normally incident to the ordinary conduct
of the Company's business, including coverage for certain types of damages
associated with environmental and other liabilities that arise from sudden,
unexpected and unforeseen events, with such coverage limits as management
deems prudent. Through FTX, the Company also maintains a property insurance
program that covers some, but not all of the risks of physical damage to
tangible property of the Company as well as the corresponding cost of business
interruption.
Environmental Matters
FTX and FRP have a history of commitment to environmental
responsibility. Since the 1940s, long before the general public recognized the
importance of maintaining environmental quality, FTX has conducted
preoperational, bioassay, marine ecological and other environmental surveys to
ensure the environmental compatibility of its operations. FTX's Environmental
Policy commits its operations to compliance with applicable laws and
regulations. FTX has implemented corporate-wide environmental programs that
include the activities of FRP and continues to study methods to reduce
discharges and emissions.
FRP's operations are subject to federal, state and local laws and
regulations relating to the protection of the environment. Exploration,
mining, development and production of natural resources, and the chemical
processing operations of IMC-Agrico, like similar operations of other
companies, may affect the environment. Moreover, such operations involve the
extraction, handling, production, processing, treatment, storage,
transportation and disposal of materials and waste products that, under
certain conditions, may be toxic or hazardous and are regulated under
environmental laws. Although significant capital expenditures and operating
costs have been and will continue to be incurred based on these requirements,
FRP does not believe these expenditures and costs have had a material adverse
effect on its business. Continued government and public emphasis on
environmental issues can be expected to result in increased capital
expenditures and operating costs in the future. However, the impact of future
laws and regulations or of future changes to existing laws and regulations
cannot be predicted or quantified.
Federal legislation (sometimes referred to as "Superfund") imposes
liability, without regard to fault, for cleanup of certain waste sites, even
though such waste management activities may have been performed in compliance
with regulations applicable at the time. Under the Superfund legislation, one
party may be required to bear more than its proportional share of cleanup
costs at a site where it has responsibility pursuant to the legislation, if
payments cannot be obtained from other responsible parties. Other legislation
mandates cleanup of certain wastes at operating sites. States also have
regulatory programs that can mandate waste cleanup. Liability under these laws
can be significant and involves inherent uncertainties.
The Company has received notices from governmental agencies that it is
one of many potentially responsible parties at certain sites under relevant
federal and state environmental laws. Some of these sites involve significant
cleanup costs; however, at each of these sites other large companies with
equal or larger proportionate shares are among the potentially responsible
parties. The ultimate settlement for such sites usually occurs several years
subsequent to the receipt of notices identifying potentially responsible
parties because of the many complex technical and financial issues associated
with site cleanup. FRP believes that the aggregate costs involved with these
potential liabilities at sites for which notification has been received will
not exceed amounts accrued and expects that any resulting costs would be
incurred over a period of years.
RELATIONSHIP BETWEEN THE COMPANY AND THE FTX GROUP
Management and Ownership
FTX and FMRP serve as the managing general partners of the Company and
the directors and officers of FTX, together with FRP's officers, perform all
FRP management functions and carry out the activities of FRP. The officers of
FRP continue to be employees and officers of FTX and its other subsidiaries,
but subject to certain exceptions, are employed principally for the operation
of FRP's business. As of December 31, 1995, FTX and FMRP held partnership
interests that represented an approximate 51.5% interest in the Company. As a
result of being the administrative managing general partner and this
ownership, FTX has the ability to control all matters relating to the
management of the Company, including any determination with respect to the
acquisition or disposition of Company assets, future issuance of additional
debt or other securities of the Company and any distributions payable in
respect of the Company's partnership interests. In addition to such other
obligations as it may assume, FTX has the general duty to act in good faith
and to exercise its rights of control in a manner that is fair and reasonable
to the holders of partnership interests.
Under the terms of FRP's credit facility (the "Credit Facility"), the
failure by FTX to maintain control of FRP, or the direct or indirect ownership
of at least 50.1% of the partnership interests in FRP, would allow
acceleration of the indebtedness thereunder. See "-Credit Arrangements."
Publicly owned FRP units have cumulative preferential rights to receive
minimum quarterly distributions of 60 cents per unit through the distribution
to be made with respect to the quarter ending December 31, 1996 before any
distributions may be made to FTX. On February 15, 1996, FRP paid a
distribution of 62.5 cents per publicly held unit ($31.3 million) and 67.35
cents per FTX owned unit ($35.9 million), which reduced the total unpaid
distribution due FTX by $2.6 million to $379.9 million. After December 31,
1996, FTX will recover this unpaid distribution on a quarterly basis from one
half of any excess of future quarterly distributions over 60 cents per unit
for all units.
Credit Arrangements
On June 30, 1995, FTX and FRP entered into the Credit Facility, which is
structured as a five-year revolving line of credit maturing on June 30, 2000.
In February 1996, FRP sold $150 million of its 7% senior notes due 2008.
Following the sale of notes in February 1996, the committed amount under the
Credit Facility was reduced to $300 million, all of which is available to FRP
and $75 million of which is available to FTX. As of March 8, 1996, $50 million
was outstanding and $250 million was available under the Credit Facility.
Under the Credit Facility, FTX is required to maintain at least a 50.1%
ownership interest in FRP and control of FRP. FRP is not permitted to enter
into any agreement restricting its ability to make distributions and is
restricted in its ability to create liens and security interests on its
assets. To secure the Credit Facility, FTX has pledged its FRP units
representing a minimum 50.1% ownership in FRP and FRP has granted a security
interest in its interest in IMC-Agrico and the Main Pass oil reserves. The
Credit Facility places restrictions on, among other things, additional
borrowings and requires FRP to maintain certain minimum working capital levels
and specified cash flow to interest coverage ratios and not to exceed a
specified debt-to-capitalization ratio.
FRP has minimized amounts outstanding under the Credit Facility by
borrowing excess funds from FTX. As of December 31, 1995, $24.7 million was
outstanding under this arrangement. Interest is charged based on interest
rates under the Credit Facility.
In February 1994, IMC-Agrico entered into a $75 million revolving credit
facility with a group of banks (the "IMC-Agrico Facility"). The IMC-Agrico
Facility, which has a letter of credit subfacility for up to $25 million,
provides for a three-year maturity with IMC-Agrico having the right to request
one-year extensions of the revolving period. As of December 31, 1995, there
were no borrowings outstanding under the IMC-Agrico Facility. Borrowings under
the IMC-Agrico Facility are unsecured, with a negative pledge on substantially
all of IMC-Agrico's assets. The IMC-Agrico Facility has minimum net partners'
capital and fixed charge coverage requirements and a current ratio test, and
places limitations on the incurrence of additional debt. It also prohibits
changes, without bank approval, to the IMC-Agrico partnership agreement
relating to distributions.
Conflicts of Interest
The nature of the respective businesses of the Company and FTX and its
affiliates may give rise to conflicts of interest between the Company and FTX.
Conflicts could arise, for example, with respect to transactions involving
potential acquisitions of businesses or mineral properties, the issuance of
additional partnership interests, the determination of distributions to be
made by the Company, the allocation of general and administrative expenses
between FTX and the Company and other business dealings between the Company
and FTX and its affiliates. Except in cases where a different standard may
have been provided for, FTX has a general duty to act in good faith and to
exercise rights of control in a manner that is fair and reasonable to the
holders of FRP's partnership interests. In resolving conflicts of interest,
FRP's partnership agreement permits FTX to consider the relative interest of
each party to a potential conflict situation which, under certain
circumstances, could include the interest of FTX and its other affiliates. The
extent to which this provision is enforceable under Delaware law is not clear.
Administrative Services Agreement
Since January 1, 1996, FM Services Company ("FMS"), a company owned 50%
by each of FTX and FCX, has furnished general executive, administrative,
financial, accounting, legal, environmental, insurance, personnel,
engineering, tax, research and development, sales and certain other services
to FTX pursuant to the terms of an Administrative Services Agreement (the
"Services Agreement") in order to enable FTX to perform its duties as
administrative managing general partner of the Company. The nature and timing
of the services provided under the Services Agreement are similar to those
historically provided directly by FTX to the Company. FRP reimburses FTX, at
FTX's cost, including allocated overhead, for such services on a monthly
basis, including amounts paid by FTX under the Services Agreement and
allocated to FRP. Such costs are allocated among FRP, FTX and certain of FTX's
other affiliates based on direct utilization whenever possible and an
allocation formula based on a combination of the operating income, property,
plant and equipment and capital expenditures of FRP, FTX and such other
affiliates.
Item 3. Legal Proceedings.
FRP is involved from time to time in various legal proceedings of a
character normally incident to its businesses. FRP believes that its
potential liability in any such pending or threatened proceedings will not
have a material adverse effect on the financial condition or results of
operations of FRP. FRP, through FTX, maintains liability insurance to cover
some, but not all, potential liabilities normally incident to the ordinary
course of its businesses with such coverage limits as management deems
prudent.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters.
The information set forth under the captions "FRP Units" and "Cash
Distributions" on the inside back cover of FRP's 1995 Annual Report to
unitholders is incorporated herein by reference. As of March 8, 1996, there
were 13,756 record holders of FRP Units.
Item 6. Selected Financial Data.
The information set forth under the caption "Selected Financial and
Operating Data" on page 10 of FRP's 1995 Annual Report to unitholders is
incorporated herein by reference.
FRP's ratio of earnings to fixed charges for each of the years 1991
through 1995 inclusive, was 4.4x, 1.0x, a shortfall of $233.5 million, 3.2x
and 5.5x, respectively. For purposes of this calculation, earnings are
considered income from continuing operations before fixed charges. Fixed
charges are interest and that portion of rent deemed representative of
interest.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The information set forth under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations" on pages 11 through
16 of FRP's 1995 Annual Report to unitholders is incorporated herein by
reference.
Item 8. Financial Statements and Supplementary Data.
The financial statements of FRP, the notes thereto and the report
thereon of Arthur Andersen LLP appearing on pages 17 through 27 and the report
of management appearing on page 17 of FRP's 1995 Annual Report to unitholders
are incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant.
As a limited partnership FRP has no directors. FTX and FMRP, as the
managing general partners of FRP, perform comparable functions for FRP. The
executive officers of FRP are appointed by FTX, and these officers, together
with certain executive officers and directors of FTX, perform all management
functions of FRP. The executive officers of FRP are employees of FTX. These
FRP executive officers, together with the directors and executive officers of
FTX who perform management functions on behalf of FRP, are collectively
referred to as the "Executive Officers" in this Report.
The following table shows, as of March 8, 1996, the names, ages,
positions with FRP, FTX and FMRP and principal occupations of the Executive
Officers:
Name Age Positions and Principal Occupations
Richard C. Adkerson 49 Director and Vice Chairman of the Board of
FTX.
Thomas J. Egan 51 Senior Vice President of FTX.
Charles W. Goodyear 38 Senior Vice President - Finance and
Accounting and Chief Financial Officer of
FRP. Executive Vice President of FTX.
Director of FMRP.
W. Russell King 46 Senior Vice President of FTX.
Rene L. Latiolais 53 President and Chief Executive Officer of
FRP. Director, President and Chief
Executive Officer of FTX. Director,
Chairman of the Board, and President of
FMRP.
James R. Moffett 57 Director and Chairman of the Board of FTX.
All of the Executive Officers have served FTX or FRP in various
executive capacities for at least the last five years.
Based upon a review of (i) Forms 3 and 4 and amendments thereto filed pursuant
to Section 16(a) of the Securities Exchange Act of 1934 ("Section 16") and
furnished to FRP during 1995 by persons subject to Section 16 at any time
during 1995 with respect to securities of FRP ("FRP Section 16 Insiders"),
(ii) Forms 5 and amendments thereto with respect to 1995 filed pursuant to
Section 16 and furnished to FRP by FRP Section 16 Insiders, and (iii) written
representations from certain FRP Section 16 Insiders, no FRP Section 16
Insider failed to file altogether or timely any reports required by Section 16
with respect to the securities of FRP.
Item 11. Executive Compensation.
FRP does not employ any Executive Officers and no compensation was
provided by FRP to any Executive Officer for services rendered in any capacity
in 1995. The President and Chief Executive Officer of FRP is Rene L.
Latiolais, and the four most highly compensated Executive Officers other than
Mr. Latiolais in 1995 were Richard H. Block, Robert B. Foster, Charles W.
Goodyear, and James R. Moffett. The determination of the most highly
compensated Executive Officers was made by reference to the salary and bonus
of each Executive Officer allocated to FRP for 1995.
The services of Executive Officers of FRP are provided to FRP by FTX as
provided in the FRP partnership agreement, for which FRP reimburses FTX at its
cost, including allocated overhead. All Executive Officers are employees of
FTX, are compensated exclusively by FTX, and are eligible to participate in
FTX benefit plans and programs. The total costs to FTX for Executive
Officers, including costs of such plans and programs, are allocated to FRP, to
the extent practicable, in proportion to the time spent by Executive Officers
on FRP affairs.
Reference is made to the information set forth under Part 1, Items 1 and
2 "Business and Properties - Relationship between the Company and the FTX
Group" above and to the information set forth in Note 6 to the FRP Financial
Statements.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The following table contains certain information concerning the
beneficial ownership of FRP units as of December 31, 1995 by each person known
by FRP to be the beneficial owner of more than 5% of any class of FRP equity
security, determined in accordance with Rule 13d-3 of the Securities and
Exchange Commission (the "SEC") and based on information furnished to FRP by
each such person. Unless otherwise indicated, the securities shown are held
with sole voting and investment power.
Number of
Partnership Units Percent
Name and Address of Beneficial Owner Beneficially of
____________________________________ Owned Class
_____ _____
Freeport-McMoRan Inc. 52,284,950(a) 51.0%
1615 Poydras Street
New Orleans, Louisiana 70112
Vanguard/Windsor Fund, Inc. 6,085,800(b) 5.9%
Post Office Box 2600
Valley Forge, Pennsylvania 19482-2600
__________________________
(a) Consists of 135,034 FRP Depositary Units and 52,149,916 FRP Unit
Equivalents.
(b) Vanguard/Windsor Fund, Inc. has sole voting power and shared investment
power as to all 6,085,800 Partnership Units, consisting solely of FRP
Depositary Units.
_____________________________
The following table contains information concerning the beneficial
ownership of FRP Depositary Units and shares of FTX common stock ("FTX
Shares") as of December 31, 1995 by (a) each Executive Officer identified
under Item 11, "Executive Compensation," and (b) all Executive Officers as a
group, determined in accordance with Rule 13d-3 of the SEC and based upon
information furnished to FRP by each such person. Unless otherwise indicated,
the securities shown are held with sole voting and investment power.
Number of Number of
FRP Depositary FTX Shares
Name of Beneficial Units Beneficially
Owner Beneficially Owned(a)(b)
Owned(a)
- ----------------------- ---------------- ------------
Richard H. Block 2,184 31,255
Robert B. Foster 41 30,162
Charles W. Goodyear 0 58,504(c)
Rene L. Latiolais 707(d) 78,904
James R. Moffett 39,600(e) 306,714(e)
All Executive
Officers as a group
(9 persons) 45,791(f) 626,561(f)
_________________________
(a) With the exception of Mr. Moffett, who beneficially owns 1.1% of the
outstanding FTX Shares, each of the individuals referred to holds less
than 1% of the outstanding FRP Depositary Units and FTX Shares,
respectively.
(b) Includes FTX Shares held by a trustee for the benefit of such individual
under the Employee Capital Accumulation Program of FTX, as follows: Mr.
Block, 2,420 FTX Shares; Mr. Foster, 252 FTX Shares; Mr. Goodyear, 605
FTX Shares; Mr. Latiolais, 2,850 FTX Shares; Mr. Moffett, 4,213 FTX
Shares; all Executive Officers as a group, 18,726 FTX Shares. Also
includes FTX Shares that could be acquired within 60 days after December
31, 1995 upon the exercise of options granted pursuant to the employee
stock option plans of FTX, as follows: Mr. Block, 28,835 FTX Shares; Mr.
Foster, 29,910 Shares; Mr. Goodyear, 57,889 FTX Shares; Mr. Latiolais,
47,726 FTX Shares; all Executive Officers as a group, 264,977 FTX
Shares.
(c) Includes 10 FTX Shares held in a retirement trust for the benefit of Mr.
Goodyear.
(d) Includes 573 FRP Depositary Units held for the benefit of Mr. Latiolais
by the custodian under FRP's Depositary Unit Reinvestment Plan.
(e) Includes 39,600 FRP Depositary Units and 32,124 FTX Shares held for the
benefit of a trust with respect to which Mr. Moffett, as a co-trustee,
shares voting and investment power but as to which he disclaims
beneficial ownership.
(f) See notes (b) through (e) above. Includes 149 FTX Shares held in a
retirement trust for the benefit of one of the Executive Officers. The
total number of FRP Depositary Units and FTX Shares represent less than
1% of the outstanding FRP Depositary Units and approximately 2.2% of the
outstanding FTX Shares, respectively.
____________________________
Item 13. Certain Relationships and Related Transactions.
Reference is made to the information set forth in Items 1 and 2,
"Business and Properties - Relationship between the Company and the FTX Group"
above, to the information set forth in Item 11, "Executive Compensation" above
and to the information set forth in Note 6 to the FRP Financial Statements.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a)(1). Financial Statements.
Reference is made to the Index to Financial Statements appearing on page
F-1 hereof.
(a)(2). Financial Statement Schedules.
Reference is made to the Index to Financial Statements appearing on page
F-1 hereof.
(a)(3). Exhibits.
Reference is made to the Exhibit Index beginning on page E-1 hereof.
(b). Reports on Form 8-K.
During the last quarter of the period covered by this report, FRP filed
a report on Form 8-K dated November 14, 1995 reporting an event under
item 5 thereof. No financial statements were filed.
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized, on March 28, 1996.
FREEPORT-McMoRan RESOURCE
PARTNERS, LIMITED PARTNERSHIP
By: FREEPORT-McMoRan Inc.,
Its Administrative Managing
General Partner
By: /s/ James R. Moffett
___________________________________________
James R. Moffett
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1934, this report has
been signed below by the following persons on behalf of the registrant and in
the capacities indicated on March 28, 1996.
Signature
_________
* President and Chief Executive
_____________________________ Officer of Freeport-McMoRan Resource
Rene L. Latiolais Partners, Limited Partnership, and
Director of Freeport-McMoRan Inc.
(Principal Executive Officer)
* Senior Vice President and Chief
_____________________________ Financial Officer of Freeport-
Charles W. Goodyear McMoRan Resource Partners, Limited
Partnership (Principal Financial
Officer)
* Vice President and Controller of
_____________________________ Freeport-McMoRan Resources Partners,
Nancy D. Bonner Limited Partnership (Principal
Accounting Officer)
* Director of Freeport-McMoRan Inc.
____________________________
Richard C. Adkerson
* Director of Freeport-McMoRan Inc.
____________________________
Robert W. Bruce III
* Director of Freeport-McMoRan Inc.
____________________________
Thomas B. Coleman
* Director of Freeport-McMoRan Inc.
____________________________
Robert A. Day
* Director of Freeport-McMoRan Inc.
____________________________
William B. Harrison, Jr.
* Director of Freeport-McMoRan Inc.
____________________________
Henry A. Kissinger
* Director of Freeport-McMoRan Inc.
____________________________
Bobby Lee Lackey
* Director of Freeport-McMoRan Inc.
____________________________
Gabrielle K. McDonald
/s/ James R. Moffett Director and Chairman of the Board
____________________________ of Freeport-McMoRan Inc.
James R. Moffett
* Director of Freeport-McMoRan Inc.
____________________________
George Putnam
* Director of Freeport-McMoran Inc.
____________________________
B. M. Rankin, Jr.
* Director of Freeport-McMoRan Inc.
____________________________
J. Taylor Wharton
* Director of Freeport-McMoRan Inc.
____________________________
Ward W. Woods, Jr.
By: /s/ James R. Moffett
_________________________
James R. Moffett
Attorney-in-Fact
INDEX TO FINANCIAL STATEMENTS
The financial statements of FRP, the notes thereto, and the
report thereon of Arthur Andersen LLP, appearing on pages 17
through 27, inclusive, of FRP's 1995 Annual Report to unitholders
are incorporated by reference.
The financial statement schedules listed below should be
read in conjunction with such financial statements contained in
FRP's 1995 Annual Report to unitholders.
Page
Report of Independent Public Accountants F-1
III-Condensed Financial Information of Registrant F-2
VIII-Valuation and Qualifying Accounts F-5
Schedules other than those listed above have been omitted
since they are either not required, not applicable or the
required information is included in the financial statements or
notes thereto.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
We have audited, in accordance with generally accepted
auditing standards, the financial statements as of December 31,
1995 and 1994 and for each of the three years in the period ended
December 31, 1995 included in Freeport-McMoRan Resource Partners,
Limited Partnership's annual report to unitholders incorporated
by reference in this Form 10-K, and have issued our report
thereon dated January 23, 1996. Our audits were made for the
purpose of forming an opinion on those statements taken as a
whole. The schedules listed in the index above are the
responsibility of the Company's management and are presented for
purposes of complying with the Securities and Exchange
Commission's rules and are not part of the basic financial
statements. These schedules have been subjected to the auditing
procedures applied in the audits of the basic financial
statements and, in our opinion, fairly state in all material
respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
Arthur Andersen LLP
New Orleans, Louisiana,
January 23, 1996
<PAGE> F-1
FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
BALANCE SHEETS
December 31,
------------------------
1995 1994
---------- ----------
(In Thousands)
ASSETS
Current assets
Cash and short-term investments $ 6,021 $ 8,409
Accounts receivable:
Customers 23,666 9,359
Other 16,680 12,134
Inventories:
Products 22,221 25,443
Materials and supplies 9,542 6,150
Prepaid expenses and other 2,545 273
---------- ----------
Total current assets 80,675 61,768
Property, plant and equipment-net 533,100 506,590
Investment in IMC-Agrico 428,922 397,937
Other assets 40,169 43,256
---------- ----------
Total assets $1,082,866 $1,009,551
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued
liabilities $ 56,539 $ 29,877
Long-term debt, less current
portion 371,140 355,000
Reclamation and mine shutdown
reserves 76,857 58,762
Accrued postretirement benefits
and other liabilities 173,864 118,252
Partners' capital 404,466 447,660
---------- ----------
Total liabilities and
partners' capital $1,082,866 $1,009,551
========== ==========
The footnotes contained in FRP's 1995 Annual Report to
unitholders are an integral part of these statements.
<PAGE> F-2
FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF OPERATIONS
Years Ended December 31,
--------------------------------------
1995 1994 1993
---------- ---------- ----------
(In Thousands)
Revenues $ 202,498 $ 111,185 $ 424,717
Cost of sales:
Production and delivery 119,239 61,211 344,944
Depreciation and amortization 42,142 38,825 81,521
---------- ---------- ----------
Total cost of sales 161,381 100,036 426,465
Exploration expenses - - 3,092
Provision for restructuring
charges - - 33,947
Loss on valuation and sale
of assets, net - - 114,802
General and administrative
expenses 50,492 28,949 58,660
---------- ---------- ----------
Total costs and expenses 211,873 128,985 636,966
---------- ---------- ----------
Operating loss (9,375) (17,800) (212,249)
Interest expense, net (30,138) (32,297) (12,293)
Equity in earnings of IMC-Agrico 201,704 136,671 1,037
Other income (expense), net (783) (2,608) 1,094
---------- ---------- ----------
Income (loss) before changes
in accounting principle 161,408 83,966 (222,411)
Cumulative effect of changes
in accounting principle - - (23,700)
---------- ---------- ----------
Net income (loss) $ 161,408 $ 83,966 $ (246,111)
========== ========== ==========
The footnotes contained in FRP's 1995 Annual Report to
unitholders are an integral part of these statements.
<PAGE> F-3
FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP
SCHEDULE III - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF CASH FLOW
Years Ended December 31,
--------------------------------------
1995 1994 1993
---------- ---------- ----------
(In Thousands)
Cash flow from operating activities:
Net income (loss) $ 161,408 $ 83,966 $ (246,111)
Adjustments to reconcile net
income (loss) to net cash
provided by operating activities:
Cumulative effect of changes
in accounting principle - - 23,700
Depreciation and amortization 42,142 38,825 81,521
Other noncash charges to income 6,495 7,150
Provision for restructuring
charges, net of payments - - 3,143
Loss on valuation and sale
of assets, net - - 114,802
Equity in earnings of
IMC-Agrico (201,704) (136,671) (1,037)
Cash distributions received from
IMC-Agrico 219,515 233,617 -
(Increase) decrease in working
capital, net of effect of
acquisitions and dispositions:
Accounts receivable (16,875) (2,311) (1,552)
Inventories 5,353 7,058 (4,750)
Prepaid expenses and other (2,272) - 1,933
Accounts payable and accrued
liabilities 29,590 (389) 1,561
Reclamation and mine shutdown
expenditures (2,065) (5,270) (9,980)
Other 8,478 5,056 2,935
---------- ---------- ----------
Net cash provided by (used in)
operating activities 243,570 230,376 (26,685)
---------- ---------- ----------
Cash flow from investing activities:
Capital expenditures (13,331) (11,231) (47,579)
Investment in IMC-Agrico (46,200) - -
Sale of assets 375 36,919 49,961
Other 1,531 530 4,711
---------- ---------- ----------
Net cash provided by (used in)
investing activities (57,625) 26,218 7,093
---------- ---------- ----------
Cash flow from financing activities:
Distributions to partners (202,541) (127,368) (121,180)
Proceeds from debt 623,259 50,400 468,137
Repayment of debt (606,990) (321,300) (329,164)
Purchase of partnership units (2,061) (1,342) -
Proceeds from sale of 8 3/4%
Senior Subordinated Notes - 146,125 -
---------- ---------- ----------
Net cash provided by (used in)
financing activities (188,333) (253,485) 17,793
---------- ---------- ----------
Net increase (decrease) in cash
and short-term investments (2,388) 3,109 (1,799)
Cash and short-term investments
at beginning of year 8,409 5,300 7,099
---------- ---------- ----------
Cash and short-term investments
at end of year $ 6,021 $ 8,409 $ 5,300
========== ========== ==========
Interest paid $ 27,818 $ 25,094 $ 22,997
========== ========== ==========
The footnotes contained in FRP's 1995 Annual Report to
unitholders are an integral part of these statements.
<PAGE> F-4
FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
for the years ended December 31, 1995, 1994 and 1993
Col. A Col. B Col. C Col. D Col. E
- ------------- ---------- ----------------------- ---------- -----------
Additions
------------------------
Balance at Charged to Charged to Balance at
Beginning Costs and Other Other-Add End of
Description of Period Expenses Accounts (Deduct) Period
- ------------- ---------- ---------- ---------- ---------- ----------
(In Thousands)
Reserves and allowances deducted from asset accounts:
Reclamation and mine shutdown reserves:
1995:
Sulphur $ 55,105 $ 2,643 $ - $ 14,206a $ 71,954
Fertilizer 37,683 2,785 - (4,537) 35,931
Oil 3,657 1,257 - (11) 4,903
---------- ---------- ---------- ---------- ----------
$ 96,445 $ 6,685 $ $ 9,658b $ 112,788
========== ========== ========== ========== ==========
1994:
Sulphur $ 57,287 $ 1,041 $ - $ (3,223) $ 55,105
Fertilizer 38,437 2,310 - (3,064) 37,683
Oil 1,609 2,385 - (337) 3,657
---------- ---------- ---------- ---------- ----------
$ 97,333 $ 5,736 $ - $ (6,624)b$ 96,445
========== ========== ========== ========== ==========
1993:
Sulphur $ 35,200 $ 27,562 $ - $ (5,475) $ 57,287
Fertilizer 18,543 5,365 - 14,529c 38,437
Oil 1,409 1,021 - (821) 1,609
---------- ---------- ---------- ---------- ----------
$ 55,152 $ 33,948 $ - $ 8,233b $ 97,333
========== ========== ========== ========== ==========
a. Includes $23.5 million of liabilities assumed in connection
with the acquisition of the sulphur assets of Pennzoil Co. (see
Note 4 to the Financial Statements).
b. Includes expenditures of $10.5 million in 1995, $11.2
million in 1994 and $13.2 million in 1993.
c. Includes $19.7 million which represents FRP's proportionate
share of IMC-Agrico liabilities (see Note 2 to the Financial
Statements) in excess of the FRP contributed amounts.
<PAGE> F-5
Freeport-McMoRan Resource Partners, Limited Partnership
Exhibit Index
Exhibit Sequentially
Number Numbered
_______ Page
____________
3.1 Amended and Restated Agreement of Limited Partnership
of FRP dated as of May 29, 1987 (the "FRP Partnership
Agreement") among FTX, Freeport Phosphate Rock Company
and Geysers Geothermal Company, as general partners,
and Freeport Minerals Company ("FMC"), as general
partner and attorney-in-fact for the limited partners,
of FRP. Incorporated by reference to Exhibit B to the
Prospectus dated May 29, 1987 included in FRP's
Registration Statement on Form S-1, as amended, as
initially filed with the Commission on May 29, 1987
(Registration No. 33-13513).
3.2 Amendment to the FRP Partnership Agreement dated as of
December 16, 1988 effected by FMC, as Administrative
Managing General Partner, and FTX, as General Partner
of FRP. Incorporated by reference to Exhibit 3.2 to
the Annual Report on Form 10-K of FRP for the fiscal
year ended December 31, 1994.
3.3 Amendment to the FRP Partnership Agreement dated as of
March 29, 1990 effected by FMC, as Administrative
Managing General Partner, and FTX, as Managing General
Partner, of FRP. Incorporated by reference to Exhibit
19.2 to the Quarterly Report on Form 10-Q of FRP for
the quarter ended March 31, 1990 (the "FRP 1990 First
Quarter Form 10-Q").
3.4 Amendment to the FRP Partnership Agreement dated as of
April 6, 1990 effected by FTX, as Administrative
Managing General Partner of FRP. Incorporated by
reference to Exhibit 19.3 to the FRP 1990 First
Quarter Form 10-Q.
3.5 Amendment to the FRP Partnership Agreement dated as of
January 27, 1992 between FTX, as Administrative
Managing General Partner, and FMRP, as Managing
General Partner, of FRP. Incorporated by reference to
Exhibit 3.3 to the Annual Report on Form 10-K of FRP
for the fiscal year ended December 31, 1991 (the "FRP
1991 Form 10-K").
3.6 Amendment to the FRP Partnership Agreement dated as of
October 14, 1992 between FTX, as Administrative
Managing General partner, and FMRP, as Managing
General Partner, of FRP. Incorporated by reference to
Exhibit 3.4 to the Annual Report on Form 10-K of FRP
for the fiscal year ended December 31, 1992 (the "FRP
1992 Form 10-K").
3.7 Amended and Restated Certificate of Limited
Partnership of FRP dated June 12, 1986 (the "FRP
Partnership Certificate"). Incorporated by reference
to Exhibit 3.3 to FRP's Registration Statement on Form
S-1, as amended, as initially filed with the
Commission on June 20, 1986 (Registration No.
33-5561).
3.8 Certificate of Amendment to the FRP Partnership
Certificate dated as of January 12, 1989.
Incorporated by reference to Exhibit 3.6 to the Annual
Report on Form 10-K for the fiscal year ended December
31, 1993 (the "FRP 1993 Form 10-K").
3.9 Certificate of Amendment to the FRP Partnership
Certificate dated as of December 29, 1989.
Incorporated by reference to Exhibit 19.1 to the FRP
1990 First Quarter Form 10-Q.
3.10 Certificate of Amendment to the FRP Partnership
Certificate dated as of April 12, 1990. Incorporated
by reference to Exhibit 19.4 to the FRP 1990 First
Quarter Form 10-Q.
4.1 Deposit Agreement dated as of June 27, 1986 (the
"Deposit Agreement") among FRP, The Chase Manhattan
Bank, N.A. ("Chase") and Freeport Minerals Company
("Freeport Minerals"), as attorney-in-fact of those
limited partners and assignees holding depositary
receipts for units of limited partnership interest in
FRP ("Depositary Receipts"). Incorporated by
reference to Exhibit 28.4 to the Current Report on
Form 8-K of FTX dated July 11, 1986.
4.2 Resignation dated December 26, 1991 of Chase as
Depositary under the Deposit Agreement and appointment
dated December 27, 1991 of Mellon Bank, N.A.
("Mellon") as successor Depositary, effective January
1, 1992. Incorporated by reference to Exhibit 4.5 to
the FRP 1991 Form 10-K.
4.3 Service Agreement dated as of January 1, 1992 between
FRP and Mellon pursuant to which Mellon serves as
Depositary under the Deposit Agreement and Custodian
under the Custodial Agreement. Incorporated by
reference to Exhibit 4.6 to the FRP 1991 Form 10-K.
4.4 Amendment to the Deposit Agreement dated as of
November 18, 1992 between FRP and Mellon.
Incorporated by reference to Exhibit 4.4 to the FRP
1992 Form 10-K.
4.5 Form of Depositary Receipt. Incorporated by reference
to Exhibit 4.5 to the FRP 1992 Form 10-K.
4.6 Custodial Agreement regarding the FRP Depositary unit
Reinvestment Plan among FTX, FRP and Chase, effective
as of April 1, 1987 (the "Custodial Agreement").
Incorporated by reference to Exhibit 19.1 to the
Quarterly Report on Form 10-Q of FRP for the quarter
ended June 30, 1987.
4.7 FRP Depositary Unit Reinvestment Plan. Incorporated
by reference to Exhibit 4.4 to the FRP 1991 Form 10-K.
4.8 Credit Agreement dated as of June 30, 1995 (the
"FTX/FRP Credit Agreement") among FTX, FRP, the
various financial institutions which are parties
thereto (the "Banks"), Chemical Bank, as
Administrative Agent and Chase, as Documentary Agent
(collectively, the "Agents"). Incorporated by
reference to Exhibit 4.1 to the Quarterly Report on
Form 10-Q of FRP for the quarter ended September 30,
1995.
4.9 First Amendment dated as of January 10, 1996 to the
FTX/FRP Credit Agreement among FTX, FRP, the FTX/FRP
Banks and the Agents. Incorporated by reference to
Exhibit 10.2 to the Current Report on 8-K of FRP dated
February 13, 1996.
4.10 Subordinated Indenture as of October 26, 1990 (the
"Subordinated Indenture") between FRP and
Manufacturers Hanover Trust Company ("MHTC") as
Trustee. Incorporated by reference to Exhibit 4.11 to
the FRP 1993 Form 10-K.
4.11 First Supplemental Indenture dated as of February 15,
1994 between FRP and Chemical Bank, as Successor to
MHTC, as Trustee, to the Subordinated Indenture
providing for the issuance of $150,000,000 of
aggregate principal amount of 8 3/4% Senior
Subordinated Notes due 2004. Incorporated by
reference to Exhibit 4.12 to the FRP 1993 Form 10-K.
4.12 Form of Senior Indenture (the "Senior Indenture") from
FRP to Chemical Bank, as Trustee. Incorporated by
reference to Exhibit 4.1 to the Current Report on Form
8-K of FRP dated February 13, 1996.
4.13 Form of Supplemental Indenture dated February 14, 1996
from FRP to Chemical Bank, as Trustee, to the Senior
Indenture providing for the issuance of $150,000,000
aggregate principal amount of 7% Senior Notes due
2008. Incorporated by reference to Exhibit 4.1 to the
Current Report on Form 8-K dated February 16, 1996 of
FRP.
10.1 Contribution Agreement dated as of April 5, 1993
between FRP and IGL (the "FRP-IGL Contribution
Agreement"). Incorporated by reference to Exhibit 2.1
to the Current Report on Form 8-K of FRP dated July
15, 1993 (the "FRP July 15, 1993 Form 8-K").
10.2 First Amendment dated as of July 1, 1993 to the FRP-
IGL Contribution Agreement. Incorporated by reference
to Exhibit 2.2 to the FRP July 15, 1993 Form 8-K.
10.3 Amended and Restated Partnership Agreement dated as of
May 26, 1995 among IMC-Agrico GP Company, Agrico,
Limited Partnership and IMC-Agrico MP Inc.
10.4 Amendment and Agreement dated as of January 23, 1996
to the Amended and Restated Partnership Agreement
dated May 26, 1995 by and among IMC-Agrico MP, Inc.,
IMC Global Operations, Inc. and IMC-Agrico Company.
Incorporated by reference to Exhibit 10.1 to the
Current Report on Form 8-K dated February 13, 1996 of
FRP.
10.5 Amended and Restated Parent Agreement dated as of May
26, 1995 among IMC Global Operations, Inc., FRP, FTX
and IMC-Agrico.
10.6 Asset Purchase Agreement dated as of October 22, 1994
between FRP and Pennzoil Company (the "Asset Purchase
Agreement"). Incorporated by reference to Exhibit 2.1
to the Current Report on Form 8-K of FRP dated January
18, 1995 (the "FRP January 18, 1995 8-K").
10.7 Amendment No. 1 dated as of January 3, 1995 to the
Asset Purchase Agreement. Incorporated by reference
to Exhibit 2.2 to the FRP January 18, 1995 8-K.
12.1 FRP Computation of Ratio of Earnings to Fixed Charges.
13.1 Those portions of the 1996 Annual Report to
unitholders of FRP which are incorporated herein by
reference.
21.1 Subsidiaries of FRP.
23.1 Consent of Arthur Andersen LLP dated March 27, 1996.
23.2 Consent of Ernst & Young LLP dated March 27, 1996.
24.1 Powers of Attorney pursuant to which this report has
been signed on behalf of certain directors of FTX.
27.1 FRP Financial Data Schedule.
99.1 Report of Ernst & Young LLP
EXHIBIT 10.3
EXECUTION COPY
AMENDED AND RESTATED
PARTNERSHIP AGREEMENT
among
IMC-Agrico GP Company
Agrico, Limited Partnership
and
IMC-Agrico MP, Inc.
Dated as of July 1, 1993
(as further amended and restated as of
May 26, 1995)
TABLE OF CONTENTS
Page
ARTICLE I.
Definitions 7
ARTICLE II.
Partnership, Name, Purposes, Powers, Authority to
Bind Partnership, Partnership Property,
Other and/or Competing Businesses,
Principal Place of Business; Registered Office and Agent 8
2.01 Partnership 8
2.02 Name 9
2.03 Purposes 10
2.04 Powers of the Partnership 13
2.05 Partner's Authority 13
2.06 Managing Partner; Operating Partner; Change in
Operating Partner; Authority to Bind Partnership 14
2.07 Partnership Property 16
2.08 Other and/or Competing Businesses 16
2.09 Principal Place of Business; Registered Office
and Agent 24
ARTICLE III.
Contributions to the Partnership 24
3.01 Initial Contributions 24
3.02 Additional Contributions 25
3.03 Failure to Contribute 26
3.04 Assumption of Liabilities Under Contribution
Agreement 29
3.05 Subsequent Capital Contribution 29
ARTICLE IV.
Interests of Partners 30
4.01 Interests of Partners 30
4.02 Capital Accounts 31
4.03 Interest on Capital Accounts 33
4.04 Loans from Partners 34
4.05 Transferred Capital Accounts 34
TABLE OF CONTENTS
(continued)
Page
ARTICLE V.
Profit and Loss Sharing;
Allocations for Federal, State and
Local Income Tax Purposes; Cash Distributions;
Suspended Distributions; Reimbursement for Transaction Costs 35
5.01 Allocation of Profits and Losses 35
5.02 Special Allocations 35
5.03 Tax Allocations 37
5.04 Interim Closing of the Books on Transfer 39
5.05 Disagreement Between Partners 39
5.06 Obligations with Respect to Distributable Cash 40
5.07 Distribution of Distributable Cash; Suspended
Distributions 40
5.08 Payment of Transaction Costs 44
ARTICLE VI.
Management 45
6.01 Operation 45
6.02 General Powers of the Managing Partner 46
6.03 Limitations on the Partners; Relations Among
Partners 48
6.04 Policy Committee 49
6.05 Rules of Procedure 56
6.06 Further Management Limitations 56
6.07 Major Decisions 56
6.08 Management of Certain Environmental Liabilities 64
ARTICLE VII.
Encumbrance or Transfer of Partnership Interest 65
7.01 Transfer of Partnership Interest Generally 65
7.02 Transfers of Partnership Interests 66
7.03 Liens 70
7.04 Transfers Upon Triggering Events 71
7.05 Interests in Managing Partner 75
7.06 Certain Conditions of Certain Transfers 75
ARTICLE VIII.
Other Rights of, Duties and Restrictions on the Partners 76
8.01 Indemnification 76
8.02 Contribution 77
TABLE OF CONTENTS
(continued)
Page
8.03 Continuing Liability of Withdrawn Partner 78
8.04 Breach of Parent Agreement 79
ARTICLE IX.
Certain Operational Provisions 79
9.01 Financial, Accounting, and Banking Matters 79
9.02 Budget and Approval Authorities 80
9.03 Insurance 82
9.04 Financial and Other Information 83
9.05 Qualifying Income 87
9.06 Work Force; Employee Benefits 89
9.07 Emergency Expenditures; Compliance with Law 93
9.08 No Action Contrary to Contracts or Applicable
Law 94
9.09 Licenses and Permits 96
9.10 Litigation 97
9.11 Payment and Reimbursement of Expenses; Handling
of Partnership Bank Accounts and Funds 97
9.12 Transactions with Affiliates 101
9.13 No Shifting of Cash Flow 103
ARTICLE X.
Accounting Records; Tax Matters 104
10.01 Books and Records 104
10.02 Inspection of Books and Records 105
10.03 Accounting and Taxable Year 106
10.04 Partnership Tax Returns 107
10.05 Partnership Taxes 107
10.06 Tax Matters Partner 108
10.07 Duties of the Tax Matters Partner 108
10.08 Partnership Status; Elections 109
10.09 Tax Reporting 110
10.10 Tax Oversight 112
ARTICLE XI.
Term 114
11.01 Term 114
11.02 Purchase Option Upon Scheduled Expiration of
the Term 114
TABLE OF CONTENTS
(continued)
Page
ARTICLE XII.
Dissolution and Winding-Up 116
12.01 Dissolution 116
12.02 Winding-Up 120
12.03 Accounting on Dissolution 120
12.04 Accounting; Allocations of Residual Net Profits
and Residual Net Loss After Dissolutions 121
12.05 Application of Article V in Year of Dissolution 121
12.06 Conversion of Assets to Cash 122
12.07 Distributions in Liquidation 123
12.08 Compliance with Treasury Regulations 124
12.09 Deficit Capital Account Restoration Obligation 125
12.10 Section 708 Termination 125
12.11 Continuation of the Partnership 126
12.12 Waiver of Certain Rights 127
ARTICLE XIII.
Miscellaneous Provisions 127
13.01 Force Majeure 127
13.02 Limitation of Liability of Partners 129
13.03 Assignment 130
13.04 Notices 131
13.05 Governing Law 133
13.06 Choice of Forum 133
13.07 Consent to Jurisdiction 133
13.08 Waiver of Jury Trial 135
13.09 Entire Agreement 135
13.10 Execution in Counterparts 136
13.11 Remedies and Waiver 136
13.12 Headings 137
13.13 Third Party Beneficiaries 137
13.14 Further Assurances 137
13.15 Power of Attorney 137
13.16 Public Announcements 138
AMENDED AND RESTATED PARTNERSHIP AGREEMENT
THIS AMENDED AND RESTATED PARTNERSHIP AGREEMENT (this
"Agreement") was made as of 12:01 a.m. (CDT) on the 1st day of
July, 1993 and further amended and restated as of the 26th day of
May, 1995 by and among (i) IMC-Agrico GP Company ("IMC GPCo"), a
Delaware corporation and a subsidiary of IMC GLOBAL OPERATIONS
INC. (formerly IMC Fertilizer, Inc.), a Delaware corporation
("Operations"), (ii) Agrico, Limited Partnership (the "FRP
Partner"), a Delaware limited partnership of which
FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP, a
Delaware limited partnership ("FRP"), owns a 99.8% limited
partnership interest and Agrico, Inc., a Delaware corporation
("FRP GPCo"), owns a 0.2% general partnership interest, (iii)
IMC-Agrico MP, Inc. (the "Managing Partner"), a Delaware
corporation, and (iv) Operations.
RECITALS:
WHEREAS, IMC GPCo, the FRP Partner and the Managing
Partnerentered into and formed a general partnership under the
Act to engage in the Phosphate Chemicals Business pursuant to a
Partnership Agreement dated as of June 29, 1993 (the "Original
Agreement"); and
WHEREAS, IMC GPCo, the FRP Partner and the Managing
Partneramended and restated the Original Agreement as of July 1,
1993;
WHEREAS, the parties hereto have approved and consented to (i)
(a) the voluntary complete liquidation and dissolution of IMC
GPCo, in accordance with the General Corporation Law of the State
of Delaware ("Delaware Law"), (b) the admission of Operations as
a Partner in the Partnership in accordance with the terms of this
Agreement, (c) the assumption by Operations (A) as of the date
hereof, of 80% of all obligations of IMC GPCo incurred by IMC
GPCo (x) as a general partner of the Partnership and (y) pursuant
to the terms of the Partnership Agreement, and (B) upon the
completion of such liquidation and dissolution of IMC GPCo, of
all remaining obligations of IMC GPCo, (d) the transfer to
Operations of the assets, properties, rights and interests of IMC
GPCo and (e) the repurchase by IMC GPCo of the preferred stock of
IMC GPCo owned by the Managing Partner at its liquidation value,
in each case in accordance with the Agreement and Plan of
Complete Liquidation and Dissolution dated as of May 26, 1995
(the "IMC GPCo Plan of Liquidation") and (ii) (a) the liquidation
of FRP GPCo or the merger of FRP GPCo with and into Freeport
Chemical Company, a Delaware corporation ("FCC"), and the
liquidation of FCC or the merger of FCC with and into
Freeport-McMoRan Inc., a Delaware corporation ("FTX"), in each
case in accordance with the FRP GPCo/FCC/FTX Merger Documents
(the "FRP GPCo/FCC/FTX Mergers"), with the result that FTX shall
become the owner of the 0.2% general partnership interest in the
FRP Partner owned by FRP GPCo immediately prior to the FRP
GPCo/FCC/FTX Mergers and shall have assumed as of the date of the
completion of such mergers all obligations of FRP GPCo and FCC,
(b) the repurchase by FRP GPCo of the preferred stock of FRP GPCo
owned by the Managing Partner at its liquidation value and (c) at
the option of FTX and FRP, the merger, liquidation or dissolution
of the FRP Partner under Delaware Law in the future (or the
transfer by the FRP Partner of its Partnership Interests to FRP
or an Affiliate of FRP) and the admission of FRP or an Affiliate
of FRP as a Partner in the Partnership, in each case in
accordance with this Agreement, the Amended and Restated Parent
Agreement dated as of May 26, 1995 among Operations, FRP, FTX and
IMC-Agrico Company, a Delaware general partnership (the "Parent
Agreement"), and the Amendment, Waiver and Consent Agreement
dated as of May 26, 1995 among IMC Global Inc., a Delaware
corporation ("Global"), Operations, IMC GPCo, the Managing
Partner, IMC-Agrico Company, FTX, FRP and the FRP Partner (the
"Amendment, Waiver and Consent Agreement");
WHEREAS, the above described transactions are to be
accomplishedin the following manner:
(i) with respect to the liquidation and dissolution of IMC GPCo,
80% of the interests of IMC GPCo shall be transferred to
Operations effective as of May 26, 1995 (except that 100% of IMC
GPCo's 50% common stock interest in the Managing Partner shall be
transferred to Operations as of May 26, 1995 and the preferred
stock of IMC GPCo owned by the Managing Partner shall be
repurchased by IMC GPCo at its liquidation value as of May 26,
1995 (the "Initial IMC GPCo Liquidating Distribution"), with the
remaining 20% of such interests (other than IMC GPCo's common
stock interest in the Managing Partner) to be transferred to
Operations (the "Final IMC GPCo Liquidating Distribution") in
accordance with the following time schedule and the terms of the
IMC GPCo Plan of Liquidation:
(A) if (x) FTX and FRP elect by written notice to the Partners
and the Partnership, after November 30, 1995 and on or prior to
June 4, 1996, to cause the merger, liquidation or dissolution of
the FRP Partner (or the transfer by the FRP Partner of its
Partnership Interests to FRP or an Affiliate of FRP) as
contemplated by the Amendment, Waiver and Consent Agreement and
(y) such merger, liquidation or dissolution of the FRP Partner
(or such transfer of its Partnership Interests) is completed not
earlier than June 5, 1996 and not later than June 15, 1996, the
Final IMC GPCo Liquidating Distribution shall be undertaken
promptly after June 22, 1997;
(B) if (x) FTX and FRP elect by written notice to the Partners
and the Partnership, after November 30, 1995 and on or prior to
June 4, 1996, to cause the merger, liquidation or dissolution of
the FRP Partner (or the transfer by the FRP Partner of its
Partnership Interests to FRP or an Affiliate of FRP) as
contemplated by the Amendment, Waiver and Consent Agreement, but
(y) such merger, liquidation or dissolution of the FRP Partner
(or such transfer of its Partnership Interests) is not completed
by June 15, 1996, the Final IMC GPCo Liquidating Distribution
shall be undertaken after June 15, 1996 and shall be completed no
later than June 30, 1996; and
(C) if FTX and FRP do not elect, after November 30, 1995 and on
or prior to June 4, 1996, to cause the merger, liquidation or
dissolution of the FRP Partner (or the transfer by the FRP
Partner of its Partnership Interests to FRP or an Affiliate of
FRP) as contemplated by the Amendment, Waiver and Consent
Agreement, the Final IMC GPCo Liquidating Distribution shall be
undertaken after June 4, 1996 and shall be completed by June 30,
1996; and
(ii) with respect to the optional merger, liquidation or
dissolution of the FRP Partner (or the transfer of its
Partnership Interests), such option may be exercised in
accordance with the terms of this Agreement and the Amendment
Waiver and Consent Agreement at any time after November 30, 1995
and on or prior to June 4, 1996; provided that if FTX and FRP
exercise such option on or prior to June 4, 1996, their right to
cause such merger, liquidation or dissolution of the FRP Partner
(or such transfer of its Partnership Interests) at that time will
be forfeited unless such merger, liquidation or dissolution of
the FRP Partner (or such transfer of its Partnership Interests)
is completed not earlier than June 5, 1996 and not later than
June 15, 1996; provided, further, that if after November 30, 1995
and on or prior to June 4, 1996 FTX and FRP exercise such option,
but such merger, liquidation or dissolution of the FRP Partner
(or such transfer of its Partnership Interests) is not completed
on or prior to June 15, 1996, FTX and FRP will have an additional
option to cause such merger, liquidation or dissolution of the
FRP Partner (or such transfer of its Partnership Interests) at
any time after July 15, 1997; and provided, further, that if
after November 30, 1995 and on or prior to June 4, 1996, FTX and
FRP do not exercise their option to cause such merger,
liquidation or dissolution of the FRP Partner (or such transfer
of its Partnership Interests), FTX and FRP will have the right to
exercise such option at any time after July 15, 1997; provided,
however that, notwithstanding the provisions of this paragraph
(ii), FTX and FRP may merge, liquidate or dissolve the FRP
Partner (or transfer its Partnership Interests to FRP or an
Affiliate of FRP) in accordance with the terms of the Amendment,
Waiver and Consent Agreement at any time so long as FTX and FRP
bear, and assume liability for, any expense, cost or loss
(including any increase in taxes, other than any increase in
income taxes which arises solely from the timing of the reporting
of income, deductions and credits attributable to the normal
business activities of the Partnership) suffered by the
Partnership, any other Partner or any of their Related Persons
(as defined below) resulting therefrom;
WHEREAS, the IMC GPCo Liquidation, the FRP GPCo/FCC/FTX Mergers
and such optional merger, liquidation or dissolution of the FRP
Partner (or such transfer of its Partnership Interests) make it
necessary and desirable to amend and restate certain provisions
of the Partnership Agreement as originally entered into, and as
previously amended and restated, by the parties in order to,
among other things, admit Operations as a new Partner; and
WHEREAS, the Partners (as hereinafter defined) believe that
through the combination of the Contributed Businesses of IMC and
FRP as contemplated by the Contribution Agreement and the
management of the business and affairs of the Partnership in
accordance with the terms hereof, they can create certain
synergies.
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements herein set forth and of
other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I.
Definitions
Capitalized terms used in this Agreement which are not otherwise
defined herein shall have the meanings given to such terms in
Exhibit A hereto. During the period subsequent to the Initial IMC
GPCo Liquidating Distribution and prior to the Final IMC GPCo
Liquidating Distribution (the "IMC GPCo Liquidation Period"), the
term "IMC Partner" (and correlative terms, such as "Non-Managing
Partner", relating to the "IMC Partner") as used herein, shall
refer to IMC GPCo and Operations, collectively and, unless
otherwise provided herein, actions to be taken by the IMC Partner
during the IMC GPCo Liquidation Period shall be taken by
Operations and IMC GPCo acting jointly; subsequent to the Final
IMC GPCo Liquidating Distribution, the term "IMC Partner" (and
such correlative terms) as used herein shall refer to Operations,
and Operations shall take any such actions acting alone; and at
all such times, the term "IMC Partner" (and such correlative
terms) as used herein shall refer to any other Affiliate of
Operations which succeeds to the Partnership Interests of IMC
GPCo or Operations by means of the purchase, transfer, assignment
or other conveyance or succession of such Partnership Interests
in accordance with the terms of this Agreement. The IMC Partner,
as so defined, the FRP Partner and the Managing Partner are
sometimes hereinafter referred to individually as a "Partner" and
collectively as the "Partners."
ARTICLE II.
Partnership, Name, Purposes, Powers, Authority to Bind
Partnership, Partnership Property, Other and/or Competing
Businesses.
2.01 Partnership. The Partners have hereby formed a general
partnership under the Act on the terms and for the purposes set
forth in this Agreement and, pursuant to this Amended and
Restated Partnership Agreement, as further amended and restated
as of May 26, 1995, IMC GPCo, the FRP Partner and the Managing
Partner, as Partners, hereby agree: (i) in accordance with the
terms of Section 13.09 herein, to admit Operations as a Partner
of the Partnership, upon the completion of the Initial IMC GPCo
Liquidating Distribution; (ii) upon the completion of the Final
IMC GPCo Liquidating Distribution, to the withdrawal of IMC GPCo
as a Partner in the Partnership, without, in accordance with
Section 12.11 herein, such withdrawal constituting a Dissolution
Event, unless such dissolution is required by applicable law;
(iii) if FTX and FRP choose to cause the merger, liquidation or
dissolution of the FRP Partner (or the transfer by the FRP
Partner of its Partnership Interests to FRP or an Affiliate of
FRP) and in accordance with the terms of the Amendment, Waiver
and Consent Agreement, upon the completion of such merger,
liquidation or dissolution (or such transfer of the Partnership
Interests), to admit FRP or an Affiliate of FRP as a Partner of
the Partnership in accordance with the terms of Section 13.09
herein and to the withdrawal of the FRP Partner as a Partner in
the Partnership, without, in accordance with Section 12.11
herein, such withdrawal constituting a Dissolution Event, unless
such dissolution is required by applicable law.
2.02 Name. The Partnership is to be known as "IMC-Agrico Company"
or such other name as the Partners shall unanimously select. The
Partners shall execute and file and/or publish all assumed name
statements and certificates required by law to be filed and/or
published in connection with the operation of the Partnership.
2.03 Purposes. The purposes of the Partnership shall be to engage
for profit in the Phosphate Chemicals Business and to engage for
profit in any and all other activities reasonably related to or
incidental to the Phosphate Chemicals Business, and, subject to
Section 9.05, to engage for profit in any other business, whether
or not related or incidental thereto, as determined by the Policy
Committee from time to time. Without limiting the generality of
the foregoing, the Partnership may, among other things:
(a) acquire, develop, construct, own, manage and operate
phosphate rock mining operations and production facilities,
phosphate chemical facilities, ammonia and urea fertilizer
facilities and uranium oxide facilities;
(b) acquire, by purchase, lease, sublease, license, royalty
agreement or otherwise, land and phosphate mineral rights to the
extent related to the Phosphate Chemicals Business;
(c) develop mines and conduct mining operations in and on
phosphate rock reserves and deposits, and construct, own, manage
and operate phosphate rock, chemical, ammonia, urea and uranium
extraction plants related thereto;
(d) acquire by purchase, lease, sublease, license or otherwise,
such machinery, equipment, vehicles and other facilities as may
be necessary or advisable to own, manage, operate or otherwise
engage for profit in the Phosphate Chemicals Business or any
other business of the Partnership at the time permitted
hereunder;
(e) subject to Section 9.12, enter into such construction,
engineering, operating, management, mining, marketing, selling,
supply or distributorship agreements, arrangements or
understandings with third parties as may be necessary or
advisable to own, manage, operate or otherwise engage for profit
in the Phosphate Chemicals Business or any other business of the
Partnership at the time permitted hereunder (and such agreements,
arrangements or understandings may be (i) with Affiliates of any
Partner so long as they comply with the terms of Section 9.12 and
(ii) with or through trade associations, including, without
limitation, the Phosphate Chemicals Export Association, a Webb-
Pomerene Act organization ("PhosChem"), and the Phosphate Rock
Export Association, a Webb-Pomerene Act organization
("PhosRock"));
(f) own, lease, rent and/or operate and/or make use of railcars,
railway lines and dock loading facilities and vessels and
otherwise arrange for the transportation of the Partnership's
inventory, supplies, materials, equipment, phosphate rock,
phosphate chemicals, uranium oxide, ammonia, urea and uranium
products and any other products produced from, or used in, the
operation of the Phosphate Chemicals Business by such means as
may be necessary or advisable;
(g) sell (in domestic or foreign markets) such phosphate rock,
phosphate chemicals, uranium oxide, ammonia, urea and uranium
products and related products and engage in marketing activities
incidental thereto (either directly or through third parties,
including, without limitation, trade associations, such as
PhosChem and PhosRock);
(h) form, organize, join and participate in trade associations
related to the Phosphate Chemicals Business, including, without
limitation, PhosChem and PhosRock;
(i) manage and operate agricultural, farming and livestock
businesses as an incidental activity relating to holding lands
originally acquired or leased by the Partnership or one of the
Partners' Affiliates as phosphate rock reserves;
(j) subject to Section 9.12, perform all other activities,
including the borrowing of money and the mortgaging of real or
personal property of the Partnership in connection therewith, as
are necessary or incidental to the business or operations of the
Partnership; and
(k) subject to Sections 9.05 and 9.12, engage in such other
businesses and activities, whether or not related to or
incidental to the Phosphate Chemicals Business, as determined by
the Policy Committee from time to time.
2.04 Powers of the Partnership. Subject to the restrictions set
forth in this Agreement, the Partnership shall have the power to
exercise all the powers and privileges granted by this Agreement
and by law, together with any powers incidental thereto, so far
as such powers and privileges are necessary or appropriate for
the conduct, promotion or attainment of the purposes of the
Partnership. Except as otherwise expressly provided in this
Agreement, the rights and obligations of the Partners and the
administration and termination of the Partnership shall be
governed by the Act.
2.05 Partner's Authority. Except as otherwise provided in this
Agreement, no Partner shall have any authority to act for, or to
assume any obligations or responsibilities on behalf of, any
other Partner or the Partnership.
2.06 Managing Partner; Operating Partner; Change in Operating
Partner; Authority to Bind Partnership.
(a) IMC-Agrico MP, Inc. is hereby designated as the managing
partner of the Partnership (the "Managing Partner"). The
Managing Partner shall, subject to the provisions of this
Agreement, have exclusive authority and responsibility to manage
the business and affairs of the Partnership and to make all
decisions regarding the business and affairs of the Partnership.
The Managing Partner is a special purpose corporation formed
solely for the purpose of acting as Managing Partner of the
Partnership. Accordingly, the Managing Partner shall not,
without the consent of both the IMC Partner and the FRP Partner,
engage in any business other than acting as the Managing Partner
hereunder.
(b) As used herein, the term "Operating Partner" shall mean the
Non-Managing Partner, initially the IMC Partner (which, for
purposes of identifying the Operating Partner, shall mean
Operations), which is entitled to elect a majority of the
directors of the Managing Partner at any given time and
"Non-Operating Partner" shall mean the other Non-Managing Partner
at that time. If a Material Breach Event shall have occurred and
not been cured prior to the delivery of the notice of exercise
described below, then (if none of the Non-Operating Partner or
any of its direct or indirect parent entities is Bankrupt) the
Non- Operating Partner shall have the right, upon written notice
of the exercise of such right, to become the Operating Partner
and, if such written notice is delivered exercising that right,
the Operating Partner shall become the Non-Operating Partner. In
the event of a Material Breach Event arising out of a Bankruptcy
of the Operating Partner or any of its direct or indirect parent
entities, prior to exercising its right to become the Operating
Partner, the Non-Operating Partner will reasonably evaluate the
circumstances surrounding such Bankruptcy, giving consideration
to the effect of the Bankruptcy on the Partnership and on the
Managing Partner and its ability to perform its obligations as
Managing Partner, but will have the right in its sole discretion
to elect to become the Operating Partner in accordance with the
terms of this Section 2.06(b). The terms of this Section 2.06(b)
shall similarly apply to any subsequent Material Breach Event or
Events.
(c) As between the Partnership and any other Person (other than a
Partner or its Affiliates), any action taken by the Managing
Partner on behalf of the Partnership shall constitute the act of
and serve to bind the Partnership. In dealing with the Managing
Partner acting on behalf of the Partnership, no Person (other
than the Non-Managing Partners and their respective Affiliates)
shall be required to inquire into the authority of the Managing
Partner to bind the Partnership. Without in any way limiting the
rights of the Partners hereunder as between each other, Persons
dealing with the Managing Partner are entitled to rely
conclusively upon the power and authority of the Managing Partner
as set forth in this Section 2.06.
2.07 Partnership Property. All real and personal property,
whether tangible or intangible (including, without limitation,
all permits and licenses), owned by or granted to or held by the
Partnership shall be deemed to be owned by or granted to or held
by the Partnership as an entity, and no Partner, individually,
shall have any ownership or right to use any such property.
2.08 Other and/or Competing Businesses.
(a) Except as otherwise provided herein, nothing contained in
this Agreement shall be deemed to restrict in any way the freedom
of any Partner or of any Affiliate of any Partner to conduct,
independently of the Partnership, any business or activity
whatsoever without any accountability to the Partnership or to
the other Partners.
(b) Except as set forth in this Section 2.08(b) and in Section
2.0 of the Parent Agreement, each Partner agrees that neither it
nor any of its Affiliates will, directly or indirectly, anywhere
in the world, own, manage, operate, control or invest in any
business that is engaged in the Phosphate Chemicals Business
without first complying with the provisions of this Section
2.08(b), it being understood that (i) purchases and resales of
phosphate chemicals in Canada by Affiliates of the IMC Partner in
volumes not materially greater than the amounts indicated on
Schedule 9.12 hereof and (ii) the conduct of the business of the
Rainbow Division of Operations substantially as currently
conducted, shall not constitute a breach or violation of this
Section 2.08. Notwithstanding the foregoing, any Person that
acquires or succeeds to (or whose Affiliate acquires or succeeds
to) the Partnership Interest (or any portion thereof) of any
Partner shall not be subject to the provisions of this Section
2.08(b) with respect to any business conducted by such Person or
its Affiliates that is conducted thereafter substantially as
conducted on the date of such acquisition or succession. If any
Affiliate of either Non-Managing Partner desires to accept an
opportunity to own, manage, operate, control or invest in any
business that is engaged, in whole or in part, in the Phosphate
Chemicals Business, the Non-Managing Partner affiliated with such
Person (the "Presenting Partner") will first offer such
opportunity to the Partnership, it being understood that two (2)
Policy Committee Representatives or Alternates (or any
combination thereof) of the Non-Managing Partner other than the
Presenting Partner (the "Exercising Partner") may elect, on
behalf of the Partnership, to pursue such opportunity within
thirty (30) days following the presentation of such opportunity
to the Partnership. The Representatives or Alternates (or any
combination thereof) of the Exercising Partner shall notify the
Presenting Partner in writing of such election, on behalf of the
Partnership, to pursue or not to pursue such opportunity before
the expiration of such thirty (30) day period. If the Exercising
Partner fails to give the Presenting Partner notice of such
election within such thirty (30) day period, the Exercising
Partner shall be deemed to have elected, on behalf of the
Partnership, not to pursue such opportunity. If the Partnership
so elects to pursue such opportunity, the Partnership shall
reimburse the Presenting Partner or its Affiliates in an amount
equal to the direct costs incurred by the Presenting Partner or
its Affiliates in connection with developing such opportunity
prior to the date of the Partnership's election to pursue such
opportunity and the opportunity will be considered a Capital
Project. If the Partnership does not so elect (or is so deemed
not to have elected) to pursue such opportunity or, if at any
time the Partnership ceases to pursue the opportunity in good
faith, one or more Affiliates of the Presenting Partner may then
elect to pursue such opportunity. If FRP desires to expand its
existing operations (or pursue other business opportunities which
are part of or related to the Phosphate Chemicals Business) in
Sri Lanka or to pursue the opportunities described in a
memorandum of understanding between FTX and Ercros, S.A.
relating to FESA and ENFERSA, it shall first offer such
opportunities to the Partnership in accordance with the preceding
provisions of this Section 2.08(b); provided that if the
Partnership elects to pursue any of such opportunities, the
Partnership shall reimburse FRP in an amount equal to the direct
costs incurred by FRP in connection with developing such
opportunity prior to the date of the Partnership's election to
pursue such opportunity. Notwithstanding the foregoing, nothing
contained in this Section 2.08(b) shall prevent one or more
Affiliates of any Partner from (A) owning, directly or
indirectly, an aggregate of less than five percent (5%) of the
common stock of, or other ownership interest in, any Person
engaged in the Phosphate Chemicals Business or (B) acquiring (by
stock purchase, asset purchase, merger, consolidation or
otherwise) any Person engaged in the Phosphate Chemicals Business
so long as (I) the revenues derived by such Person from its
Phosphate Chemicals Business represent (and can reasonably be
expected to continue to represent) less than ten percent (10%) of
the total revenues of such Person and (II) the Person acquiring
such Person (the "Acquiring Person") either offers to sell such
Person's Phosphate Chemicals Business to the Partnership at its
fair market value or sells such Person's Phosphate Chemicals
Business to an independent third Person, it being understood
that, in the case of this clause (B), the Acquiring Person may
continue to own and operate, directly or indirectly, such
acquired Person's Phosphate Chemicals Business if it has offered
to sell such Phosphate Chemicals Business to the Partnership in
accordance with this sentence and (x) if any Affiliate of the FRP
Partner is the Acquiring Person, two (2) Policy Committee
Representatives or Alternates of the IMC Partner (or any
combination thereof) fail, on behalf of the Partnership, to
accept such offer within thirty (30) days of such offer to sell,
or (y) if any Affiliate of the IMC Partner is the Acquiring
Person, two (2) Policy Committee Representatives or Alternates of
the FRP Partner (or any combination thereof) fail, on behalf of
the Partnership to accept such offer within thirty (30) days of
such offer to sell. Each Partner acknowledges and agrees that
the covenants contained in this Section 2.08(b) have been
negotiated in good faith by the parties hereto, and are
reasonable and are not more restrictive or broader than necessary
to protect the interests of the Partners hereto, and would not
achieve their intended purpose if they were on different terms or
for periods of time shorter than the periods of time provided
herein or were applied in more restrictive geographical areas
than are provided herein. Each Partner further acknowledges and
agrees that the business of the Partnership is highly
competitive, that no Partner hereto would enter into this
Agreement but for the covenants contained in this Section 2.08(b)
and that such covenants are essential to protect the value of the
business of the Partnership. If any provision of this Section
2.08(b) is held to be unenforceable because of the scope or area
of its applicability, the court making such determination shall
have the power to modify such scope and area or either of them,
and such provision shall then be applicable in such modified
form. Each Partner and its Affiliates shall be relieved of all
obligations under this Section 2.08(b) on and after the second
anniversary of the date that such Partner and its Affiliates
cease to own an interest in the Partnership.
(c) If either Non-Managing Partner (the "Developing Partner")
desires to pursue, or to cause the Partnership to pursue, a Real
Estate Development Project, it shall present such Real Estate
Development Project to the Partnership, it being understood that
two (2) Representatives or Alternates (or any combination
thereof) of the Non-Managing Partner other than the Developing
Partner (the "Electing Partner") may elect, on behalf of the
Partnership, to pursue such Real Estate Development Project
within sixty (60) days following the completion of such
presentation. The Electing Partner shall notify the Developing
Partner in writing of such election, on behalf of the
Partnership, to pursue or not to pursue such Real Estate
Development Project before the expiration of such sixty (60) day
period. If the Electing Partner fails to give the Developing
Partner notice of such election within such sixty (60) day
period, the Electing Partner shall be deemed to have elected, on
behalf of the Partnership, not to pursue such Real Estate
Development Project. If the Partnership so elects to pursue such
Real Estate Development Project, the Electing Partner shall
promptly reimburse the Developing Partner for an aggregate of
seventy-five percent (75%) of the direct costs incurred by the
Developing Partner or its Affiliates in connection with
developing such Real Estate Development Project prior to the date
of such election. If the Partnership does not so elect (or is so
deemed not to have elected) to pursue such Real Estate
Development Project, then the Developing Partner shall have the
option, for a period of sixty (60) days, to deliver a written
notice to each other Partner of its election to either (i)
purchase the real property which is to be the subject of the Real
Estate Development Project from the Partnership at its fair
market value or (ii) cause the Partnership to make a distribution
in kind to the Developing Partner of the real property which will
be the subject of the Real Estate Development Project. If the
Developing Partner elects the purchase option set forth in clause
(i) of the preceding sentence, then (A) the Partners shall
negotiate in good faith to determine the fair market value of
such real property (and if they cannot agree on such value within
sixty (60) days following the notice referred to in the preceding
sentence, the fair market value shall be determined in accordance
with the Real Estate Appraisal Procedure, the cost of which shall
be paid by the Developing Partner) and (B) the Partnership shall,
within thirty (30) days of the date such fair market value is
finally determined, sell such real property to the Developing
Partner for a purchase price, payable at the closing of such sale
in immediately available funds, equal to its fair market value.
If the Developing Partner elects to cause the Partnership to make
a distribution in kind pursuant to clause (ii) of the second
preceding sentence the Partnership shall make, on or before the
thirtieth (30th) day following the date of such election, (1) a
distribution in kind to the Developing Partner, of the real
property which is the subject of the Real Estate Development
Project, (2) a distribution in kind to the Electing Partner of a
Comparable Property and (3) a proportional distribution in cash
to the Managing Partner. For purposes of this Section 2.08(c),
"Comparable Property" shall mean similarly situated real property
as determined by the Managing Partner, reasonably acceptable to
the Policy Committee, having a fair market value such that the
ratio of the fair market value of such real property compared to
the fair market value of the real property being distributed to
the Developing Partner is equal to the ratio of (x) the Capital
Interest of the Partner receiving the distribution in kind
pursuant to clause (2) of the preceding sentence to (y) the
Capital Interest of the Developing Partner, in each case at the
time of such distribution. Each Partner and its Affiliates shall
be relieved of all obligations under this Section 2.09(c) on and
after the date that such Partner and its Affiliates cease to own
an interest in the Partnership.
2.09 Principal Place of Business; Registered Office and Agent.
The principal place of business of the Partnership shall be
located at 2100 Sanders Road, Northbrook, Illinois 60062 or at
such other place or places as the Policy Committee may from time
to time determine. The registered office of the Partnership
shall be 2100 Sanders Road, Northbrook, Illinois 60062 and the
registered agent of the Partnership at such address shall be the
Managing Partner; provided that the Managing Partner may
designate such other address or agent as it determines
appropriate from time to time.
ARTICLE III.
Contributions to the Partnership
3.01 Initial Contributions. On the Closing Date, the
contributions are being made to the Partnership by or on behalf
of, and the Partnership will assume certain liabilities of, the
Partners and their Affiliates, all as provided in the
Contribution Agreement. Immediately after such contribution, the
agreed value of each Partner's Capital Account shall be as
follows (it being understood that such agreed values shall not
reflect, and shall not be adjusted to reflect, any adjustments or
payments contemplated by the Contribution Agreement):
IMC Partner $748,993,000
FRP Partner $650,993,000
Managing Partner $ 14,000
3.02 Additional Contributions. As and when the Policy Committee
(or, if not the Policy Committee, the CEOs but not the Managing
Partner) determines, in accordance with the terms of Section
6.07(a) or (b), that the Partnership requires cash from time to
time, each of the IMC Partner (or, during the IMC GPCo
Liquidation Period, each of Operations and IMC GPCo) and the FRP
Partner hereby agrees that it shall make cash contributions to
the Partnership in an amount equal to the product of (i) the
amount of the Partnership's cash requirement as determined by the
Policy Committee or the CEOs, but not the Managing Partner, in
accordance with the terms of Section 6.07(a) or (b), by the
Policy Committee (or, if not by the Policy Committee, by the
CEOs), multiplied by (ii) a fraction, the numerator of which is
such Partner's Current Interest and the denominator of which is
the aggregate Current Interests of the Non-Managing Partners;
provided that if the Policy Committee (or, if not the Policy
Committee, the CEOs) determines, in accordance with the terms of
Section 6.07(a) or (b), that the cash required by the Partnership
is to be used for a Capital Project, each of the IMC Partner (or,
during the IMC GPCo Liquidation Period, each of Operations and
IMC GPCo) and the FRP Partner shall make cash contributions to
the Partnership either (x) in an amount equal to the product of
(1) the cash required by the Partnership for such Capital Project
as determined, in accordance with the terms of Section 6.07(a) or
(b), by the Policy Committee (or, if not by the Policy Committee,
by the CEOs), multiplied by (2) a fraction, the numerator of
which is the Capital Interest of such Partner at such time as the
Capital Project will be placed in service and the denominator of
which is the aggregate Capital Interests of the Non-Managing
Partners at such time as the Capital Project will be placed in
service, or (y) in such other amount as the Policy Committee (or,
if not the Policy Committee, the CEOs) may determine in
accordance with the terms of Section 6.07(a) or (b). Once the
Policy Committee (or, if not the Policy Committee, the CEOs)
approves, in accordance with the terms of Section 6.07(a) or (b),
an additional cash contribution, the Managing Partner shall have,
subject to any terms or conditions specified by the Policy
Committee (or, if not by the Policy Committee, by the CEOs) at
the time it so approves such additional cash contribution, the
reasonable discretion to determine the timing of such cash
contribution giving due consideration to the Partnership's cash
needs as determined by the Managing Partner. The Managing Partner
shall notify the IMC Partner (or, during the IMC GPCo Liquidation
Period, each of Operations and IMC GPCo) and the FRP Partner at
least ten (10) days in advance of the time each such cash
contribution is required to be made to the Partnership.
3.03 Failure to Contribute. If either the IMC Partner (or,
during the IMC GPCo Liquidation Period, either of Operations or
IMC GPCo) or the FRP Partner (in any such case, the
"Non-Contributing Partner") fails, in whole or in part, to make
any cash contribution or defaults, in whole or in part, in any
other obligation to pay money under this Agreement within fifteen
(15) days of giving of a due notice by either of the other
Partners to the Non-Contributing Partner that such cash
contribution is due or that the Non-Contributing Partner has
defaulted in any other such obligation hereunder, the IMC Partner
(with respect to circumstances in which the FRP Partner is the
Non-Contributing Partner) or the FRP Partner (with respect to
circumstances in which the IMC Partner (or, during the IMC GPCo
Liquidation Period, either of Operations or IMC GPCo) is the
Non-Contributing Partner), as the case may be (in either such
case, the "Contributing Partner"), shall have the right to
advance directly to the Partnership such additional cash
contribution, or portion thereof, or such other payment of money,
or portion thereof, as the Non-Contributing Partner has failed to
make or defaulted on (the "Non-Contributing Partner's Share"),
and such advance, together with a proportionate amount of the
corresponding cash contribution or other payment, if any, made by
such Contributing Partner, shall be deemed a loan by the
Contributing Partner to the Partnership (the "Partner Loan"). A
Partner Loan shall bear interest at the rate equal to the lower
of: (i) the maximum rate allowed by law; or (ii) five (5)
percentage points over the Prime Rate. The Partner Loan shall be
recouped and otherwise repaid from all funds which would
otherwise have been available to make distributions which the
Partners would otherwise be entitled to receive from the
Partnership but for this Section 3.03, all of which shall instead
be paid by the Partnership to the Contributing Partner and
applied to the payment of the Partner Loan and all interest
thereon, until the same shall have been paid in full. It is
understood, however, that to the extent the principal and
interest of a Partner Loan are not repaid in full by the
Partnership from all funds which would otherwise have been
available to make distributions (including any distributions
pursuant to Section 12.07(b)) to the Partners, the
Non-Contributing Partner shall be obligated to repay an amount
equal to the Non-Contributing Partner's Share of the outstanding
balance of the principal and interest of such Partner Loan upon
commencement of the winding up of the Partnership in accordance
with Section 12.02. Any amount which would otherwise have been
available to make distributions from the Partnership that is
applied to any Partner Loan shall be credited first to any
interest then due on such Partner Loan, and the balance of the
distribution shall be credited against the outstanding principal
balance of such Partner Loan.
The exercise of the right to make a Partner Loan shall be in
addition to any other rights or remedies that the Contributing
Partner may have under this Agreement or at law or in equity
arising from the Non-Contributing Partner's (i) failure to make
the required cash contribution or (ii) default in any other
obligation to pay money.
3.04 Assumption of Liabilities Under Contribution Agreement. In
accordance with the terms of this Agreement, the IMC Partner has
assumed all of the liabilities and obligations of Operations, and
the FRP Partner has assumed all of the liabilities and
obligations of FRP, in each case under and pursuant to the
Contribution Agreement and each such Partner hereby confirms its
agreement to perform such assumed liabilities and obligations as
if it were a party to such agreement. Any amounts payable by
either Non-Managing Partner under the Contribution Agreement
shall be deemed amounts payable by such Non- Managing Partner
hereunder. The Partners agree that (i) any payment by the IMC
Partner or the FRP Partner pursuant to the terms of this Section
3.04 shall satisfy such amounts payable by Operations or FRP, as
the case may be, or their Affiliates under the Contribution
Agreement and (ii) any payment by Operations or FRP, as the case
may be, or their Affiliates under the Contribution Agreement
shall satisfy such amounts payable by the IMC Partner or the FRP
Partner under this Section 3.04. Nothing herein shall be deemed
to release Operations or FRP (or any of their Affiliates) from
any obligations they may have under the Contribution Agreement.
3.05 Subsequent Capital Contribution. The IMC Partner and the
FRP Partner each may, after the Closing Date, contribute to the
Partnership their respective organizational costs, as defined in
Section 709 of the Code, incurred in forming the Partnership.
ARTICLE IV.
Interests of Partners
4.01 Interests of Partners.
(a) The "Current Interests" of the Partners shall be as follows:
Fiscal Year Ending IMC FRP Managing
June 30 Partner Partner Partner
__________________ _________ _________ _____________
1994 41.3995% 58.5995% 0.001%
1995 44.9995% 54.9995% 0.001%
1996 46.8995% 53.0995% 0.001%
1997 46.4995% 53.4995% 0.001%
1998 and 59.3995% 40.5995% 0.001%
thereafter
During the IMC GPCo Liquidation Period, the "Current Interests"
of Operations and IMC GPCo shall be equal to eighty percent (80%)
and twenty percent (20%), respectively, of the "Current
Interests" of the IMC Partner set forth above.
(b) The "Capital Interests" of the Partners shall be as follows:
Fiscal Year Ending IMC FRP Managing
June 30 Partner Partner Partner
__________________ _________ ___________ _____________
1994 53.4995% 46.4995% 0.001%
1995 54.8995% 45.0995% 0.001%
1996 56.3995% 43.5995% 0.001%
1997 57.7995% 42.1995% 0.001%
1998 and 59.3995% 40.5995% 0.001%
thereafter
During the IMC GPCo Liquidation Period, the "Capital Interests"
of Operations and IMC GPCo shall be equal to eighty percent (80%)
and twenty percent (20%), respectively, of the "Capital
Interests" of the IMC Partner set forth above.
4.02 Capital Accounts.
(a) A separate Capital Account shall be established and
maintained in respect of each Partner.
(b) The Capital Accounts of the Partners shall be credited with
(i) the amount of cash and the fair market value of other
property (net of liabilities that the Partnership is considered
to assume or take subject to under Section 752 of the Code)
contributed by such Partner to the capital of the Partnership and
(ii) allocations to such Partner pursuant to Sections 5.01 and
5.02 of income (or items thereof) including tax-exempt income and
gain. The Capital Accounts of each of the Partners shall be
debited with (i) the amount of cash and the fair market value of
other property distributed to such Partner (net of liabilities
that such Partner is considered to assume or take subject to
under Section 752 of the Code); (ii) allocations to such Partner
of expenditures of the Partnership described in Section
705(a)(2)(B) of the Code; and (iii) allocations to such Partner
pursuant to Sections 5.01 and 5.02 of deduction or loss (or items
thereof). If any property other than cash is distributed to any
Partner, the Capital Accounts of the Partners shall be adjusted
as if the property had instead been sold by the Partnership for a
price equal to its fair market value, with the resulting gain or
loss allocated among the Partners pursuant to Sections 5.01 and
5.02 and the proceeds thereof distributed.
(c) For purposes of computing the amount of any item of income,
gain, deduction or loss to be reflected in the Capital Accounts
of the Partners, the determination, recognition and
classification of such items shall be the same as its
determination, recognition and classification for Federal income
tax purposes; except that:
(i) Any deductions for depreciation, depletion, cost
recovery or amortization attributable to property
contributed by the Partners to the Partnership or
attributable to Partnership property adjusted pursuant to
Section 4.02(d) shall be determined as if the adjusted
basis of such property on the date it was contributed or
adjusted was equal to the fair market value of the
property; and
(ii) Any income, gain or loss attributable to the taxable
disposition of any property contributed by the Partners or
attributable to Partnership property adjusted pursuant to
Section 4.02(d) shall be determined as if the adjusted
basis of the property as of the date of disposition was
equal to the fair market value of the property at the time
of contribution or adjustment reduced by all depreciation,
cost recovery and amortization deductions charged to the
Partners' Capital Accounts with respect to such property.
(d) Upon the issuance of additional Partnership interests for
cash or property, the Capital Accounts of the Partners and the
value of all Partnership assets for purposes of Section 4.02(c)
shall be adjusted upwards or downwards to reflect any unrealized
gain or unrealized loss attributable to each asset as if such
assets had been sold immediately prior to such issuance and such
gain or loss had been allocated to the Partners, at such time,
pursuant to Sections 5.01 and 5.02.
4.03 Interest on Capital Accounts. Except as specifically
provided herein, no Partner shall be entitled to any interest on
its Capital Account or its contributions to the capital of the
Partnership, nor shall any Partner have the right to demand or
receive the return of all or any part of its Capital Account or
its contributions to the capital of the Partnership.
4.04 Loans from Partners. Loans by a Partner to the Partnership
(including, without limitation, any Partner Loan) shall not be
considered capital contributions.
4.05 Transferred Capital Accounts. In the event that any Partner
transfers all or a portion of its Partnership Interest in
accordance with the terms of this Agreement, the transferee shall
succeed to the Capital Account of the transferor Partner to the
extent such Capital Account relates to the transferred
Partnership Interest or portion thereof. In accordance with the
terms of the preceding sentence, Operations shall succeed to 80%
of the Capital Account of IMC GPCo as of the date of the Initial
IMC GPCo Liquidating Distribution and Operations shall succeed to
the remaining 20% of the Capital Account of IMC GPCo as of the
date of the Final IMC GPCo Liquidating Distribution. If FTX and
FRP elect to merge, liquidate or dissolve the FRP Partner (or
transfer its Partnership Interests) in accordance with the terms
of the Amendment, Waiver and Consent Agreement, the successor to
the FRP Partner, as a Partner to the Partnership, shall succeed
to the Capital Account of the FRP Partner, as provided in the
first sentence of this Section.
ARTICLE V.
Profit and Loss Sharing; Allocations for Federal, State and Local
Income Tax Purposes; Cash Distributions; Suspended Distributions;
Reimbursement for Transaction Costs
5.01 Allocation of Profits and Losses. Except as provided in
Section 5.02, 5.03 or 12.05, for purposes of maintaining the
Capital Accounts and in determining the rights of the Partners
among themselves, each item of income, gain, loss and deduction
(computed in accordance with Section 4.02(c)) shall be allocated
to the Partners' Capital Accounts as a part of the Residual Net
Profit or Residual Net Loss for the year in accordance with the
Partners' Capital Interests for the following year.
5.02 Special Allocations.
(a) Transaction Costs attributable to the transactions
contemplated by the Contribution Agreement shall be allocated
fifty percent (50%) to IMC GPCo and fifty percent (50%) to the
FRP Partner.
(b) Any gain or loss attributable to a Capital Transaction shall
be allocated to the IMC Partner (or, during the IMC GPCo
Liquidation Period, Operations and IMC GPCo) and the FRP Partner
in accordance with their respective Capital Interests for the
fiscal quarter of the Partnership in which the effective date of
the Capital Transaction occurs.
(c) If the IMC Partner's (or, during the IMC GPCo Liquidation
Period, Operations' and IMC GPCo's) or the FRP Partner's share of
Current Interest Cash for any year exceeds that Partner's share
of Target Cash for that year, such Partner shall be allocated an
amount of gross income equal to the excess.
(d) If the IMC Partner's (or, during the IMC GPCo Liquidation
Period, Operations' and IMC GPCo's) or the FRP Partner's share of
Current Interest Cash for any year is less than that Partner's
share of Target Cash for that year, such Partner shall be
allocated an amount of gross loss equal to the difference.
(e) The gross income or loss allocated to any Partner under
Section 5.02(c) or 5.02(d) shall be considered to consist of each
item of Partnership income or loss (except depreciation,
depletion and amortization), as the case may be, in the same
proportion that such items bear to total Partnership income or
loss.
(f) For purposes of Sections 5.02(c) and 5.02(d), the IMC
Partner's (or, during the IMC GPCo Liquidation Period,
Operations' and IMC GPCo's) or the FRP Partner's percentage of
Target Cash for any year shall be equal to such Partner's Current
Interest for such year. For purposes of Sections 5.02(c) and
5.02(d), the IMC Partner's (or, during the IMC GPCo Liquidation
Period, Operations' and IMC GPCo's) or the FRP Partner's "share
of Target Cash" for any year shall be equal to (i) such Partner's
percentage of Target Cash for such year, as determined pursuant
to the preceding sentence multiplied by (ii) Target Cash for such
year.
(g) All losses and deductions associated with the Partners'
organizational costs shall be allocated proportionally to the
Partners based on their contribution of such costs pursuant to
Section 3.05.
5.03 Tax Allocations.
(a) Except as otherwise provided in this Agreement, for Federal
income tax purposes, all items of Partnership income, gain, loss
and deduction (and the character and source of such items) shall
be allocated among the Partners in the same manner as the
corresponding item of income, gain, loss or deduction is
allocated to Capital Accounts pursuant to Sections 5.01 and 5.02.
(b) If, as a result of contributions of property by a Partner to
the Partnership or as a result of the revaluation of Partnership
assets pursuant to Section 4.02(d), Section 704(c) of the Code
(or the principles of Section 704(c) of the Code) requires
allocations of income, gain, loss and deduction of the
Partnership in a manner different from that set forth in Sections
5.01 and 5.02, the Partnership shall adopt mutually acceptable
methods and conventions consistent with the provisions of Section
704(c) of the Code and the Regulations thereunder which are
acceptable to both the IMC Partner (or, during the IMC GPCo
Liquidation Period, Operations and IMC GPCo) and the FRP Partner
and such methods and conventions shall control, solely for
Federal income tax purposes, allocations of items of Partnership
income, gain, loss and deduction. The method and conventions
adopted by the Partnership shall be designed, in general, (i) to
allocate the "built-in" gain or loss on the sale of a contributed
property to the contributor; (ii) to allocate the deductions from
contributed properties in a manner that reflects the Partners'
respective contributions of basis giving rise to such deductions
(other than special basis adjustments pursuant to Section 743 of
the Code); (iii) to preserve to the FRP Partner, for the benefit
of FRP and its partners, deductions attributable to special basis
adjustments pursuant to Section 754 of the Code resulting from
the purchase of interests in FRP; (iv) to adjust the allocations,
to the extent necessary, to reflect the sale of an asset
contributed by a Partner; (v) to eliminate the difference between
the value at which the property is shown on the books of the
Partnership and the property's adjusted tax basis; and (vi) to
assist the FRP Partner in integrating the allocations of the
Partnership with allocations to FRP and its partners in a
reasonable manner.
5.04 Interim Closing of the Books on Transfer. In the event that
a Partner sells or exchanges all or a portion of its Partnership
Interest or a Partner's Partnership Interest is reduced, the
Partners' distributive share of items allocated to them pursuant
to Sections 5.01 and 5.02 shall be determined as if the
Partnership's books of account were closed on the date on which
such sale, exchange or reduction of the Partnership Interest
occurred; provided, that, to the extent such determination
relates to transactions contemplated by the IMC GPCo Plan of
Liquidation and the optional merger, liquidation or dissolution
of Agrico LP (or the transfer of its Partnership Interests to FRP
or an Affiliate of FRP) as contemplated by the Amendment, Waiver
and Consent Agreement, such determination shall be based upon any
permissible method elected by the Tax Matters Partner.
5.05 Disagreement Between Partners. In the event of a
disagreement between the IMC Partner and the FRP Partner
concerning the correct calculation of the allocations pursuant to
this Article V, the correct calculation of such allocations shall
be treated as a Major Decision and shall be determined by the
Policy Committee, the CEOs or the Managing Partner, as the case
may be, pursuant to Section 6.07(a) and Section 6.07(b).
5.06 Obligations with Respect to Distributable Cash.
Notwithstanding any other provision of this Agreement other than
Sections 3.03 and 5.07(d), but subject to the terms of any
agreement or instrument to which the Partnership is a party, the
Partnership shall distribute quarterly all Distributable Cash to
the Partners.
5.07 Distribution of Distributable Cash; Suspended Distributions.
(a) Subject to the terms of any agreement or instrument to which
the Partnership is a party, as soon as available, but in any
event (i) not later than sixteen (16) days (or, in the case of a
quarter ending on June 30, not later than thirty (30) days)
following the end of each quarter of each Fiscal Year, commencing
with the end of the first quarter following the Closing, the
Partnership shall advise each Partner in writing of the amount of
Distributable Cash, if any, which will be distributed to each
Partner in respect of the previous quarter of the Fiscal Year,
(ii) in the case of a quarter ending June 30, not later than
sixteen (16) days following the end of such quarter, commencing
with the first such quarter following the Closing, the
Partnership shall advise each Partner in writing of its good
faith estimate of the amount of Distributable Cash, if any, which
will be distributed to each Partner in respect of the previous
quarter of the Fiscal Year and (iii) not later than 40 days
following the end of each quarter of each Fiscal Year, commencing
with the first quarter following the Closing, the Partnership
shall distribute to each Partner such Partner's Distributable
Cash in respect of the preceding quarter (adjusted, if required,
as provided in Section 5.07(b) and Section 5.07(c) below);
provided, however, that if the Accounting Referee has not
provided its report in accordance with the terms of the
Contribution Agreement prior to any such distribution of
Distributable Cash, the Managing Partner shall consider the items
or amounts that are the subject of dispute in establishing any
cash reserves of the Partnership, including, without limitation,
as such reserves relate to the calculation of Current Interest
Cash.
(b) Notwithstanding the foregoing, the allocation of
Distributable Cash to IMC GPCo and the FRP Partner for quarters
ending on or prior to June 30, 1994 shall be adjusted as follows:
(i) first, Distributable Cash shall be computed and
allocated to IMC GPCo and the FRP Partner for such quarter,
as if any Transaction Costs incurred by the Partnership in
such quarter had not been incurred;
(ii) second, an amount equal to 50% of any expenditures for
Transaction Costs incurred by the Partnership during such
quarter shall be subtracted from the amounts calculated
under clause (i) above; and
(iii) third, the amount so calculated pursuant to clauses
(i) and (ii) above shall be distributed to IMC GPCo and the
FRP Partner.
(c) Capital Proceeds in respect of a Material Asset Sale shall be
distributed, reinvested or retained by the Partnership as
determined by the Policy Committee or the CEOs, as the case may
be, at the time of approval of such Material Asset Sale in
accordance with the terms of Section 6.07. Capital Proceeds in
respect of all other Capital Transactions shall be distributed to
the Partners pursuant to Section 5.07(a) unless the Managing
Partner elects to use such Capital Proceeds to replace the
capital asset in respect of which such Capital Proceeds were
generated or otherwise to maintain (but not for the Expansion of)
the business of the Partnership.
(d) Notwithstanding the foregoing provisions of Sections 5.06,
5.07(a), 5.07(b) and 5.07(c), and in addition to the suspension
and repayment that is to occur under the circumstances set forth
in Section 3.03 hereof, if either Operations or FRP, or either of
their Affiliates, fails to pay any claim (a "Contribution
Agreement Claim") by the Partnership or another Partner or any of
its respective Affiliates (the "Non-Defaulting Partner") under
the Contribution Agreement and there is no good faith dispute
between Operations, or any of its Affiliates, and FRP, or any of
its Affiliates, as to the existence of such claim or if either
the IMC Partner (or, during the IMC GPCo Liquidation Period,
Operations or IMC GPCo) or the FRP Partner fails to make any
payment due hereunder (including, without limitation, any cash
contribution pursuant to Section 3.02) and there is no good faith
dispute among the Partners over the existence of such default,
then the Partnership shall suspend all payments and distributions
otherwise due hereunder to the Partner that has so defaulted or
whose parent entity has so defaulted (the "Defaulting Partner").
If a good faith dispute exists (i) between Operations, or any of
its Affiliates, and FRP, or any of its Affiliates, as to the
existence of a Contribution Agreement Claim or (ii) between the
IMC Partner (or, during the IMC GPCo Liquidation Period,
Operations or IMC GPCo) and the FRP Partner over the existence of
a default with respect to a payment due hereunder, then in each
such case, the parties to such dispute shall proceed to resolve
such dispute as soon as practicable pursuant to the Dispute
Resolution Mechanism. All payments and distributions otherwise
due to the Defaulting Partner hereunder, including, without
limitation, amounts determined by the Dispute Resolution
Mechanism to be a valid Contribution Agreement Claim or a
defaulted payment hereunder, shall instead be recouped and
applied to what would otherwise have been distributed to such
Defaulting Partner to reduce the claim of the Partnership or
Partner or of their Affiliate, as the case may be, until such
time as the Contribution Agreement Claim or such defaulted
payment, as the case may be, together with interest on the unpaid
amount thereof at the rate per annum equal to the lower of: (i)
the maximum rate allowed by law and (ii) the Prime Rate plus five
percent (5%) has been paid in full. The parties agree that with
respect to a Contribution Agreement Claim all amounts so recouped
and paid to a Non-Defaulting Partner shall satisfy such amounts
owed by Operations or FRP, as the case may be, or their
Affiliates under the Contribution Agreement. Upon payment in
full of the Contribution Agreement Claim or such defaulted
payment, as the case may be (together with such interest accrued
thereon), the Partnership shall resume payments and distributions
to the Partners in accordance with the provisions of Sections
5.07(a), 5.07(b) and 5.07(c).
5.08 Payment of Transaction Costs. The Partnership shall
promptly reimburse any Partner for any Transaction Costs incurred
and actually paid by such Partner. Any such Transaction Costs
incurred prior to the date of this Agreement, and not previously
reimbursed by the Partnership, will be promptly reimbursed by the
Partnership following such date.
ARTICLE VI.
Management
6.01 Operation. The business and affairs of the Partnership
shall be managed and conducted by the Managing Partner, who shall
have full control over and responsibility for such business and
affairs, in all cases subject to the provisions of this
Agreement. The Managing Partner shall perform its duties and
obligations hereunder as an ordinary prudent and reasonable
manager would under similar circumstances.
It is understood and agreed that regardless of the fact that the
Managing Partner may enter into transactions, agreements,
arrangements and understanding with the Operating Partner or its
Affiliates, including, without limitation, the Marketing and
Administrative Services Agreement and the Leasing Agreement, in
order for the Operating Partner or such Affiliates to provide
certain services to the Managing Partner, the Managing Partner
shall not be relieved of its duties and obligations to provide
services hereunder nor shall such duties and obligations be
altered by such transactions, agreements, arrangements or
understandings.
6.02 General Powers of the Managing Partner. Subject to the
terms, restrictions and limitations set forth elsewhere herein,
including, without limitation, those set forth in this Article
VI, the Managing Partner, on behalf of the Partnership, shall
have full authority and responsibility to do all things it deems
necessary or appropriate in the conduct of the business and
affairs of the Partnership, including, without limitation, (i)
the determination of the operations in which the Partnership will
participate and the level or rate of activity of such operations;
(ii) the obtaining and maintaining of all governmental licenses
and permits necessary or appropriate for the conduct of the
activities of the Partnership; (iii) the execution of normal
banking transactions such as accepting deposits, drawing of
checks and otherwise making payments on behalf of the
Partnership; (iv) the maintaining or incurring of Debt, the
making of expenditures and the incurring of any other obligations
it deems necessary or appropriate for the conduct of the
activities of the Partnership; (v) the evaluation of confidential
information furnished to the Partnership by others in connection
with the operation of the Partnership's business or the
evaluation by the Partnership of a potential transaction; (vi)
the acquisition, lease, disposition, mortgage, pledge,
encumbrance, hypothecation or exchange of any or all of the
assets of the Partnership; (vii) the use of the assets of the
Partnership (including, without limitation, cash on hand) in any
manner it deems necessary or appropriate in order to achieve the
purposes of the Partnership, including, without limitation, the
financing of the conduct of the activities of the Phosphate
Chemicals Business and any other operations of the Partnership,
the extension of credit in the ordinary course of business to
Persons other than Affiliates of the Managing Partner (except
that the Managing Partner may cause the Partnership to advance
funds to it or its Affiliates in order to meet payroll or other
similar obligations with respect to its employees or employees of
its Affiliates who provide services to the Partnership, as
contemplated in Sections 9.06 and 9.11), the repayment of
obligations of the Partnership, the conduct of additional
Partnership operations and the purchase of assets; (viii) the
negotiation and execution on any terms it deems necessary or
appropriate, and the performance of, any contracts, conveyances
or other instruments that it considers necessary or appropriate
to the conduct of the Partnership operations or the
implementation of its powers under this Agreement; (ix) the
calculation and distribution of Distributable Cash; (x) subject
to Section 5.07(c) and Section 5.07(d), the calculation and
reinvestment, or distribution, of Capital Proceeds; (xi) the
selection, appointment and dismissal of officers, employees,
outside attorneys, accountants, consultants, engineers and
contractors to perform services for the Partnership, and the
determination of their compensation and other terms of employment
or hiring; (xii) the maintenance of such insurance (including
self- insurance) for the benefit of the Partnership as the
Managing Partner deems necessary or appropriate; (xiii) the
formation of any further limited or general partnerships, joint
ventures or other relationships that the Managing Partner deems
necessary or appropriate, except that the Managing Partner shall
not, without the consent of the FRP Partner, cause the
Partnership to create, invest in, or become an equity owner or
partner in an entity which is subject to Federal income taxes;
(xiv) the control of any matters affecting the rights and
obligations of the Partnership, including the conduct of
litigation and the incurring of legal expenses and the settlement
of claims and litigation; (xv) the preparation of the
Partnership's tax returns; (xvi) subject to Section 9.12, the
hiring or engagement of its Affiliates (subject to the
supervision and control of the Managing Partner) to carry out the
obligations of the Managing Partner hereunder; (xvii) subject to
Section 9.07, the taking of all actions necessary or appropriate
to preserve life or property in the case of an emergency or
necessary or appropriate to comply with applicable law; and
(xviii) the payment of all taxes which may be levied or assessed
against the Partnership or its properties.
6.03 Limitations on the Partners; Relations Among Partners.
(a) Except as set forth in Section 6.02 with respect to the
Managing Partner, but in all cases subject to Section 6.07, no
Partner shall, in the name of, or on behalf of the Partnership,
act without the prior consent of the Policy Committee or the
approval of the two CEOs or the Managing Partner contemplated by
Section 6.07(b), as the case may be.
(b) No Partner shall be liable to third Persons for Partnership
losses, deficits, liabilities or obligations except as
specifically otherwise provided herein or expressly agreed to in
writing by such Partner, unless the assets of the Partnership
shall first be exhausted.
(c) In any matter between the Partnership on the one hand and any
of the Partners on the other hand or in any matter between the
Partners, neither the Partnership nor any Partner shall be bound
by the act of a Partner unless such Partner is acting in
accordance with the limitations and provisions set forth in this
Agreement or with the consent of each other Partner.
6.04 Policy Committee.
(a) The responsibility and authority for establishing policies
relating to the strategic direction of the Partnership and
assuring that such policies are implemented shall be vested in a
policy committee (the "Policy Committee"). All decisions
concerning the management and control of the Partnership that are
approved by the Policy Committee shall be binding on the
Partnership and the Partners. Except as otherwise stated herein,
the Managing Partner shall use all commercially reasonable
efforts to act in accordance with the budgets and policies
established by, and other determinations made by, the Policy
Committee or the two CEOs or the Managing Partner, as the case
may be, in accordance with Section 6.07.
(b) The Policy Committee shall consist of four (4) members, two
(2) of whom shall be representatives of the IMC Partner selected
by the IMC Partner (each an "IMC Representative" and,
collectively, the "IMC Representatives") and two (2) of whom
shall be representatives of the FRP Partner selected by the FRP
Partner (each an "FRP Representative" and, collectively, the "FRP
Representatives" and, together with the IMC Representatives, the
"Representatives"). A Representative of the Operating Partner
shall serve as Chairman of the Policy Committee. The IMC Partner
and the FRP Partner shall, within ten (10) days of the date
hereof, notify each other in writing of the identity of the IMC
Representatives and the FRP Representatives, respectively. The
IMC Partner, within (10) days of the date hereof, shall notify
the other Partners in writing as to which of its Representatives
is to initially serve as Chairman of the Policy Committee. Any
person selected by the IMC Partner or the FRP Partner to serve as
an IMC Representative or an FRP Representative shall continue to
serve in such capacity until such Partner shall have notified the
other Partners in writing of his or her replacement. The IMC
Partner and the FRP Partner may, by written notice to the other,
designate a person to serve as an alternate for each IMC
Representative and each FRP Representative, respectively (each
alternate to an IMC Representative being referred to herein as an
"IMC Alternate" and, collectively, as the "IMC Alternates"; each
alternate to an FRP Representative being referred to herein as an
"FRP Alternate" and, collectively, as the "FRP Alternates"; and
the IMC Alternates and the FRP Alternates being collectively
referred to herein as the "Alternates"), and such IMC Alternate
or FRP Alternate, as the case may be, shall be entitled, in the
absence of such IMC Representative or FRP Representative, to vote
on behalf of such IMC Representative or FRP Representative at any
meeting of the Policy Committee. Each Partner and its
Affiliates, in dealing with IMC Representatives or Alternates or
the FRP Representatives or Alternates, as the case may be, shall
be entitled to rely conclusively upon the power and authority of
such Representatives or Alternates to bind the IMC Partner or the
FRP Partner, as the case may be, with respect to all matters
unless and until it receives notice to the contrary in writing
from the IMC Partner or the FRP Partner, as the case may be. To
the fullest extent permitted by law, each Representative and
Alternate shall be deemed the agent of the Partner which
appointed such Person a Representative and Alternate, and such
Representative or Alternate shall not be deemed an agent or a
sub-agent of the Partnership or the other Partners and shall have
no duty (fiduciary or otherwise) to the Partnership or the other
Partners. Each Partner, by execution of this Agreement, agrees
to, consents to, and acknowledges the delegation of powers and
authority to such Representative and Alternatives, and to the
actions and decisions of such Representative and Alternates
within the scope of their respective authority as provided
herein.
(c) The Policy Committee shall hold regular meetings at least
once during each quarter of each Fiscal Year on dates specified
by the Policy Committee and may meet for special meetings at the
call of any Partner on at least twenty (20) days' notice to the
other Partners (or such shorter periods as may be necessary in an
emergency). Attendance by any IMC Representative or FRP
Representative or any IMC Alternate or FRP Alternate at any
meeting of the Policy Committee shall constitute an effective
waiver of any required prior notice to the IMC Partner or the FRP
Partner, as the case may be, of such meeting. The Chairman of
the Policy Committee shall, (i) with reasonable advance notice
(which in the case of regular quarterly meetings shall not be
less than fourteen (14) days), prepare and distribute an agenda
for each meeting of the Policy Committee, (ii) organize and
conduct such meeting and (iii) prepare and distribute minutes of
such meeting. Any Partner may propose in advance topics for the
agenda or raise topics which are not on the agenda for such
meeting. In addition to the Representatives and Alternates of
the Partners serving on the Policy Committee each Representative
or Alternate of each of the IMC Partner and the FRP Partner may
bring one or more other advisors to any meeting; provided that
such advisors shall not have the right to vote on any matter
brought before the Policy Committee; and provided, further that
the Representatives or Alternates of either of the IMC Partner or
the FRP Partner shall have the right to call executive sessions
of the Policy Committee and to exclude any Person not a
Representative or Alternate from such executive session unless
such Person is an employee of a Partner or its parent entity.
(d) Meetings of the Policy Committee may only be held when a
quorum is present. Except as set forth in the last sentence of
this Section 6.04(d), a quorum of the Policy Committee shall be
comprised of four (4) Representatives or Alternates (or any
combination thereof), which quorum shall be comprised of two (2)
IMC Representatives or IMC Alternates (or any combination
thereof) and two (2) FRP Representatives or FRP Alternates (or
any combination thereof). The affirmative vote of a majority of
the Policy Committee at a meeting at which a quorum is present
(two (2) IMC Representatives or IMC Alternates (or any
combination thereof) and two (2) FRP Representatives or FRP
Alternates (or any combination thereof) being entitled to vote at
any such meeting, except as set forth in the final two (2)
sentences of this Section 6.04(d)) must be obtained in connection
with the decision of any matter being considered by the Policy
Committee; provided, that in the case of a business opportunity
presented to the Partnership by a Presenting Partner pursuant to
Section 2.08(b) or pursuant to Section 3.0 of the Parent
Agreement or a Real Estate Development Project presented to the
Partnership by a Developing Partner pursuant to Section 2.08(c),
the election as to whether to pursue or not to pursue such
business opportunity or Real Estate Development Project, as the
case may be, shall be made by the affirmative vote of two (2)
Representatives or Alternates (or any combination thereof) of the
Exercising Partner or the Electing Partner, as the case may be.
Representatives or Alternates (or any combination thereof)
constituting a quorum may, upon their unanimous consent,
participate in a meeting of the Policy Committee by means of
conference telephone or similar communications equipment which
makes it possible for all persons participating in the meeting to
hear each other. Representatives or Alternates (or any
combination thereof) may consent to any action without a meeting
through a consent in writing of two (2) IMC Representatives or
IMC Alternates (or any combination thereof), and two (2) FRP
Representatives or FRP Alternates (or any combination thereof)
or, in the circumstances described in the proviso to the second
preceding sentence above, of two Representatives or Alternates
(or any combination thereof) of the Exercising Partner or the
Electing Partner, as the case may be. Notwithstanding any
provision of this Agreement to the contrary, if either the IMC
Partner (or, during the IMC GPCo Liquidation Period, Operations
or IMC GPCo) or the FRP Partner defaults in any obligation to pay
money (including, without limitation, any cash contribution
pursuant to Section 3.02 and any amounts payable under the
Contribution Agreement) as and when due hereunder and such
default remains uncured after the expiration of thirty (30) days
from and after notice thereof to such Partner by any other
Partner and there is no good faith dispute among the Partners or
their Affiliates over the existence of such default (with any
such good faith disputes among the Partners or their Affiliates
to be resolved as soon as practicable pursuant to the Dispute
Resolution Mechanism), neither the defaulting Partner's
Representatives nor Alternates (which, during the IMC GPCo
Liquidation Period, with respect to either Operations or IMC GPCo
shall mean neither the IMC Representatives nor the IMC
Alternates) shall be entitled to vote on, or consent to, any
matter before the Policy Committee until such time as the default
has been cured by the defaulting Partner (but they shall continue
to receive notice of and to be able to attend meetings of the
Policy Committee), and during such period the Policy Committee
shall be entitled to exercise all of its power and authority as
set forth in this Partnership Agreement upon the vote at a
meeting (or by telephone or other similar communications
equipment as set forth above) or by written consent of two (2) of
the Representatives or Alternates (or any combination thereof) of
the non-defaulting Partner. In any such event, the presence at a
meeting in person (or by telephone or other similar
communications equipment as set forth above) of two (2)
Representatives or Alternates (or any combination thereof) of the
non-defaulting Partner shall constitute a quorum for the
transaction of business.
6.05 Rules of Procedure. The Policy Committee may from time to
time adopt detailed rules and procedures not inconsistent with
this Agreement for the management of the business of the
Partnership.
6.06 Further Management Limitations. Under no circumstances
shall the Policy Committee have the power to alter or modify in
any manner the terms of this Agreement.
6.07 Major Decisions.
(a) Except as provided in Section 6.07(b) below, no act shall be
taken or sum expended or obligation incurred by the Partnership,
the Policy Committee or any Partner concerning a matter within
the scope of any of the Major Decisions set forth below (each a
"Major Decision"), unless and until the Major Decision (A) shall
be approved by the Policy Committee or the CEOs or (B) is
permitted to be taken by the Managing Partner pursuant to Section
6.07(b). The Major Decisions shall consist of:
(i) creating any Debt of the Partnership in an aggregate
amount at any time outstanding exceeding the Base
Obligation Amount applicable at the time when such Debt is
incurred; provided that no approval by the Policy Committee
or the CEOs will be required for borrowings by the
Partnership for working capital purposes pursuant to a
credit facility (or a working capital contribution
facility) previously approved by the Policy Committee (or,
if not by the Policy Committee, by the CEOs); and provided,
further that the Partners shall have the right to make
Partner Loans to the Partnership in accordance with Section
3.03 without the approval of the Policy Committee or the
CEOs;
(ii) making, or committing to make, any capital
expenditures for Expansion in an annual aggregate amount in
any Fiscal Year in excess of the Base Obligation Amount for
such Fiscal Year;
(iii) making, or committing to make, any Material Asset
Sale;
(iv) approving annual operating and capital expenditure
budgets, quarterly updates of such budgets and any increase
in excess of 15% in any previously approved capital budget
item having a dollar amount in any Fiscal Year in excess of
the Base Budget Amount for such Fiscal Year, it being
understood that if any quarterly update of a previously
approved annual operating or capital expenditure budget is
not approved by the Policy Committee, or the CEOs pursuant
to Section 6.07(b), as the case may be, the Managing
Partner shall have the authority to continue to operate and
manage the business and affairs of the Partnership in
accordance with the most recently approved annual operating
or capital expenditure budget, as the case may be, as such
budget has been updated by any previously approved
quarterly budget update;
(v) calculating Distributable Cash and making distributions
of Distributable Cash in accordance with Section 5.07;
(vi) entering into, or modifying or amending in any
material respect, any agreement which expressly restricts
the Partnership's right to distribute Distributable Cash to
the Partners;
(vii) incurring a Material Obligation (other than Debt
permitted to be incurred pursuant to Section 6.07(a)(i));
(viii) (A) shutting down any Material Facilities of the
Partnership if, in the good faith judgment of the Managing
Partner, such shut down is expected to last more than three
(3) months or (B) continuing to keep any Material
Facilities of the Partnership shut down (other than a shut
down covered by clause (A) above which was properly
approved by the Policy Committee or, if not by the Policy
Committee, by the CEOs) for a period in excess of three (3)
months;
(ix) approving and determining the amount of any cash
contributions by the Partners to be made pursuant to
Section 3.02;
(x) entering into, or modifying or amending in any material
respect, any transactions, agreements, arrangements or
understandings between or on behalf of the Partnership, on
the one hand, and the Operating Partner or any Affiliate of
the Operating Partner, on the other hand, in an aggregate
amount in any Fiscal Year in excess of the Base Affiliate
Transaction Amount for such Fiscal Year, other than the
transactions, agreements, arrangements or understandings
referenced in Section 9.12;
(xi) entering into any settlement agreement with respect to
any suit, claim, action or proceeding involving payment by
the Partnership of an amount in excess of one million
dollars ($1,000,000); or
(xii) calculating the allocations pursuant to Article V, in
the event of a disagreement between the IMC Partner (or,
during the IMC GPCo Liquidation Period, Operations or IMC
GPCo) and the FRP Partner relating thereto.
(b) Notwithstanding the foregoing, if the Policy Committee fails
to approve any matter before it in accordance with the terms of
Sections 6.04 and 6.05, after discussion in good faith,
resolution of such matter shall be referred to the respective
Chief Executive Officers ("CEOs") of the Non-Managing Partners at
the time such matter is presented for resolution. Except as
provided in Section 6.07(c) below, if such CEOs fail to agree on
any matter within fourteen (14) days of the date the matter was
submitted to them, pending final resolution of the dispute, the
Managing Partner shall have the authority to operate the business
and affairs of the Partnership in such a manner as it reasonably
determines to be necessary in order to maintain the value of the
assets of the Partnership or as required to assure compliance
with applicable law, including without limitation taking the
following actions:
(i) establishing annual operating and capital expenditure
budgets (including maintenance capital and capital
expenditures for Expansion in an aggregate amount in any
Fiscal Year not exceeding the Base Obligation Amount for
such Fiscal Year);
(ii) calculating Distributable Cash and distributing
Distributable Cash in accordance with Section 5.07;
(iii) (A) shutting down any Material Facilities of the
Partnership if, in the good faith judgment of the Managing
Partner, such shut down is expected to last more than three
(3) months or (B) continuing to keep any Material
Facilities of the Partnership shut down (other than a shut
down covered by clause (A) above which was properly
approved by the Policy Committee or, if not by the Policy
Committee, by the CEOs or properly undertaken by the
Managing Partner) for a period in excess of three (3)
months; or
(iv) calculating the allocations pursuant to Article V, in
the event of a disagreement between the IMC Partner (or,
during the IMC GPCo Liquidation Period, Operations or IMC
GPCo) and the FRP Partner relating thereto.
(c) Notwithstanding the foregoing Section 6.07(b), in no event
shall the Managing Partner take any of the following actions
without the prior approval of either the Policy Committee or the
CEOs in accordance with Section 6.07(a) or Section 6.07(b), as
the case may be:
(i) creating any Debt of the Partnership in an aggregate
amount at any time outstanding exceeding the Base
Obligation Amount applicable at the time when such Debt is
incurred; provided that no approval by the Policy Committee
or the CEOs will be required for borrowings by the
Partnership for working capital purposes pursuant to a
credit facility (or a working capital contribution
facility) previously approved by the Policy Committee (or,
if not by the Policy Committee, by the CEOs); and provided,
further that the Partners shall have the right to make
Partner Loans to the Partnership in accordance with Section
3.03 without approval of the Policy Committee or the CEOs;
(ii) making, or committing to make, any capital
expenditures for Expansion in an aggregate amount in any
Fiscal Year in excess of the Base Obligation Amount for
such Fiscal Year;
(iii) making, or committing to make, any Material Asset
Sale;
(iv) entering into, or modifying or amending in any
material respect, any agreement which expressly restricts
the Partnership's right to distribute Distributable Cash to
the Partners;
(v) incurring a Material Obligation (other than Debt
permitted to be incurred pursuant to Section 6.07(a)(i));
(vi) approving and determining the amount of any cash
contributions by the Partners to be made pursuant to
Section 3.02;
(vii) entering into, or modifying or amending in any
material respect, any transactions, agreements,
arrangements or understandings between or on behalf of the
Partnership, on the one hand, and the Operating Partner or
any Affiliate of the Operating Partner, on the other hand,
in an aggregate amount in any Fiscal Year in excess of the
Base Affiliate Transaction Amount for such Fiscal Year,
other than the transactions, agreements, arrangements or
understandings referenced in Section 9.12;
(viii) entering into any settlement agreement with respect
to any suit, claim, action or proceeding involving payment
by the Partnership of an amount in excess of one million
dollars ($1,000,000); or
(ix) engaging in any activity prohibited by Section 9.05.
6.08 Management of Certain Environmental Liabilities. The
Partners agree that after the Closing Date the IMC Partner and
the FRP Partner will consult with each other concerning
negotiation, remediation and expenditures to be made by the
Partnership or the Partners, as the case may be, for the
Environmental Liabilities listed on Part I and Part II of
Schedule 2.05(iv) to the Contribution Agreement (each a "Retained
Environmental Liability"). The Partnership and the Partners
agree to provide to the Partner whose Affiliate contributed the
Assets to which such Retained Environmental Liability relates
(or, in a case in which Operations contributed such Assets, to
Operations) (the "Retaining Partner") access to all relevant
information on an ongoing basis relating to such Environmental
Liability and to enter into discussions in good faith to
determine the most efficient use of money by the Partnership or
the Retaining Partner, as the case may be, in an effort to ensure
the Partnership's continued use of (or other appropriate action
agreed to by the Partners with respect to) the Assets to which
such Environmental Liability relates. The Partners further agree
to permit the Retaining Partner, upon written notification to the
other Partners, to directly manage and oversee all negotiations,
agreements to remediate and remediation activities relating to
any Retained Environmental Liability to the extent the management
of such negotiation and remediation will not unreasonably
interfere with the day-to-day use of such Assets or result in an
unreasonable increase in costs to the Partnership (such cost
increases to be reimbursed to the Partnership by such Retaining
Partner managing such negotiation and remediation). With respect
to any Environmental Liability listed on such Schedule 2.05(iv)
that shall be an Assumed Liability, each Partner shall cause the
Partnership to act as quickly as is commercially reasonable to
complete all required remedial activity.
ARTICLE VII.
Encumbrance or Transfer of Partnership Interest
7.01 Transfer of Partnership Interest Generally. No Partner may
assign, transfer or otherwise dispose of all or any portion of
its Partnership Interest except in accordance with the terms of
this Article VII. Any attempt by any Partner to assign, transfer
or otherwise dispose of all or any portion of its Partnership
Interest other than in accordance with this Article VII shall be
null, void ab initio and of no force and effect. Notwithstanding
any other provision of this Article VII, the transfers of the
Partnership Interest of IMC GPCo to Operations executed in
connection with the IMC GPCo Liquidation and, in the event that
FTX and FRP choose to cause the merger, liquidation or
dissolution of the FRP Partner (or the transfer by the FRP
Partner of its Partnership Interests to FRP or an Affiliate of
FRP) in accordance with the terms of the Amendment, Waiver and
Consent Agreement, transfers of the Partnership Interest of the
FRP Partner to FRP or an Affiliate of FRP executed in connection
with such merger, liquidation or dissolution of the FRP Partner
(or such transfer of the Partnership Interests), shall be deemed
to have been made in accordance with the terms of this Article
VII.
7.02 Transfers of Partnership Interests. (a) Except as otherwise
consented to in writing by each of the other Partners, no Partner
may sell, transfer or otherwise dispose of all or any portion of
its Partnership Interest (collectively "Transfer") unless (i)
such Transfer is pursuant to a written agreement pursuant to
which the transferee agrees to be bound by all of the terms of
this Agreement as if it were originally a party hereto, (ii) such
Transfer does not cause a termination of the Partnership for
Federal income tax purposes, (iii) the transferring Partner shall
have transferred a proportionate amount of its capital stock of
the Managing Partner to the transferee of all or a portion of the
Partnership Interest as required by Section 7.05 and (iv) such
Transfer is in compliance with Section 7.02(b) and Section 7.04.
(b) If either the IMC Partner (or, during the IMC GPCo
Liquidation Period, Operations or IMC GPCo) or the FRP Partner
(in any such case, the "Soliciting Partner") desires to sell or
otherwise dispose of to any third party (other than an Affiliate
of such Soliciting Partner), or to solicit bids from any third
party (other than an Affiliate of such Soliciting Partner) to
purchase or otherwise acquire, all or any part of its Partnership
Interest (the "Subject Partnership Interest"), such Soliciting
Partner shall (i) if the Soliciting Partner is the IMC Partner
(or, during the IMC Liquidation Period, Operations or IMC GPCo),
notify the FRP Partner in writing of the IMC Partner's desire to
sell its Subject Partnership Interest or (ii) if the Soliciting
Partner is the FRP Partner, notify the IMC Partner (or, during
the IMC GPCo Liquidation Period, Operations and IMC GPCo) in
writing of its desire to sell its Subject Partnership Interest.
The notice referred to in the preceding sentence is hereinafter
referred to as the "Notice of Intent to Sell", and the Partner
receiving the Notice of Intent to Sell is hereinafter referred to
as the "Notified Partner". For a period (the "No-Shop Period")
of thirty (30) days following the date it gives Notice of Intent
to Sell, and during the duration of any Negotiation Period (as
defined below), neither the Soliciting Partner nor any of its
Affiliates, officers, directors, employees, representatives or
agents will, without the prior written consent of the Notified
Partner, commence or continue any discussions, negotiations or
exchanges of information with any Person other than the Notified
Partner with respect to the sale of the Subject Partnership
Interest. During the No-Shop Period, both the Soliciting Partner
and the Notified Partner shall cooperate with each other in
exchanging all due diligence materials they deem to be reasonably
necessary to determine the price and terms of any potential
offer. If the Notified Partner makes a bona fide offer to
purchase the Subject Partnership Interest prior to the end of the
No-Shop Period, then the Soliciting Partner and the Notified
Partner shall negotiate in good faith for the purchase and sale
of the Subject Partnership Interest and the No-Shop Period shall
be extended for fifteen (15) days (the "Negotiation Period");
provided that a decision to accept or reject shall be in the sole
discretion of the Soliciting Partner. If the Notified Partner
fails to make a bona fide offer to purchase the Subject
Partnership Interest (the making or failure to make such offer
being in its sole discretion) prior to the expiration of the
No-Shop Period or if the Soliciting Partner and the Notified
Partner fail to execute a letter of intent relating to the
purchase and sale of the Subject Partnership Interest or
terminate negotiations prior to the expiration of the Negotiation
Period, then the Soliciting Partner may, but shall not be
obligated to, immediately commence discussions, negotiations or
exchanges of information with, and/or sell its Subject
Partnership Interest to, any third party; provided that if the
Notified Partner made a bona fide offer during the No-Shop
Period, the Soliciting Partner shall not so sell the Subject
Partnership Interest to a third party unless (i) definitive,
binding agreements relating to such sale are executed within two
hundred twenty (220) days of the expiration of the Negotiation
Period, (ii) the cash value of the consideration received in
connection with such sale is at least equal to 95% of the cash
value of such offer made by the Notified Partner and (iii) the
transferee of such Subject Partnership Interest agrees in writing
to be bound by the terms of this Agreement as if it had
originally been a party hereto. The cash value of such sale and
the cash value of such offer by the Notified Partner,
respectively, shall be determined by agreement among the
Soliciting Partner and the Notified Partner (i) in the case of
the cash value of such sale, within ten (10) days following the
execution of definitive, binding agreements by the parties
relating thereto and (ii) in the case of the cash value of such
offer by the Notified Partner, within ten (10) days following the
earliest to occur of (A) the termination of negotiations between
the Soliciting Partner and the Notified Partner and (B) the
expiration of the Negotiation Period, provided that if such
agreement is not reached during either of such ten (10) day
periods, then, in either such case, such cash value shall be
determined by means of the Appraisal Procedure, with the expense
thereof to be paid fifty percent (50%) by the Soliciting Partner
and fifty percent (50%) by the Notified Partner and with the
determination made thereby being final, unappealable, binding on
both the Soliciting Partner and the Notified Partner and
enforceable in a court of law or equity. After the expiration of
such two hundred twenty (220) day period, such Subject
Partnership Interest shall again be subject to the terms of this
Section 7.02(b). The failure of either the Soliciting Partner or
the Notified Partner to exercise its rights under this Section
7.02(b) shall not be deemed to be a waiver of its respective
rights under this Section 7.02(b) with respect to subsequent
Subject Partnership Interests.
7.03 Liens. None of IMC GPCo (prior to the completion of the
Final IMC GPCo Liquidating Distribution), Operations (subsequent
to the completion of the Initial IMC GPCo Liquidating
Distribution), the FRP Partner (prior to or subsequent to the
merger, liquidation or dissolution of the FRP Partner (or the
transfer of its Partnership Interests) contemplated by the terms
of the Amendment, Waiver and Consent Agreement) or the Managing
Partner may, except with the consent of the other Partners (which
consent may be granted or withheld in such Partners' sole
discretion), create or permit to exist any Lien on its
Partnership Interest or any portion thereof or any of the capital
stock of the Managing Partner (except (i) Liens for current taxes
not delinquent or taxes being contested in good faith and by
appropriate proceedings or (ii) Liens arising in the ordinary
course of business for sums not due or sums being contested in
good faith and by appropriate proceedings). Any attempt by any
such Partner to create or permit to exist any Lien (other than
the excepted Liens described in this Section 7.03) on its
Partnership Interest or any portion thereof shall be null, void
ab initio and of no force and effect. Notwithstanding anything to
the contrary contained herein, if any Person obtains a Lien on
the Partnership Interest of IMC GPCo, Operations, the FRP Partner
or the Managing Partner or any portion thereof (during a period
during which such a Lien could not be granted to such Person in
accordance with the terms of this Section 7.03) and forecloses on
such Lien, (i) the Partnership shall continue, (ii) the Person
foreclosing on the Lien shall succeed to the economic interests
of the Partnership Interest, or portion thereof, upon which it
foreclosed but not the voting or other interests which comprise
such Partnership Interest, or portion thereof, (iii) the Person
foreclosing on such Lien shall not be admitted as a "Partner"
without the approval of the Policy Committee or the other
Partners, and (iv) any sale or other disposition of the
Partnership Interest, or portion thereof, upon which such Person
foreclosed shall be subject to the terms of Article VII hereof.
7.04 Transfers Upon Triggering Events.
(a) Upon the occurrence of a Triggering Event, the Triggering
Partner shall give the other Partners prompt written notice of
such Triggering Event (the "Triggering Event Notice"), which
notice shall describe the terms and conditions of the transaction
giving rise to the Triggering Event. For a period of thirty (30)
days following the receipt of the Triggering Event Notice (or, if
no Triggering Event Notice is received, at any time after a
Triggering Event has occurred), the Non-Triggering Partner
(which, during the IMC GPCo Liquidation Period, shall mean both
Operations and IMC GPCo, for purposes of this Section 7.04, if
the IMC Partner is the Non-Triggering Partner) shall have the
right to sell, and, upon the receipt of notice (the "Exercise
Notice") of the exercise of such right from the Non-Triggering
Partner, the Triggering Partner shall have the obligation to
purchase, all but not less than all of the Non-Triggering
Partner's Partnership Interest at the Transfer Price applicable
to such Triggering Event; provided, however, that (i) if the
transaction that gave rise to the Triggering Event involved the
sale of all or a portion of the Partnership Interest of the
Triggering Partner, the Non-Triggering Partner shall instead have
the right to sell all, but not less than all of its Partnership
Interest to the purchaser (the "Purchasing Partner") of the
Triggering Partner's Partnership Interest and the Purchasing
Partner, by its execution and delivery of a counterpart hereof on
the closing date with respect to the purchase and sale of the
Triggering Partner's Partnership Interest, agrees to purchase the
Non-Triggering Partner's Partnership Interest at the Transfer
Price applicable to such Triggering Event, (ii) if the Exercise
Notice was delivered to the Triggering Partner and the Triggering
Partner fails to purchase the Non-Triggering Partner's
Partnership Interest within the period specified above, then,
without limiting its rights against such party, the
Non-Triggering Partner shall then have the right to sell all, but
not less than all, of its Partnership Interest to either the
Purchasing Partner or the Partnership, and upon receipt of an
Exercise Notice, the Purchasing Partner or the Partnership, as
the case may be, shall be obligated to purchase the
Non-Triggering Partner's Partnership Interest for cash at the
Transfer Price applicable to such Triggering Event; and (iii) if
the Exercise Notice was delivered to the Purchasing Partner and
the Purchasing Partner fails to purchase the Non-Triggering
Partner's Partnership Interest within the period specified above,
then, without limiting its rights against such party, the
Non-Triggering Partner shall then have the right to sell all, but
not less than all, of its Partnership Interest to either the
Triggering Partner or the Partnership, and upon receipt of an
Exercise Notice, the Triggering Partner or the Partnership, as
the case may be, shall be obligated to purchase the
Non-Triggering Partner's Partnership Interest for cash at the
Transfer Price applicable to such Triggering Event. The closing
of the sale of the Non-Triggering Partner's Partnership Interest
shall occur on or before the sixtieth (60th) day following the
receipt of the Exercise Notice by the Triggering Partner, the
Purchasing Partner or the Partnership, as the case may be;
provided that if the Appraisal Procedure is invoked to determine
the Transfer Price, the time periods in this sentence shall be
extended to the date which is thirty (30) days following the
final determination of the Transfer Price. If a Triggering Event
Notice has been delivered and the Non-Triggering Partner does not
deliver an Exercise Notice within the thirty (30) day period
specified above, the Non-Triggering Partner shall be deemed to
have elected not to sell its Partnership Interest.
(b) The terms and conditions (other than the method of payment of
the Transfer Price) of any sale pursuant to this Section 7.04
shall be customary for transactions of such type; provided that
if the event giving rise to this Triggering Event involves a sale
of a Partnership Interest, such terms and conditions shall be
substantially similar to the terms and conditions of the sale
giving rise to the Triggering Event, adjusted as appropriate to
reflect differences in the structure of the transactions. The
Transfer Price payable in connection with any sale of a
Partnership Interest by a Non-Triggering Partner pursuant to this
Section 7.04 shall be payable in cash on the date of closing of
such sale. If the Transfer Price is determined in accordance
with the Appraisal Procedure, the expense thereof is to be paid
fifty percent (50%) by the Triggering Partner and fifty percent
(50%) by the Non- Triggering Partner.
(c) Any sale of a Partnership Interest by a Non-Triggering
Partner pursuant to this Section 7.04 shall be accompanied by a
corresponding sale of all of the issued and outstanding stock of
the Managing Partner then held by such Non-Triggering Partner in
accordance with Section 7.05.
7.05 Interests in Managing Partner. Except as provided in this
Section 7.05, neither the IMC Partner nor the FRP Partner shall
sell, transfer or otherwise dispose of all or any portion of the
capital stock of the Managing Partner. If either the IMC Partner
or the FRP Partner sells, transfers or otherwise disposes of all
or a portion of its Partnership Interest to any Person in
accordance with the terms of Section 7.02, then, simultaneously
therewith, the Non-Managing Partner making such a transfer shall
so sell, transfer or otherwise dispose of a proportionate amount
of capital stock of the Managing Partner to such Person.
7.06 Certain Conditions of Certain Transfers. As a condition to
the effectiveness of (i) the Initial IMC GPCo Liquidating
Distribution, (ii) the Final IMC GPCo Liquidating Distribution,
(iii) the FRP GPCo/FCC/FTX Mergers, (iv) the merger, liquidation
or dissolution of the FRP Partner (or the transfer of its
Partnership Interests) in accordance with the terms of the
Amendment, Waiver and Consent Agreement and (v) any related
transactions, each Partner hereby agrees to bear, and assume
liability for, any expense, cost or loss (including any increase
in taxes, other than any increase in income taxes which arises
solely from the timing of the reporting of income, deductions and
credits attributable to the normal business activities of the
Partnership) suffered by the Partnership, any other Partner or
any of their Related Persons (as defined below) arising from
consummation of the transactions described in (i) to (v) above in
violation of the provisions of this Agreement, the Parent
Agreement, the Amendment, Consent and Waiver Agreement and the
IMC GPCo Plan of Liquidation.
ARTICLE VIII.
Other Rights of, Duties and Restrictions on the Partners
8.01 Indemnification. All costs, expenses, liabilities,
obligations, losses, damages, penalties, proceedings, actions,
suits or claims of whatever kind or nature which may be imposed
on, incurred by, suffered by, or asserted against the
Partnership, any Partner (which term, for purposes of this
Article VIII, shall, with respect to the IMC Liquidation Period
(and all other periods during which Operations or IMC GPCo is a
Partner) refer to each of Operations and IMC GPCo, severally and
not jointly) or any Partner's respective Affiliates, directors,
officers and employees, in connection with the ownership or
management or operation of the business and affairs of the
Partnership shall be referred to as "Claims". The Partnership
shall indemnify and hold harmless each Partner and their
respective Affiliates, directors, officers and employees
("Related Persons") for all Claims other than those caused by
such Partner's or such other Related Person's gross negligence,
wilful misconduct, wilful breach of this Agreement or failure to
follow a specific instruction from the Policy Committee adopted
in accordance with the terms of this Agreement; provided that in
no event shall the Partnership be required to indemnify any
Partner or any of its Related Persons for any Claim arising out
of or relating to any Excluded Liability for which such Partner
or Related Person is responsible pursuant to the terms of the
Contribution Agreement. For purposes of this Agreement, an
ignoring of the terms of this Agreement shall be deemed a wilful
breach; provided that the Managing Partner shall not be liable
for ignoring the term of this Agreement requiring the Managing
Partner to act as an ordinary prudent and reasonable manager if
the Managing Partner acted in good faith and in the belief (which
was reasonable) that its actions were in accordance with all of
the terms of this Agreement. In addition to, and not in
contravention of, the foregoing, the Partnership shall indemnify
and hold harmless each Partner and their respective Related
Persons from all Assumed Liabilities and any and all costs,
expenses, liabilities, obligations, losses, damages, penalties,
proceedings, actions, suits or claims of whatever kind or nature
which may be imposed on, incurred by, suffered by, or asserted
against any Partner or its respective Related Persons arising out
of or in connection with any Assumed Liability. The Leasing
Agreement and the Marketing and Administrative Services Agreement
shall contain provisions consistent with this Section 8.01.
8.02 Contribution. In the event that any Partner shall pay in
good faith or become obligated to pay any proper obligation of
the Partnership, such Partner shall be entitled to contributions
from the other Partners to the extent necessary so that, after
giving effect to such contributions, each Partner shall bear no
more than that part of such obligation which corresponds to its
respective Capital Interest at the time of the occurrence,
circumstances, events or conditions giving rise to the
obligation.
8.03 Continuing Liability of Withdrawn Partner. In the event of
the withdrawal of a Partner from the Partnership by reason of the
transfer of its entire Partnership Interest in accordance with
the provisions of this Agreement, or in violation of this
Agreement, such withdrawn Partner shall remain liable as a
general partner with respect to all obligations of the
Partnership incurred or accrued on or prior to the date of
withdrawal (but shall not have liability for obligations of the
Partnership incurred or which accrue subsequent to the date of
withdrawal). If the Partnership is continued without
dissolution, or reconstituted and continued, following the
withdrawal of any Partner, in either case in accordance with the
terms of this Agreement, the withdrawn Partner shall be entitled
only to the payments expressly provided for in this Agreement and
shall not be entitled to any other or further payments from the
Partnership or any other Partner. Further, in such circumstances,
the withdrawn Partner shall have no right to cause the winding up
or liquidation of the business or assets of the Partnership, and
neither the Partnership nor any Partner shall, as a condition to
the continuation or reconstitution of the Partnership, be
required to post any bond in favor of, or indemnify, the
withdrawn Partner as regards past, present or future liabilities
or otherwise.
8.04 Breach of Parent Agreement. For purposes of this Agreement,
(i) a breach by FTX or FRP of the terms of the Parent Agreement
shall constitute a breach of this Agreement by the FRP Partner
and (ii) a breach by Global or Operations of the terms of the
Parent Agreement shall constitute a breach of this Agreement by
the IMC Partner.
ARTICLE IX.
Certain Operational Provisions
9.01 Financial, Accounting, and Banking Matters.
(a) The Fiscal Year of the Partnership shall begin on July 1 and
end on June 30 of each year of the Partnership.
(b) The auditors of the Partnership shall be Ernst & Young or
such other independent certified public accounting firm of
recognized national standing selected by the Policy Committee in
accordance with the terms of Sections 6.04 and 6.05, or if the
Policy Committee fails to so approve such a selection, then by
the CEOs or the Managing Partner, as the case may be, in
accordance with the terms of Section 6.07(b).
(c) The Partnership shall establish bank accounts at such banks
as may from time to time be designated by the Managing Partner.
The Partnership's funds shall be invested in such manner as the
Managing Partner deems appropriate. All bank and other accounts
shall be maintained in the Partnership's name. None of the
Partnership's funds shall be commingled with the funds of any
Partner unless previously approved in writing by the other
Partners.
9.02 Budget and Approval Authorities.
(a) The Managing Partner shall have the sole and exclusive
authority and responsibility to present annual operating and
capital budgets and quarterly updates of such budgets to the
Policy Committee for its approval, such quarterly updates to
present information on a month-by-month basis. As soon as
available, but not later than forty (40) days prior to the end of
each Fiscal Year, the Managing Partner shall, at a special
meeting of the Policy Committee called for such purpose, present
to the Policy Committee the operating and capital expenditure
budgets for the succeeding Fiscal Year. The Policy Committee
shall review such proposed budgets and shall either approve the
proposed budgets or negotiate in good faith with the Managing
Partner to adopt mutually acceptable budgets for such succeeding
Fiscal Year. As soon as available, but not later than sixty (60)
days after the end of a Fiscal Year and each quarter of the
succeeding Fiscal Year, the Managing Partner shall, at a special
meeting of the Policy Committee called for such purpose, present
to the Policy Committee the operating and capital expenditure
budget updates for the remaining portion of the then current
Fiscal Year. The Policy Committee shall review such proposed
budget updates and shall either approve the proposed budget
updates or negotiate in good faith with the Managing Partner to
adopt mutually acceptable budget updates for the remaining
portion of the then current Fiscal Year. If the Policy Committee
adopts budgets for a Fiscal Year or any portion thereof, the
Managing Partner shall use all commercially reasonable efforts to
operate and manage the business and affairs of the Partnership in
accordance with such budgets (or, if the Policy Committee fails
to so adopt such budgets in accordance with the terms of Sections
6.04 and 6.05 and if such budgets are instead adopted by the CEOs
or the Managing Partner, as the case may be, in each case in
accordance with the terms of Section 6.07(b), then in accordance
with such budgets).
(b) The Managing Partner shall have the sole and exclusive
authority and responsibility to present five (5) year operating
and financial forecasts for the Partnership to the Policy
Committee; provided that if the Managing Partner has not
presented such a five (5) year operating and financial forecast
to the Policy Committee on or before the sixtieth (60th) day of
any Fiscal Year for the succeeding five (5) years, the Managing
Partner shall provide the Non-Operating Partner with access to
the Managing Partner's operating and financial personnel and
shall cause such operating and financial personnel to assist the
Non-Operating Partner in preparing a five (5) year operating and
financial forecast for the Partnership.
9.03 Insurance. The Managing Partner shall have the authority
and responsibility to take whatever action (not inconsistent with
the terms hereof) it determines in good faith to be necessary or
appropriate to preserve and protect the assets of the
Partnership, including, without limitation, by procuring, for the
account of the Partnership, such insurance against such hazards
and liabilities as the Managing Partner deems appropriate in
light of prudent industry practice. All such insurance, whether
maintained by the Managing Partner, Operations or FRP for the
benefit of the Partnership, may be in the name of any Partner,
Operations, FRP or the Partnership so long as each insurance
policy names the Partnership and each Partner as either the
"insured party" or an "additional insured party" and waives
subrogation in favor of each such party. Such insurance coverage
may be subject to such self-insurance, deductibles and limits as
the Managing Partner deems appropriate. If requested by the
Managing Partner, either of the Non-Managing Partners or their
respective parent entities shall cooperate with the Managing
Partner in designing and maintaining a risk management program
which insures the Partnership against such hazards and
liabilities as the Managing Partner deems appropriate, provided
that if the Managing Partner requests either of the Non-Managing
Partners or their Affiliates to maintain insurance in the name of
the Partnership, the Partnership shall reimburse such
Non-Managing Partner or such Affiliates for all of the direct
costs and expenses incurred in connection with the maintenance of
such insurance. In addition to the insurance provided for the
benefit of the Partnership under this Section 9.03, each Partner
and its Affiliates shall have the right to purchase such other
insurance as it deems prudent to cover its respective interest in
the Partnership; provided that all costs and expenses incurred in
connection with the maintenance of such insurance shall be paid
by such Partner and provided that such insurance shall not have
the effect of restricting the amount or availability of insurance
maintained by the Partnership. Should any Partner or their
Affiliates with respect to the Partnership purchase such other
insurance, such other insurance shall waive rights of subrogation
against the other Partners, the Partnership and their Affiliates.
9.04 Financial and Other Information. The Managing Partner shall
deliver or cause to be delivered to each Partner:
(a) as soon as available, but not more than twenty (20) days (or,
in the case of June, forty-five (45) days) after the end of each
month during the term of the Partnership, (i) a statement of the
Distributable Cash and Capital Proceeds of the Partnership for
the preceding month and (ii) an estimate of the Distributable
Cash and Capital Proceeds of the Partnership for the remaining
months of the current quarter and for the entire succeeding
quarter of the Partnership;
(b) as soon as available, but not more than twenty (20) days (or,
in the case of June, forty-five (45) days) after the end of each
month in each Fiscal Year during the term of the Partnership, the
following reports of the Partnership: (i) a Partnership
consolidation (i.e. trial balance) for the preceding month, (ii)
a plant operating statement showing expenditures by cost center
and cost element compared with the budget for the preceding month
and year-to-date, (iii) a capital spending status report;
(c) as soon as available, but not more than twenty (20) days (or,
in the case of June, forty-five (45) days) after the end of each
month in each Fiscal Year during the term of the Partnership, (i)
an unaudited Balance Sheet of the Partnership as at the end of
the preceding month, (ii) the unaudited related Statement of
Income of the Partnership, which shall include sales volumes,
revenues and margins by product, for the preceding month and for
the Fiscal Year-to-date and (iii) the unaudited related Statement
of Cash Flow of the Partnership for the preceding month and for
the Fiscal Year-to-date, it being understood that in the case of
clauses (ii) and (iii) such statements are to be presented
setting forth in each case in comparative form the corresponding
figures for the corresponding period of the previous Fiscal Year
and the plan for the current Fiscal Year, all in reasonable
detail and in accordance with generally accepted accounting
principles applied on a basis consistent with such prior fiscal
periods (except as otherwise specified in such report);
(d) as soon as available, but not more than twenty (20) days (or,
in the case of June, forty-five (45) days) after the end of each
month in each Fiscal Year during the term of the Partnership, an
analysis of the performance of the Partnership;
(e) as soon as available, but in any event within thirty (30)
days after the end of each quarter of each Fiscal Year during the
term of the Partnership a report providing the financial and
operating data for inclusion in the Partners' Affiliates'
respective reports on Form 10-K or Form 10-Q (or any successor
reports or forms thereof) required to be filed with the SEC as of
the end of such quarter;
(f) as soon as available, but in any event within ninety (90)
days after the end of each Fiscal Year during the term of the
Partnership, an audited Balance Sheet as at the end of such
Fiscal Year and the related Statements of Income and Cash Flow of
the Partnership for such Fiscal Year, setting forth in each case
in comparative form, the figures for the previous Fiscal Year of
the Partnership, all in reasonable detail, with applicable
footnotes and accompanied by a report thereon of Ernst & Young or
such other independent public accountants of recognized national
standing selected by the Partnership in accordance with the terms
of Section 9.01(b), which report shall state whether in its
opinion, such financial statements present fairly in all material
respects the financial position of the Partnership as at the
dates indicated and the results of its operations and cash flows
for the periods indicated, in conformity with generally accepted
accounting principles;
(g) promptly upon obtaining knowledge of any audit item involving
disclosure or any material accounting issue, written notification
of such disclosure or accounting issue;
(h) within sixty (60) days after the end of each Fiscal Year
during the term of the Partnership, a certificate of an officer
of the Managing Partner describing the material terms of all
transactions between the Partnership and Affiliates of the
Operating Partner during the preceding Fiscal Year;
(i) within twenty (20) days of the end of each calendar year, the
information that FRP and FTX reasonably request in order for FRP
and FTX to comply with the provisions of FASB 109; and
(j) promptly, any other financial reports delivered to the
Operating Partner's parent entity.
9.05 Qualifying Income.
(a) The Partnership shall not, without the written consent of the
FRP Partner, generate income other than Qualifying Income. The
Managing Partner shall take any action required to operate the
Partnership in a manner consistent with the requirement of this
Section 9.05(a).
(b) The Managing Partner shall provide the FRP Partner, on a
monthly basis, with the information and data reasonably necessary
for the FRP Partner to determine whether the requirement of
Section 9.05(a) will be met for the Partnership's taxable year.
The Managing Partner shall also provide the FRP Partner, on a
timely basis, with the information and data reasonably necessary
to determine whether any Major Decision defined in Section
6.07(a)(ii) or Section 6.07(a)(iv) will result in the failure of
the Partnership to meet the requirement of Section 9.05(a) for
any taxable year of the Partnership. Upon providing the FRP
Partner with information and data with respect to any current or
proposed source of Partnership income reasonably sufficient for
FRP to determine whether such income is or will be Qualifying
Income, the Managing Partner may request that the FRP Partner
consent to the Partnership's generation of such income. The FRP
Partner shall respond in writing to any such request in a timely
manner and any consent so expressed shall constitute consent by
the FRP Partner to the generation of such income for purposes of
Section 9.05(a), subject to any limitation on the amount or
timing thereof stated in such consent. If the FRP Partner does
not respond in writing to the Managing Partner's request within
twenty-five (25) days of the receipt of such request, the FRP
Partner shall be deemed to have consented to the Partnership's
generation of such income for purposes of Section 9.05(a).
(c) In the event that (i) the Partnership fails (or based on all
available information, the FRP Partner reasonably believes the
Partnership may fail) to meet the requirement of Section 9.05(a)
for any taxable year or (ii) there is an amendment to Section
7704 of the Code, the issuance of a Treasury Regulation pursuant
to Section 7704 of the Code, the amendment of any other Code
Section, or the issuance of any other Treasury Regulation or
pronouncement that, in the reasonable belief of the FRP Partner,
may affect the partnership status of the FRP Partner or FRP for
Federal income tax purposes, the Policy Committee shall meet to
determine what actions would be required to preserve the
partnership status of the FRP Partner and FRP for Federal income
tax purposes. If the Policy Committee determines (or, if the
Policy Committee fails to agree, if either the IMC Partner or the
FRP Partner reasonably and in good faith determines) that the
Partnership cannot be operated in a manner that is consistent
with achieving the Partnership's business purpose other than in a
manner that is inconsistent with preserving the partnership
status of the FRP Partner and FRP for Federal income tax
purposes, the Partners agree to negotiate in good faith to
determine the appropriate action to be taken. In the event that
the IMC Partner and the FRP Partner are unable to agree on the
action to be taken after negotiating in good faith, each of the
IMC Partner and the FRP Partner shall have the right to elect to
dissolve the Partnership. It is acknowledged that none of the
Partners is obligated to take any action, and the Partnership is
not obligated to take action, that is harmful to any Partner or
its Affiliates, other than the dissolution of the Partnership.
9.06 Work Force; Employee Benefits.
(a) The Managing Partner shall supply, for the account of the
Partnership, the necessary work force for the conduct of the
business and affairs of the Partnership. The work force to be
provided shall include but shall not be limited to qualified
miners, engineers, metallurgists, geologists, assayers, equipment
operators, helpers, mechanics, accountants, attorneys, purchasing
agents, sales personnel and support staff, together with
necessary supervisory and management personnel, and shall
include, as necessary, the services of the Leased IMC Employees.
Consistent with approved budgets, all members of the work force
employed by the Managing Partner for the purpose of providing
services to the Partnership shall be paid such salaries, hourly
wages and benefits and shall be subject to such other terms and
conditions of employment as the Managing Partner deems
appropriate subject to the following sentence of this Section
9.06. The Managing Partner shall be reimbursed (in accordance
with Section 9.11) for the cash costs (i) incurred under the
Leasing Agreement in connection with the Leased IMC Employees
including, but not limited to, salaries and wages; social
security taxes and payroll taxes; contributions to the IMC
Salaried Pension Plan and the Retirement Plan for Non-Union
Hourly Employees of IMC Fertilizer, Inc. and contributions to
the IMC Salaried Contribution Plan and the Savings Plan for
Hourly Employees of IMC Fertilizer, Inc.; any employee benefits
other than those described above, including, but not limited to,
benefits under any employee benefit plan (as defined in section
3(3) of the Employee Retirement Income Security Act of 1974, as
amended) or any retirement or deferred compensation plan, stock
plan, unemployment compensation plan, vacation pay, severance
pay, bonus or benefit arrangement, insurance or hospitalization
program or any other fringe benefit arrangement which does not
constitute an employee benefit plan, or any employment agreement,
post-retirement benefits, severance benefits or other employee
benefits for former Leased IMC Employees; and other governmental
charges relating to such employment; and (ii) of hiring and
employing, including, without limitation, (A) the cost of all
social security taxes, payroll taxes, post-retirement benefits of
former Managing Partner employees, other employee benefits and
other governmental charges related to such employment to the
extent that the cost thereof is associated with personnel
employed or formerly employed at production facilities as
reflected, consistent with Operations' historic practices, in the
cost of goods sold income statement caption and (B) the costs
attributable to employees providing management information
services, public relations and internal audit services provided
directly to production facilities and limited to those amounts
reflected, consistent with Operations' historic practices, in the
cost of goods sold income statement caption. To the extent that
such personnel costs described at clause (ii) above are included,
consistent with Operations' historic practices, in the selling
and administrative expense income statement caption for financial
reporting purposes, such costs shall be covered by the
Administrative Fee described in Section 9.11 and shall not be
separately reimbursed or paid by the Partnership.
(b) Subject to the terms and conditions of the Contribution
Agreement and to the extent permitted by applicable law, the
Managing Partner shall maintain employee benefit plans (as
defined in section 3(3) of ERISA) and retirement or deferred
compensation plans, unemployment compensation plans, vacation
pay, severance pay, bonus and benefit arrangements, insurance and
hospitalization programs and any other fringe benefit
arrangements for current and former employees, consultants and
agents (whether pursuant to contract, arrangement, custom or
informal understanding) which do not constitute employee benefit
plans (collectively, "Employee Benefit Plans") which are
substantially similar in all material respects to such plans,
arrangements and programs maintained from time to time by
Operations, and shall modify the provisions of the MP Pension
Plans, MP Contribution Plans and MP Benefit Plans to the extent
changes are made to the corresponding plan, contract or
arrangement maintained by Operations (the "IMC Plans") to the
extent such changes to the IMC Plans are commercially reasonable;
provided, however, that nothing in this Section 9.06(b) shall
require the Managing Partner to maintain any plan, arrangement or
program for any employee who is covered by a collective
bargaining agreement, except to the extent provided by such
collective bargaining agreement.
9.07 Emergency Expenditures; Compliance with Law.
(a) If at any time as a result of any event there arises an
emergency where the Managing Partner determines that failure to
take prompt action may result in loss of life or material
personal injury or property damage, the Managing Partner shall
have the authority and responsibility to take such action and
make such immediate expenditures as the Managing Partner may deem
necessary to protect against loss of life, personal injury or
damage to or destruction of property, to safeguard lives and/or
prudently preserve and protect the optimum economic value of the
assets of the Partnership; provided that as soon as reasonably
practicable following the occurrence of such an emergency, the
Managing Partner shall notify the other Partners of the nature of
the emergency and the actions taken in response to such
emergency.
(b) The Managing Partner shall have the authority and
responsibility to take such action and make such immediate
expenditures as it may deem necessary to manage and operate the
business and affairs of the Partnership in compliance with
applicable law; provided that if time permits, the Managing
Partner shall seek the approval of the Policy Committee prior to
making any expenditure pursuant to this Section 9.07(b) which
would otherwise have required such approval, and, if time does
not so permit, will promptly report such action or expenditures
to the Policy Committee.
(c) Any expenditure made pursuant to this Section 9.07 shall be
deemed to constitute an approved expenditure without the need or
necessity for any action or approval by the Policy Committee and
shall not be included in determining whether the Managing Partner
is managing the business and affairs of the Partnership within
the operating and capital expenditure budgets approved or adopted
as described in Section 9.02 hereof.
9.08 No Action Contrary to Contracts or Applicable Law. The
Managing Partner agrees to use all commercially reasonable
efforts not to do or fail to do any act if it in good faith
believes not doing or failing to do such act is likely to result,
or with the giving of notice and/or the passage of time is likely
to result, in (a) a default under the terms of any mortgage,
bond, indenture, agreement, lease or other instrument or
obligation to which the Partnership is a party or by which its
properties or assets may be bound; or (b) the violation of any
law, rule, regulation or ordinance or any judgment, order,
injunction, decree or award of any court, administrative agency
or governmental body against, or binding upon, the Partnership or
its properties or assets; provided, that, in the case of clause
(a) above, the covenant of the Managing Partner shall not apply
if compliance therewith would require the Managing Partner to
make any capital or other expenditures which are not provided for
in an operating or capital expenditure budget adopted by the
Policy Committee (or by the CEOs or the Managing Partner, as the
case may be, pursuant to Section 6.07(b)), or otherwise approved
by the Policy Committee or by the CEOs or the Managing Partner in
accordance with the terms of this Agreement and, in the case of
clause (b) above, any action or failure to act by the Managing
Partner taken to comply with the covenant shall be deemed to be
within its authority set forth in Section 9.07(b) and (c) hereof.
The Managing Partner shall promptly notify the Policy Committee
in writing of (i) the occurrence of any material default of which
it has knowledge under the terms of any mortgage, bond,
indenture, agreement, lease or other instrument or obligation to
which the Partnership is a party or by which its properties or
assets may be bound, (ii) any material violation of which it has
knowledge of any law, rule, regulation or ordinance or any
judgment, order, injunction, decree or award of any court,
administrative agency or governmental authority insofar as such
violation relates to the Managing Partner, any Partner or the
Partnership, and (iii) any event which, with the delivery of
notice or the passage of time, or both, in the good faith belief
of the Managing Partner is likely to result in an event described
in clause (i) or (ii). The Managing Partner shall cause the
Partnership to use all commercially reasonable efforts to
promptly cure or remedy any such event within its control and for
which it is responsible hereunder; provided, that in the case of
a cure or remedy relating to a default described in clause (a) of
the first sentence of this Section 9.08, the covenant of the
Managing Partner shall not apply if compliance therewith would
require the Partnership to make any capital or other expenditures
which are not provided for in an operating or capital expenditure
budget adopted by the Policy Committee (or adopted by the CEOs or
the Managing Partner, as the case may be, pursuant to Section
6.07(b)), or otherwise approved by the Policy Committee or by the
CEOs or the Managing Partner in accordance with the terms of this
Agreement and, in the case of a cure or remedy relating to a
violation described in clause (b) of the first sentence of this
Section 9.08, any such cure or remedy shall be deemed to be
within the Managing Partner's authority set forth in Section
9.07(b) and (c) hereof. The Managing Partner shall represent the
Partnership in any proceeding (whether formal or informal)
relating to any such event. At all times the Managing Partner
shall keep the Non-Managing Partners informed of the current
status and all significant developments in all such proceedings
or matters.
9.09 Licenses and Permits. The Managing Partner shall use all
commercially reasonable efforts to procure and maintain, for the
account of the Partnership, all licenses, permits and other
governmental authorizations necessary or appropriate to operate
the Partnership. The Managing Partner shall notify the
Non-Managing Partners promptly of any denial, suspension or
revocation of any material permit, license or governmental
authorization and of any other action or failure to act by any
governmental authority which relates to permits or licenses for
the Partnership or significantly affects the operations of the
Partnership.
9.10 Litigation. The Managing Partner may, in its commercially
reasonable discretion, bring suit in the name or on behalf of the
Partnership without the approval of the Policy Committee. The
Managing Partner shall at all times keep the Non-Managing
Partners informed of the current status and all significant
developments in any such suit.
9.11 Payment and Reimbursement of Expenses; Handling of
Partnership Bank Accounts and Funds.
(a) The Partnership shall establish bank accounts at such banks
as may from time to time be designated by the Managing Partner.
The Partnership's funds shall be invested in such manner as the
Managing Partner deems appropriate with interest accruing to the
Partnership. All bank and other accounts shall be maintained in
the Partnership's name. None of the Partnership's funds shall be
commingled with the funds of any Partner unless previously
approved in writing by all of the other Partners. The
Partnership shall designate a representative of the Managing
Partner as a signatory on its bank accounts to accomplish more
effectively the purposes of this Section 9.11.
(b) During the regular course of business, the Managing Partner
will invoice customers on behalf of the Partnership for all sales
of the business of the Partnership. The customers for such sales
will be instructed to direct their cash remittance directly to a
Partnership bank account designated by the Managing Partner.
(c) The Partnership shall pay all costs, expenses, liabilities,
losses, damages, penalties and other obligations of the
Partnership. In furtherance thereof, the Managing Partner will
maintain in the name of the Partnership one or more Partnership
cash disbursement accounts for the purpose of paying all such
obligations of the Partnership. These disbursements include all
payments to third parties, payments to the Partners for expenses
incurred on behalf of the Partnership as well as payments to the
Partners of their share of Distributable Cash. The disbursements
shall cover all capital as well as operating outlays of the
Partnership.
(d) The Partnership shall pay to the Managing Partner, out of
Partnership funds, an annual fee (the "Administrative Fee")
intended to compensate the Managing Partner for selling and
administrative expenses (determined on a basis consistent with
Operations' historic practice with respect to its Contributed
Business) incurred by the Managing Partner in connection with the
operation and management of the business and affairs of the
Partnership or the performance of the Managing Partner's
obligations hereunder. One-twelfth of the Administrative Fee
shall be payable monthly in advance on the first day of each
month during the term of the Partnership. The Administrative Fee
shall initially be thirty-four million, three hundred thousand
dollars ($34,300,000) and (i) shall be adjusted on June 30, 1994
and each June 30 thereafter during the term of the Partnership in
accordance with the following sentence, and (ii) may be adjusted
by the Policy Committee upon the request of any Partner if the
manner in which the Managing Partner manages and operates the
business and affairs of the Partnership changes in such a way
that the Administrative Fee (as adjusted in accordance with the
following sentence) no longer accurately reflects the selling and
administrative practices employed by the Managing Partner in
connection with the operation and management of the business and
affairs of the Partnership and the performance of its obligations
hereunder. The Administrative Fee for any Fiscal Year commencing
with the Fiscal Year commencing July 1, 1994 shall be equal to
either (x) the sum of (i) the Administrative Fee in effect for
the immediately preceding Fiscal Year, plus (ii) the product of
(A) the percentage change in the GNP Deflator Index for the
immediately preceding Fiscal Year, multiplied by (B) the
Administrative Fee for the immediately preceding Fiscal Year or
(y) an amount determined by the Policy Committee pursuant to
clause (ii) of the immediately preceding sentence. It is agreed
among the Partners that all expenses and costs relating to FRP
Transferred Sales Employees are included in the Administrative
Fee and that no additional payment or reimbursement shall be made
from the Partnership to the Managing Partner on account of such
employees.
(e) The Partnership shall reimburse the Managing Partner for all
cash personnel costs, as set forth in Section 9.06.
Additionally, any other expenditures incurred by the Managing
Partner in connection with the business and affairs of the
Partnership or the performance by the Managing Partner of its
obligations hereunder in accordance with the terms of this
Agreement, as generally described in the operating budget of the
Partnership, and which constitute part of cost of goods sold and
not paid directly from Partnership funds will be reimbursed by
the Partnership.
(f) To the extent the Managing Partner determines that an advance
of monies from the Partners to the Partnership is necessary
(other than under the Working Capital Contribution Arrangement),
the Managing Partner shall request that the Policy Committee call
for cash contributions from the Partners in accordance with
Section 3.02(a).
(g) The Managing Partner shall be entitled to access, as needed,
the funds of the Partnership in order to pay expenses, including,
but not limited to, payroll expenses of the Managing Partner, for
which the Managing Partner is entitled to reimbursement pursuant
to Section 9.11(e).
(h) Notwithstanding anything herein to the contrary, the
Partnership shall not be obligated to pay, advance to or
reimburse the Managing Partner for, any costs or expenses
pursuant to this Section 9.11 if such cost or expense was
incurred by the Managing Partner otherwise than in compliance
with this Agreement.
(i) All payments provided for in this Section 9.11 shall be made
on or before the due date, and if not paid, the unpaid balance
shall bear interest from and after the due date at the rate equal
to the lower of: (i) the maximum rate allowed by law and (ii) the
Prime Rate.
9.12 Transactions with Affiliates. Except with respect to items
(i)(B) and (ii) referred to in the parenthetical phrase in the
following sentence, any transaction, agreement, arrangement or
understanding between or on behalf of the Partnership, on the one
hand, and the Operating Partner or any Affiliate of the Operating
Partner, on the other hand, must be on terms no less favorable to
the Partnership than those which could be obtained from an
independent third party providing similar goods or services of
like quality. All such transactions, agreements, arrangements
and understandings in an aggregate amount in any Fiscal Year in
excess of the Base Affiliate Transaction Amount for such Fiscal
Year (other than (i) during any period during which the IMC
Partner is Operating Partner, (A) any transactions, agreements,
arrangements or understandings with Operations' railcar repair
business located at Fitzgerald, Georgia on terms no less
favorable to the Partnership than those which could be obtained
from an independent third party providing similar goods or
services of like quality and (B) any transactions, agreements,
arrangements and understandings with the Rainbow Division of
Operations and International Minerals & Chemical (Canada) Global
Limited ("IMC Canada Ltd."; formerly International Minerals &
Chemical Corporation (Canada) Limited) on the terms set forth on
Schedule 9.12 and (ii) (A) the Marketing and Administrative
Services Agreement, (B) the Leasing Agreement, (C) the Materials
Purchase and Cost Sharing Agreement, (D) the Employee Cost
Sharing Agreement and (E) the Limestone Cost Sharing Agreement)
shall be subject to the approval of the Policy Committee or the
CEOs, as the case may be, in accordance with Section 6.07(a) or
(b). Nothing in this Section 9.12 shall in any way restrict or
affect the right of the Partnership to enter into transactions
with Affiliates of the Non-Operating Partner.
The Operating Partner will, and will cause its Affiliates to (i)
give the Non-Operating Partner and its auditors and other
authorized representatives such access to the offices,
properties, books and records of such party, (ii) furnish to the
Non-Operating Partner and its auditors and other authorized
representatives such financial and operating data and other
information as such Persons may reasonably request and (iii)
instruct its employees and auditors to cooperate with the
Non-Operating Partner and its auditors and other authorized
representatives, in each case as may be reasonably requested by
the Non-Operating Partner to evaluate any transactions,
agreements, arrangements or understandings between the
Partnership or the Managing Partner on the one hand, and the
Operating Partner and its Affiliates, on the other hand; provided
that any investigation pursuant to this Section shall be
conducted in such a manner as not to interfere unreasonably with
the conduct of business of the Operating Partner and its
Affiliates.
9.13 No Shifting of Cash Flow. The Partners acknowledge that due
to the changes in the Partners' Current Interests and Capital
Interests over time, either the IMC Partner or the FRP Partner
could be disproportionately benefited or adversely affected by
actions designed to defer or accelerate Partnership revenues,
defer or accelerate Partnership expenses or capital expenditures
or defer or accelerate Partnership cash flow. The Managing
Partner agrees that it will not operate the Partnership with the
intention of deferring or accelerating cash flows from one period
to another; provided that nothing in this Section 9.13 shall
prevent the Managing Partner from managing the business and
affairs of the Partnership in accordance with the then current
operating and capital expenditure budgets or taking actions to
serve the interests of the Partnership without regard to changes
in the Current Interests and Capital Interests of the Partners.
ARTICLE X.
Accounting Records; Tax Matters
10.01 Books and Records. The Managing Partner shall cause the
Partnership to prepare and maintain proper and complete records
and books of account, separate from the books and records of the
Managing Partner maintained for activities unrelated to the
Partnership, in which shall be entered all transactions and other
matters relative to the Partnership and the operation and
management of the Partnership and its business as are usually
entered into records and books of account maintained by Persons
engaged in businesses of like character. The books and records of
the Partnership shall be maintained at its principal place of
business. The books of the Partnership shall be maintained for
financial reporting requirements in accordance with generally
accepted accounting principles. The Partnership shall also
maintain such tax basis books as are required for the Partnership
and the Partners to comply with the provisions of FASB 109. The
Partnership shall provide such financial and other statements,
including plans, forecasts and projections, as each Partner may
reasonably require for purposes of estimating taxes or projecting
the amount and source of future taxable income or loss.
10.02 Inspection of Books and Records. Each of the IMC Partner
(and, during the IMC GPCo Liquidation Period, each of Operations
and IMC GPCo) and the FRP Partner, at its own expense, shall have
reasonable access to the auditors of the Partnership and shall
have the right to inspect such books and records and the physical
properties of the Partnership during normal business hours and to
cause an audit thereof; provided that if either of the IMC
Partner (or, during the IMC GPCo liquidation Period, Operations
or IMC GPCo) or the FRP Partner requests access to the
Partnership's auditors, desires to inspect the books, records and
physical properties of the Partnership or desires to cause an
audit of the Partnership's books, records and physical
properties, such Partner shall provide prior written notice to
the Managing Partner; and provided, further, that, unless
required by applicable law or unless such Partner reasonably
believes that it needs some or all of the information which would
be obtained in an audit in order to satisfy its duties and
obligations to its shareholders or partners or to the
shareholders or to the partners or unitholders of Global or FRP,
as the case may be, no more than one such audit may be requested
during any twelve (12) month period and each such audit shall be
made, if at all, within twenty-four (24) months of the end of the
fiscal period to which it relates. All meetings with the
Partnership's auditors and inspections of the Partnership's
books, records and physical properties shall be conducted in a
manner and at a time designed not to cause undue inconvenience to
the Managing Partner. The Managing Partner, however, shall (i)
not unreasonably delay such audit, (ii) make all books and
records of the Partnership available to the auditors in
connection with such audit and (iii) use all commercially
reasonable efforts to cause its personnel to cooperate with the
auditors in a commercially reasonable manner and to provide any
assistance reasonably necessary in connection with such audit.
Any Partner shall be permitted to make financial and other
information relating to the business and affairs of the
Partnership available to third parties in connection with any
proposed sale or other disposition of all or a portion of its
Partnership Interest in accordance with the terms of this
Agreement, provided such third parties have signed appropriate
confidentiality agreements with such Partner and the Partnership.
10.03 Accounting and Taxable Year. Subject to Section 448 of the
Code and the provisions of this Agreement, the books of the
Partnership (and the classification, realization and recognition
of income, gain, losses, deductions and other items for Federal
income tax purposes) shall be kept and determined on such method
of accounting for tax and financial reporting purposes as may be
determined by the Managing Partner. The taxable year of the
Partnership shall end on such date permitted under the Code as
the Partners shall determine.
10.04 Partnership Tax Returns. The Managing Partner shall use its
best efforts to cause the Partnership to timely file all
necessary federal, state, and local Partnership income tax
returns and information returns. Each Partner shall provide such
information, if any, as may be required by the Partnership for
purposes of preparing such tax and information returns. The
Partnership's income tax returns shall be provided to the
Non-Operating Partner in sufficient time for the Non-Operating
Partner to confer with the Managing Partner before the time at
which such Partnership return must be filed. The Partnership
shall deliver to each Partner, within twenty-five (25) days after
the end of the Partnership taxable year any additional
information in the possession of the Partnership that the
Partners may reasonably require for the preparation of their own
income tax returns.
10.05 Partnership Taxes. The Managing Partner shall cause the
Partnership to timely pay all taxes and assessments levied or
assessed against the Partnership or its assets. However, the
Managing Partner may cause the Partnership to either (i) contest
in good faith the validity of any such taxes or assessments or
(ii) pay such taxes and assessments under protest. In the event
that the Managing Partner causes the Partnership to contest in
good faith such taxes and assessments, the Managing Partner shall
not be obligated to cause the Partnership to pay the same until a
final determination is reached that such taxes or assessments are
valid and constitute an obligation of the Partnership.
10.06 Tax Matters Partner. The Managing Partner shall be the "tax
matters partner," as that term is defined in Code Section
6231(a)(7) (the "Tax Matters Partner") with all of the rights,
duties, and powers provided for in Code Sections 6221 through
6232 inclusive; provided, however, that, in the exercise of such
powers, the Tax Matters Partner shall be subject to the overall
direction of the Partners and the provisions of Sections 10.05,
10.06 and 10.07. The Tax Matters Partner, as an authorized
representative of the Partnership, shall have the right to retain
and to pay the fees and expenses of counsel and other advisors
selected by the Tax Matters Partner. All reasonable expenses of
the Tax Matters Partner and other reasonable fees and expenses of
the Partnership incurred in connection with the defense of any
claims made by the Internal Revenue Service shall be borne by the
Partnership.
10.07 Duties of the Tax Matters Partner. The Tax Matters Partner
shall cooperate with the other Partners and, for other than
routine correspondence and communications, shall promptly provide
the other Partners with copies of notices or other materials
from, and inform the other Partners of discussions engaged in
with, the Internal Revenue Service and shall provide the other
Partners with notice of all scheduled administrative proceedings,
including meetings with Internal Revenue Service agents,
technical advice conferences and appellate hearings, as soon as
reasonably possible after receiving notice of the scheduling of
such proceedings. The Tax Matters Partner shall not agree to
extend the period of limitations for assessments, file a petition
or complaint in any court, file a request for an administrative
adjustment of Partnership items after any return has been filed,
or enter into any settlement agreement with the Internal Revenue
Service or Department of Treasury with respect to Partnership
items of income, gain, loss, deduction or credit except with the
consent of the IMC Partner (or, with respect to the IMC GPCo
Liquidation Period, Operations and IMC GPCo) and the FRP Partner,
which consent shall not be unreasonably withheld. The Tax Matters
Partner may request extensions to file any tax return or
statement without the consent of, but shall so inform, the IMC
Partner (or, with respect to the IMC GPCo Liquidation Period,
Operations and IMC GPCo) and the FRP Partner. The provisions of
this Agreement regarding the Partnership's tax returns shall
survive the termination of the Partnership and the transfer of
any Partner's Partnership Interest and shall remain in effect for
the period of time necessary to resolve any and all matters
regarding the Federal, state and local income taxation of the
Partnership and the items of Partnership income, gain, loss,
deduction and credit.
10.08. Partnership Status; Elections.
(a) The Partners acknowledge that this Agreement creates a
partnership for Federal and state income tax purposes and hereby
agree not to elect to be excluded from the application of
Subchapter K of Chapter 1 of Subtitle A of the Code or any
similar state statute.
(b) The Managing Partner shall cause the Partnership to
file an election under Section 754 of the Code and the Treasury
Regulations thereunder to adjust the basis of the Partnership
assets under Sections 734(b) or 743(b) of the Code and shall file
a corresponding election under the applicable sections of state
and local law. The Managing Partner shall also cause the
Partnership to take or to elect to take deductions under the most
accelerated method available to the Partnership, unless both the
IMC Partner (or, with respect to the IMC GPCo Liquidation Period,
Operations and IMC GPCo) and the FRP Partner agree otherwise. The
Partnership shall make any other elections under the United
States income tax laws and regulations and any similar state
statutes as determined to be appropriate by the Managing Partner.
10.09. Tax Reporting.
(a) The Managing Partner shall provide the Non-Operating Partner
with any tax information and data reasonably requested by the
Non-Operating Partner, including information and data requested
for the purpose of allowing the Non-Operating Partner to (i)
allocate its Partnership tax items on a property-by-property
basis; and (ii) allocate FRP's portion of Partnership tax items
to any partner of FRP that purchases or sells its interest in FRP
during the year, pursuant to Section 706 of the Code and FRP's
accounting conventions for sales and purchases of FRP interests.
For purposes of this Section 10.09, the term "property" shall
mean, with respect to depletable assets, property as defined in
Section 613 of the Code and the Treasury Regulations thereunder.
(b) Except as otherwise provided in this Agreement, the
information and data requested pursuant to this Section 10.09
shall be provided to Non-Operating Partner on the following
schedule:
Period in Which Item Accrued Reporting Deadline
Fiscal Year ending June 30 October 25
Six Months ending December 31 January 25
(c) The information and data provided under this Section 10.09
shall be prepared with the same degree of completion and accuracy
as is required for information and data filed with a Federal
income tax return, shall be prepared on an accrual basis and
shall include any and all items of Partnership income, gain,
losses, deductions and any other items or information as may be
reasonably needed by the Non-Operating Partner or any of its
Affiliates. Such information and data shall include, but shall
not be limited to, the total amount of each of the tax items
listed in the attached Schedule Y and each Partner's allocable
share of each item.
(d) In the event of any amendment to the Code or the
issuance of any Treasury Regulation or pronouncement that affects
any of the Non-Operating Partner's Affiliate's reporting
requirements with respect to the partners, if applicable, of any
of the Affiliates of the Non-Operating Partner, the Partnership
shall furnish to the Non-Operating Partner any additional
information and data that is reasonably necessary for any of the
Non-Operating Partner's Affiliates to comply with such reporting
requirements.
(e) In the event that any information is needed from the
Non-Operating Partner in order for the Tax Matters Partner to
complete the required federal and state tax return, such
information will be provided by the Non-Operating Partner by
September 15.
10.10. Tax Oversight.
(a) The Non-Operating Partner shall have the right to
request any and all information and data from the Managing
Partner regarding the calculation of the allocations pursuant to
Article V and regarding the tax matters of the Partnership,
including the classification, realization and recognition of
income, gain, losses, deductions and other Partnership items, and
the Operating Partner shall provide such information and data as
soon as practicable. Each of the IMC Partner (or, with respect to
the IMC GPCo Liquidation Period, Operations and IMC GPCo) and the
FRP Partner, at its sole cost, shall also have the right to
inspect and copy any and all books and records of the Partnership
relating to the calculation and allocation of Partnership tax
items, including the original source documents and tax work
papers of the Partnership, at such times as the IMC Partner (or,
with respect to the IMC GPCo Liquidation Period, Operations or
IMC GPCo) or the FRP Partner, as the case may be, may reasonably
request. (b) The Managing Partner shall notify the Non-Operating
Partner as promptly as practicable of the tax treatment of any
significant tax item of the Partnership. The Non-Operating
Partner shall have the right to confer with the Managing Partner
regarding the tax matters of the Partnership and the calculation
of the allocations pursuant to Article V on a yearly basis or on
a more frequent basis as requested by the Non-Operating Partner.
(c) In the event of a disagreement between the Partners regarding
the treatment of a Partnership tax item (other than items as to
which the Partners approve a treatment), the Partnership shall
not take any position for Federal or state income tax purposes
that is not supported by substantial authority, as that term is
defined for purposes of Code Section 6662(d)(2)(B)(i). The
Partners reserve the right to file their separate income tax
returns in a manner inconsistent with the Partnership's Federal
income tax return.
ARTICLE XI.
Term
11.01 Term. The term of the Partnership commenced on July 1,
1993 and shall continue in existence until June 30, 2076, unless
extended by written agreement of each Partner or unless earlier
terminated pursuant to the terms of this Agreement.
11.02 Purchase Option Upon Scheduled Expiration of the Term.
Either the IMC Partner or the FRP Partner may give the other
irrevocable written notice not less than one hundred eighty (180)
days prior to the scheduled expiration of the term of the
Partnership pursuant to Section 11.01 of its election to exercise
the purchase option set forth in this Section 11.02. If only one
of the IMC Partner or the FRP Partner gives the notice referred
to in the preceding sentence (the "Buying Partner"), the Buying
Partner shall have the right and the obligation to purchase all,
but not less than all, of such other Non-Managing Partner's
Partnership Interest and the Managing Partner's Partnership
Interest at the aggregate Transfer Price therefor. If the Buying
Partner and such other Non-Managing Partner cannot agree upon a
Transfer Price within sixty (60) days after the notice referred
to in the first sentence of this Section 11.02, either the IMC
Partner or the FRP Partner may, by notice to the other, invoke
the Appraisal Procedure. If the Appraisal Procedure is required
to determine the Transfer Price, the fees and expenses of such
Appraisal Procedure shall be shared equally by the IMC Partner
and the FRP Partner. The closing of such sale shall take place
upon the date the term of the Partnership is scheduled to expire
pursuant to Section 11.01. If both the IMC Partner and the FRP
Partner give the notice referred to in the first sentence of this
Section 11.02, then the term of the Partnership under Section
11.01 shall automatically be extended for an additional period of
twenty (20) years (or such other time period as the IMC Partner
and the FRP Partner may mutually agree) on the terms and
conditions set forth herein (or on such other terms and
conditions as the IMC Partner and the FRP Partner may mutually
agree). If neither the IMC Partner nor the FRP Partner give the
notice referred to in the first sentence of this Section 11.02,
then, upon the expiration of the term of the Partnership, the
affairs of the Partnership shall be wound up in accordance with
the provisions of Article XII hereof.
ARTICLE XII.
Dissolution and Winding-Up
12.01 Dissolution. The Partnership shall be dissolved upon the
first to occur of the following events (each, a "Dissolution
Event"):
(a) The Bankruptcy of any Partner, provided, however, that to the
fullest extent permitted by applicable law, the Partnership shall
be reconstituted and continued if all of the Partners (other than
a Bankrupt Partner or Partners) elect to so reconstitute and
continue the Partnership, in which event the Partnership shall
continue as so reconstituted with all of the Partners (including
the Bankrupt Partner or Partners) remaining as partners in the
Partnership;
(b) The election by all Partners to dissolve the Partnership;
(c) The expiration of the term of the Partnership (as such term
may be adjusted pursuant to Section 11.01 or 11.02), except if
one Partner acquires directly or indirectly the Partnership
Interest of the other Partners pursuant to the provisions of
Section 11.02;
(d) The occurrence of any event that makes it unlawful for the
business of the Partnership to be carried on or for the Partners
to carry it on in partnership;
(e) The entry of a decree of judicial dissolution;
(f) The written determination by the Policy Committee (or if the
Policy Committee fails to agree, if either the IMC Partner or the
FRP Partner reasonably and in good faith determines) that the
Partnership cannot be operated in a manner that is consistent
with achieving the Partnership's business purpose other than in a
manner that is inconsistent with preserving the partnership
status of the FRP Partner and FRP for Federal income tax purposes
and the election by either the IMC Partner or the FRP Partner to
dissolve the Partnership, after negotiating in good faith with
the other Partners, in accordance with Section 9.05(c); or
(g) Subject to Section 12.11, the occurrence of any other event
that, absent an agreement to the contrary, causes a dissolution
of the Partnership under the Act; provided that, to the fullest
extent permitted by law, if a dissolution of the Partnership is
caused by any event described in Section 12.01(g), unless one of
the Partners is Bankrupt, (i) the Partners (other than any
Partner whose act has resulted in such dissolution) may elect to
reconstitute the Partnership within four (4) months of the date
of the event giving rise to the dissolution hereunder and if the
Partners do so elect, the Partnership shall continue as if no
dissolution had occurred, in which event the Partnership shall
continue as so reconstituted with all of the Partners (including
any Partner the act of which has resulted in such dissolution)
remaining as partners in the Partnership, or (ii) if the
Partnership is not reconstituted as provided above, and such
dissolution is caused by the act of any Partner (the "Withdrawing
Partner"), then the IMC Partner, if it is not the Withdrawing
Partner or the FRP Partner, if it is not the Withdrawing Partner
(in either such case, the "Non-Withdrawing Partner") may, by
written notice to the Withdrawing Partner, elect (A) to purchase
the Partnership Interest of the Withdrawing Partner, or (B) to
admit one or more new partners (the "New Partners") to the
Partnership, who shall purchase the Partnership Interest of the
Withdrawing Partner or (C) to cause the Partnership's affairs to
be wound up in accordance with Section 12.02. The Withdrawing
Partner (1) shall have only those rights and receive only those
payments that are expressly provided for herein, (2) shall be
liable to the Partnership, the Non-Withdrawing Partner, the
Managing Partner and any New Partners for all losses, costs,
fees, expenses and damages suffered by the Partnership, such
Non-Withdrawing Partner, the Managing Partner or any New Partners
as a result of such dissolution, (3) shall remain liable to the
Partnership, such Non-Withdrawing Partner, the Managing Partner
and any New Partners for any debts, liabilities or other
obligations of the Withdrawing Partner to the Partnership, such
Non-Withdrawing Partner, the Managing Partner or any New
Partners, and (4) shall remain liable to the Partnership, such
Non-Withdrawing Partner, the Managing Partner and any New
Partners for its contribution obligation pursuant to Section
8.02. The purchase price to be paid to the Withdrawing Partner
(by the Non-Withdrawing Partner or any New Partners) in any sale
and purchase of the Withdrawing Partner's Partnership Interest
pursuant to this Section 12.01, shall be (x) the Transfer Price,
determined (unless otherwise agreed) in accordance with the
Appraisal Procedure (which Appraisal Procedure shall be at the
expense of the Withdrawing Partner), reduced by (y) the amount of
any losses, costs, fees, expenses or damages suffered by the
Partnership, the Non- Withdrawing Partner, the Managing Partner
or any New Partners as a result of such dissolution, and shall be
payable to the Withdrawing Partner in five equal annual
installments, without interest, commencing on the date of the
transfer of the Partnership Interest of the Withdrawing Partner
(which shall be the tenth (10th) business day following the
determination of the Transfer Price). In any winding up pursuant
to clause (ii)(C) above, the amount otherwise distributable to
the Withdrawing Partner pursuant to the following provisions of
Article XII shall be reduced by the amount of any losses, costs,
fees, expenses or damages suffered by the Partnership, the
Non-Withdrawing Partner, the Managing Partner or any New Partners
as a result of such dissolution.
12.02 Winding-Up. Upon dissolution of the Partnership, and the
failure by one or more of the Partners or any Affiliate or
Affiliates of the Partners, to reconstitute and continue the
Partnership (pursuant to Section 11.02 or otherwise) within four
(4) months after such dissolution and if the Non-Withdrawing
Partner has not made any election pursuant to Section 12.01, the
Managing Partner shall (unless the event giving rise to the
dissolution was the Bankruptcy of the Managing Partner, in which
case the Non-Managing Partner with the largest Capital Interest
at the time of such dissolution shall) wind up the affairs of the
Partnership in accordance with the Act and, to the extent
permitted by applicable law, shall settle accounts between the
Partners as specified in this Article XII. The Partner charged
with winding up the affairs of the Partnership and settling
accounts among the Partners hereunder shall be referred to as the
"Liquidating Partner".
12.03 Accounting on Dissolution. If the Partnership is not
reconstituted or continued in accordance with the terms hereof
following a dissolution, then on the date (the "Accounting Date")
which is four (4) months following the date of dissolution, a
proper accounting shall be made of the Partnership assets,
liabilities and operations, from the date of the last previous
accounting to the Accounting Date. Any items of income, gain,
credit, loss, expense and other deductions which are realized
subsequent to the date of the last previous accounting to the
Accounting Date shall be allocated in accordance with Article V
and proper adjustments shall be made to the Capital Account of
each Partner.
12.04 Accounting; Allocations of Residual Net Profits and
Residual Net Loss After Dissolutions.
(a) Any items of gain or loss that are realized from Partnership
operations or from sales of Partnership assets subsequent to the
Accounting Date and before the date of liquidation shall be
allocated as provided in Article V.
(b) In addition to the adjustments to the Partner's Capital
Accounts described above, if any of the Partnership's properties
are to be distributed in kind rather than sold, such properties
that are to be distributed in kind shall be valued by the
Partners and a simulated aggregate gain (if any) or loss (if any)
for those properties shall be allocated to the Partners' Capital
Accounts as that simulated aggregate gain (or loss) would have
been allocated under Article V if such properties had been sold
for a cash price equal to each asset's fair market value on the
Accounting Date.
12.05 Application of Article V in Year of Dissolution. In the
year in which the Partnership dissolves, Article V shall be
applied with regard to the Capital Interests in effect for the
year of the dissolution, rather than the Capital Interests in
effect for the following year.
12.06 Conversion of Assets to Cash.
(a) If the Partnership is not reconstituted, or the Partnership
Interest of the Withdrawing Partner is not purchased in
accordance with the terms hereof, then commencing with the date
that is four (4) months after the date of dissolution, unless
arrangements satisfactory to all Partners are otherwise made,
sufficient assets of the Partnership will be converted into cash
to permit the Partnership to pay all its liabilities other than
long-term debts which (i) are secured by Partnership assets from
which the projected net income is sufficient to pay installments
of principal and interest on such debts as they become due and
(ii) contain terms specifying that neither the dissolution of the
Partnership nor the distribution of such property that is subject
to and secured by such debts constitutes a default or causes the
acceleration of the maturity of such indebtedness ("Approved
Debts").
(b) Notwithstanding the provisions of Sections 12.07 and 12.08
regarding the method and timing of the liquidation of the assets
of the Partnership, but subject to the order of priorities set
forth therein, if on commencement of the winding up process in
accordance with Section 12.02, the Partners determine that an
immediate sale of part or all of the Partnership's assets would
be impractical or would cause undue loss to the Partners, the
Partners may defer for a reasonable time the liquidation of any
assets except those necessary to satisfy the liabilities of the
Partnership.
(c) In the event that Partnership assets are distributed in kind
pursuant to Section 12.06(b), the Partners shall be consulted to
determine the most tax-efficient manner to make such
distribution, consistent with the liquidation priorities of
Section 12.07.
12.07 Distributions in Liquidation. As soon as the actions
required by Sections 12.03, 12.04, 12.05 and 12.06 have been
completed, the Liquidating Partner shall cause the cash and
assets of the Partnership to be distributed in the following
order:
(a) To creditors of the Partnership (other than Partners) in
payment of all liabilities of the Partnership (other than
Approved Debts) in the order of priority as provided by law. If
any liability is contingent or uncertain in amount, a reserve
equal to the maximum amount to which the Partnership could
reasonably be held liable will be established. Upon the payment
or other discharge of such liability, the amount remaining in
such reserve not needed, if any, will be distributed in
accordance with the remaining provisions of this Section 12.07.
(b) To the Partners in payment of all loans (including, without
limitation, any Partner Loans) and any interest thereon in
accordance with the amount owing to each Partner.
(c) To each Partner in accordance with the positive balance in
its Capital Account.
(d) To the Partners in accordance with their respective Capital
Interests in effect for the year of the liquidation.
(e) Notwithstanding the foregoing provisions of this Section
12.07, any distribution which, but for this Section 12.07(e)
would be payable to a Partner whose actions in violation of this
Agreement (other than any breach of Section 9.05(a)) caused the
dissolution of the Partnership shall be reduced by the amount of
losses, costs, fees, expenses and damages suffered by the
Partnership or any Partner (other than the Partner whose actions
caused a dissolution) as a result of such dissolution. 12.08
Compliance with Treasury Regulations. In the event that the
Partnership or any Partner's Partnership Interest is "liquidated"
within the meaning of Treasury Regulation Section
1.704-1(b)(2)(ii)(g), liquidating distributions shall be made,
pursuant to this Agreement, in accordance with the Partners'
positive Capital Account balances, as required by Treasury
Regulation Section 1.704(b)(2)(b)(2), by the end of the taxable
year or, if later, within ninety (90) days after the date of such
liquidation. In determining any Partner's Capital Account
balance pursuant to this Section 12.08, any item of gain, loss,
deduction, and credit that has not previously been allocated
pursuant to Article V shall be so allocated.
12.09 Deficit Capital Account Restoration Obligation. At the end
of the period described in Sections 12.06 and 12.08 (and after
allocation of all Partnership items pursuant to this Article
XII), if any Partner has a negative balance in its Capital
Account, such negative balance shall be a debt from that Partner
to the Partnership, and that Partner shall be obligated to make
additional contributions to the Partnership to restore that
Partner's Capital Account for income tax purposes to zero (0) at
such time. Any amount contributed to the Partnership pursuant to
this Section 12.09 shall be distributed according to Section
12.07.
12.10 Section 708 Termination. Notwithstanding any other
provision of this Article XII, in the event that the Partnership
is liquidated within the meaning of Section 1.704-1(b)(2)(ii)(g)
of the Treasury Regulations, but no Dissolution Event has
occurred, the assets of the Partnership shall not be liquidated,
the Partnership's liabilities shall not be paid or discharged,
and the Partnership's affairs shall not be wound up.
12.11 Continuation of the Partnership. Unless required by
applicable law, no sale, transfer, assignment or other
disposition by either Partner of all or any part of its
Partnership Interest in accordance with the terms hereof
(including, without limitation, the transfers of the Partnership
Interest of IMC GPCo to Operations in connection with the IMC
GPCo Liquidation and, in the event that FTX and FRP choose to
cause the merger, liquidation or dissolution of the FRP Partner
(or the transfer by the FRP Partner of its Partnership Interests
to FRP or an Affiliate of FRP) in accordance with the terms of
the Amendment, Waiver and Consent Agreement, transfers of the
Partnership Interest of the FRP Partner to FRP or an Affiliate of
FRP in connection with such merger, liquidation or dissolution of
the FRP Partner) shall cause a dissolution of the Partnership,
and, if such a dissolution is required under applicable law
(including, without limitation, as a result of the transfers of
the Partnership Interest of IMC GPCo to Operations in connection
with the IMC GPCo Liquidation or, in the event that FTX and FRP
choose to cause the merger, liquidation or dissolution of the FRP
Partner (or the transfer by the FRP Partner of its Partnership
Interests to FRP or an Affiliate of FRP) in accordance with the
terms of the Amendment, Waiver and Consent Agreement, as a result
of the transfers of the Partnership Interest of the FRP Partner
to FRP or an Affiliate of FRP in connection with such merger,
liquidation or dissolution of the FRP Partner), immediately upon
such sale, transfer, assignment or other disposition by either
Partner, the Partnership shall be reconstituted as a general
partnership, governed by this Partnership Agreement, among the
transferee, purchaser or assignee and the remaining Partner or
Partners.
12.12 Waiver of Certain Rights. Unless otherwise agreed in
writing by the Partners, to the extent permitted by Delaware law,
each Partner hereby waives (i) all rights it may have under
Delaware law to cause the dissolution of the Partnership (other
than dissolution by operation of law as a result of a transfer of
its Partnership Interest as expressly permitted hereby), (ii) to
the extent a dissolution occurs by operation of law, the right to
cause the Partnership to wind up its affairs and make
distributions to the Partners pursuant to Article XII upon the
occurrence of such dissolution and (iii) all rights to partition
with respect to real and personal property, provided that this
clause shall not apply to assets that have previously been
distributed by the Partnership to the Partners.
ARTICLE XIII.
Miscellaneous Provisions
13.01 Force Majeure. If the Managing Partner is rendered unable,
wholly or in part, by force majeure to carry out its obligations
hereunder such obligations insofar as they are affected by the
force majeure shall be suspended during but no longer than the
continuance of the force majeure. In such event, the Managing
Partner shall use all commercially reasonable efforts to remove
the force majeure as promptly as practicable. The term "force
majeure" shall mean but shall not be limited to: acts of God or
the public enemy; expropriation or confiscation of facilities;
compliance with any order or request of any governmental
authority or person purporting to act therefor; acts of declared
or undeclared war; public disorders, rebellion, or sabotage;
revolution; earthquake; fire; flood; riot; labor difficulties or
shortages; labor strikes whether direct or indirect; action or
inaction of any governmental agencies; delays in or shortages of
transportation; inability to obtain necessary materials or
equipment; inability to obtain necessary permits or approvals due
to existing or future laws, rules or regulations of any
governmental authority; or any cause whether or not of the same
class or kind as those specifically above named not within the
control of the Managing Partner and which, by the exercise of all
commercially reasonable efforts the Managing Partner is unable to
prevent. The requirement that the Managing Partner use all
commercially reasonable efforts to remedy any force majeure as
promptly as practicable shall not require the settlement of
strikes, lockouts, or other labor difficulties by the Managing
Partner contrary to its wishes or the challenging of the validity
of any governmental law, regulation, order or request. In the
event of any occurrence of force majeure, the Managing Partner
immediately shall notify the Policy Committee of such occurrence.
13.02 Limitation of Liability of Partners.
(a) Notwithstanding anything to the contrary set forth in this
Agreement, except as provided in Section 7.06 or Section
13.02(b), no Partner (which term, for purposes of this Section
13.02(a), shall, with respect to the IMC GPCo Liquidation Period
(and all other periods during which Operations or IMC GPCo is a
Partner), refer to each of Operations and IMC GPCo, severally and
not jointly) shall be liable to the Partnership, any other
Partner or any of their respective Related Persons for any loss
or damage of any nature incurred or suffered by the Partnership,
any other Partner or any of their respective Related Persons
except loss or damage to the Partnership, any other Partner or
any of their respective Related Persons caused by such Partner's
gross negligence or wilful misconduct hereunder.
(b) The Managing Partner shall be liable to the Partnership and
the other Partners, solely as a result of such Partners' status
as Partners, only for all damages, including lost profits, which
are proximately caused by the Managing Partner's gross
negligence, wilful misconduct, wilful breach of this Agreement or
failure to follow a specific instruction from the Policy
Committee adopted in accordance with the terms of this Agreement,
but shall not be so liable for any further lost profits or other
damages which are the further consequences of such lost profits
or other damages that were proximately caused. For purposes of
this Agreement, an ignoring of the terms of this Agreement shall
be deemed a wilful breach; provided that the Managing Partner
shall not be liable for ignoring the term of this Agreement
requiring the Managing Partner to act as an ordinary prudent and
reasonable manager if the Managing Partner acted in good faith
and in the belief (which belief was reasonable) that its actions
were in accordance with all of the terms of this Agreement.
13.03 Assignment. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective
successors and assigns; provided that no assignment of any
Partnership Interest, or portion thereof, shall be effective
unless made in accordance with the terms of this Agreement. The
transfers of the Partnership Interest of IMC GPCo to Operations
in connection with the IMC GPCo Liquidation, the FRP GPCo/FCC/FTX
Mergers and, in the event that FTX and FRP choose to cause the
merger, liquidation or dissolution of the FRP Partner (or the
transfer by the FRP Partner of its Partnership Interests to FRP
or an Affiliate of FRP) in accordance with the terms of the
Amendment, Waiver and Consent Agreement, transfers of the
Partnership Interest of the FRP Partner to FRP or an Affiliate of
FRP in connection with such merger, liquidation or dissolution of
the FRP Partner shall each be deemed to be made in accordance
with the terms of this Agreement. The sale, transfer or
assignment of a Partnership Interest, or portion thereof, in
accordance with the terms of this Agreement (including, without
limitation, the transfers of the Partnership Interest of IMC GPCo
to Operations in connection with the IMC GPCo Liquidation and, in
the event that FTX and FRP choose to cause the merger,
liquidation or dissolution of the FRP Partner (or the transfer by
the FRP Partner of its Partnership Interests to FRP or an
Affiliate of FRP) in accordance with the terms of the Amendment,
Waiver and Consent Agreement, transfers of the Partnership
Interest of the FRP Partner to FRP or an Affiliate of FRP in
connection with such merger, liquidation or dissolution of the
FRP Partner) shall result in the transfer to the purchaser,
transferee or assignee of a Partnership Interest, or portion
thereof, that is equal to the sold, transferred or assigned
Partnership Interest, or the sold, transferred or assigned
portion thereof, of the seller, transferor or assignor and shall
cause the purchaser, transferee or assignee to be subject to and
to incur all obligations pertaining to the sold, transferred or
assigned Partnership Interest, or the sold, transferred or
assigned portion thereof.
13.04 Notices. All communications, notices and consents provided
for herein shall be in writing and be given in person (or air
freight delivery) or by means of telecopy (with request for
assurance of receipt in a manner typical with respect to
communications of that type) or by mail, and shall become
effective (x) on delivery if given in person or by air freight
delivery, (y) on the date of transmission if sent by telecopy or
(z) three business days after being deposited in the mails, with
proper postage for first-class registered or certified air mail
prepaid. Notices shall be addressed as follows:
(i) if to the IMC Partner at:
2100 Sanders Road
Northbrook, Illinois 60062
Facsimile: 708-205-4805
Attention: Corporate Secretary
(ii) if to Operations at:
2100 Sanders Road
Northbrook, Illinois 60062
Facsimile: 708-205-4805
Attention: Corporate Secretary
(iii) if to IMC GPCo at:
2100 Sanders Road
Northbrook, Illinois 60062
Facsimile: 708-205-4805
Attention: Corporate Secretary
(iv) if to the Managing Partner at:
2100 Sanders Road
Northbrook, Illinois 60062
Facsimile: 708-205-4805
Attention: Corporate Secretary
and (v) if to the FRP Partner at:
1615 Poydras Street
New Orleans, Louisiana 70112
Facsimile: 504-585-3513
Attention: General Counsel
or at such other address as either party hereto may from time to
time designate by notice duly given in accordance with the
provisions of this Section to the other party hereto.
13.05 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware
without regard to the conflicts of law rules of such state.
13.06 Choice of Forum. All suits, actions or proceedings arising
out of or relating to this Agreement shall be brought in a state
or federal court located in the State of Delaware, which courts
shall be an appropriate forum for all such suits, actions or
proceedings. Each Partner hereby waives any objection which it
may now or hereafter have to the laying of venue in any such
court of any such suit, action or proceeding.
13.07 Consent to Jurisdiction. Each Partner hereby irrevocably
submits to the jurisdiction of any state or federal court located
in the State of Delaware in any such suit, action or proceeding
referred to in Section 13.06 above. IMC GPCo hereby designates
and appoints The Corporation Trust Company, with an office on the
date hereof at 1209 Orange Street, Wilmington, Delaware 19801, or
any successor thereof, as its authorized agent to accept and
acknowledge on its behalf service of any and all process which
may be served in any such suit, action or proceeding in any state
or federal court in the State of Delaware and agrees that service
of process upon The Corporation Trust Company, or any successor
thereof, shall be deemed in every respect effective service of
process upon IMC GPCo in any such suit, action or proceeding.
Operations hereby designates and appoints The Corporation Trust
Company, with an office on the date hereof at 1209 Orange Street,
Wilmington, Delaware 19801, or any successor thereof, as its
authorized agent to accept and acknowledge on its behalf service
of any and all process which may be served in any such suit,
action or proceeding in any state or federal court in the State
of Delaware and agrees that service of process upon The
Corporation Trust Company, or any successor thereof, shall be
deemed in every respect effective service of process upon
Operations in any such suit, action or proceeding. The FRP
Partner hereby designates and appoints The Corporation Trust
Company, with an office on the date hereof at 1209 Orange Street,
Wilmington, Delaware 19801, or any successor thereof, as its
authorized agent to accept and acknowledge on its behalf service
of any and all process which may be served in any such suit,
action or proceeding in any state or federal court in the State
of Delaware and agrees that service of process upon The
Corporation Trust Company, or any successor thereof, shall be
deemed in every respect effective service of process upon the FRP
Partner in any such suit, action or proceeding. The Managing
Partner hereby designates and appoints The Corporation Trust
Company, with an office on the date hereof at 1209 Orange Street,
Wilmington, Delaware 19801, or any successor thereof, as its
authorized agent to accept and acknowledge on its behalf service
of any and all process which may be served in any such suit,
action or proceeding in any state or federal court in the State
of Delaware and agrees that service of process upon The
Corporation Trust Company, or any successor thereof, shall be
deemed in every respect effective service of process upon the
Managing Partner in any such suit, action or proceeding. Said
designation and appointment by each of IMC GPCo, Operations, the
FRP Partner and the Managing Partner shall be irrevocable during
the term of this Agreement, and each party shall pay all costs
and expenses of its respective designation and appointment as and
when due and payable.
13.08 Waiver of Jury Trial. EACH PARTNER HEREBY WAIVES ANY RIGHT
TO A TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT AND AGREES THAT ANY SUCH SUIT,
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE
A JURY.
13.09 Entire Agreement; Amendments. This Agreement (including the
exhibits hereto) together with the other Transaction Agreements
(including any exhibits or schedules thereto), the Amendment,
Waiver and Consent Agreement and a certain letter agreement dated
as of July 1, 1993 relating to certain tax matters between
Operations and FRP embody the entire agreement and understanding
between the parties with respect to the subject matter hereof and
thereof, and supersede any agreements, representations,
warranties or understandings, oral or written, between the
parties with respect to the subject matter of this Agreement and
the other Transaction Agreements entered into prior to the
respective dates hereof and thereof. This Agreement may be
amended or modified (including, without limitation, to admit a
new "Partner" or "Partners" (other than (i) any New Partners or
any new "Partner" admitted to the Partnership pursuant to a
transfer of the Partnership Interest (or a portion thereof) of a
Partner pursuant to Section 7.02 or Section 7.04) or (ii) the
admission of FRP or an Affiliate of FRP as a new Partner as a
result of the election of FTX and FRP to merge, liquidate or
dissolve the FRP Partner (or transfer its Partnership Interests)
in accordance with the terms of the Amendment, Waiver and Consent
Agreement) only by an instrument in writing executed by all of
the Partners.
13.10 Execution in Counterparts. This Agreement may be signed
incounterparts. Any single counterpart or set of counterparts
signed, in either case, by all the parties hereto shall
constitute a full and original agreement for all purposes.
13.11 Remedies and Waiver. No failure or delay in exercising any
right hereunder shall operate as a waiver of or impair any such
right. No single or partial exercise of any such right shall
preclude any other or further exercise thereof or the exercise of
any other right. Any waiver must be given in writing to be
effective, and no waiver shall be deemed a waiver of any other
right.
13.12 Headings. The headings of Articles and Sections have been
included herein for convenience only and shall not constitute a
part of this Agreement for any other purpose.
13.13 Third Party Beneficiaries. This Partnership Agreement is
solely for the benefit of the parties hereto and the Partners'
respective Related Persons to the extent set forth in Section
8.01, and no provision of this Agreement shall be deemed to
confer upon third parties, other than the Partners' respective
Related Persons to the extent set forth in Section 8.01, any
remedy, claim, liability, reimbursement, claim of action or other
right in excess of those existing without reference to this
Agreement.
13.14 Further Assurances. Each Partner agrees to execute and
deliver such other documents, certificates, agreements and other
writings and to take such other actions as may be necessary or
desirable in order to consummate or implement expeditiously the
transactions contemplated by the Transaction Agreements and to
vest in the Partnership good title to the Assets, subject only to
Permitted Liens.
13.15 Power of Attorney. Each Partner hereby constitutes and
reappoints, effective as of May 26, 1995, the Managing Partner
and its successors and assigns as the true and lawful attorney of
such Partner with full power of substitution in the name of the
Partnership or in the name of such Partner, but for the benefit
of the Partnership (i) to collect for the account of the
Partnership any Asset and (ii) to institute and prosecute all
proceedings on behalf of the Partnership which the Managing
Partner may in its commercially reasonable discretion deem
necessary or appropriate in order to assert or enforce any right,
title or interest in, to or under the Assets, and to defend or
compromise any and all actions, suits or proceedings in respect
of such Assets. The Partnership shall be entitled to retain for
its own account any amounts collected pursuant to the foregoing
powers, including any amounts payable as interest in respect
thereof.
13.16 Public Announcements. Except as may be required by
applicable law or any listing agreement with any national
securities exchange, neither the Partnership nor any Partner nor
any Affiliate thereof will issue any press release or make any
public statement with respect to the business of the Partnership
or its financial performance or condition without the prior
written consent of the Partners unless either (i) a draft of the
proposed release has been provided to each Partner at least
twenty-four (24) hours prior to its proposed release in order to
permit the Partners to comment thereon or (ii) such press release
or other public statement contains factual information (or
discussion or analysis of or comment based upon such factual
information) previously provided to such Person by the Managing
Partner; provided that none of the Partners nor any of their
Affiliates will present projections or forward-looking
information that is attributed to the Partnership or any other
Partner or its Affiliates without the prior written consent of
such other Partners.
* * * * *
IN WITNESS WHEREOF, the parties have signed this Amended and
Restated Partnership Agreement as of the 26th day of May, 1995.
IMC-Agrico GP Company
By: ROBERT C. BRAUNEKER
Name Printed: Robert C. Brauneker
Title: Vice President
Agrico, Limited Partnership
By: Agrico, Inc., its
general partner
By:
Name Printed:
Title:
IMC-Agrico MP, Inc.
By: ROBERT C. BRAUNEKER
Name Printed: Robert C. Brauneker
Title: Vice President
IMC Global Operations Inc.
(formerly IMC Fertilizer, Inc.)
By: PETER HONG
Name Printed: Peter Hong
Title: Vice President
IN WITNESS WHEREOF, the parties have signed this Amended and
Restated Partnership Agreement as of the 26th day of May, 1995.
IMC-Agrico GP Company
By:
Name Printed:
Title:
Agrico, Limited Partnership
By: Agrico, Inc., its
general partner
By: CHARLES W. GOODYEAR
Name Printed: Charles W. Goodyear
Title: Vice President
IMC-Agrico MP, Inc.
By:
Name Printed:
Title:
IMC Global Operations Inc.
(formerly IMC Fertilizer, Inc.)
By:
Name Printed:
Title:
Schedule X
B - (N x T)
---------------
Target Cash = C - N
B = The capital account balance of the respective Partner at the
beginning of the June 30 fiscal year, adjusted for all
adjustments to the Partner's capital account for the current year
except for adjustments required as a result of (i) allocations
pursuant to Section 5.01; (ii) the special allocations pursuant
to Section 5.02(c) and 5.02(d); and (iii) all cash distributions
to the Partner for the current fiscal year made pursuant to the
Partner's Current Interest for the year.
N = The Capital Interest for the following year for the
respective Partner. In determining any allocations to be made
pursuant to Article V and Article XII for any period other than a
period ending on the last day of the Partnership's fiscal year,
however, the Capital Interest for the current year for the
respective Partner shall be used.
T = The sum of the capital account balances of the Partners at
the beginning of the June 30 fiscal year, adjusted for all
adjustments to the Partners' capital accounts for the current
year except for adjustments required as a result of (i)
allocations pursuant to Section 5.01; (ii) the special
allocations pursuant to Section 5.02(c) and 5.02(d); and (iii)
all cash distributions to the Partners for the current fiscal
year made pursuant to the Partners' Current Interest for the
year.
C = The Current Interest of the respective Partner for the
applicable fiscal year.
SCHEDULE Y
ITEM OF TAX INFORMATION PERIOD(S)
1. Ordinary income excluding July 1 - December 31
depreciation and depletion (estimated July 1 - June 30
where appropriate), including (final)
workpapers supporting allocations
between partners
2. Depletable gross revenues, statutory July 1 - December 31
depletion expenses (excluding July 1 - June 30
depreciation) for purposes of Code (final)
Section 613, production volumes, and
remaining reserves by property (taking
into account special tax allocations)
3. Depreciation and amortization expense, July 1 - December 31
by tax property for mining assets and by July 1 - June 30
state for other assets, as follows: (final)
---Federal
---AMT
---ACE
4. Depreciable and amortizable asset July 1 - December 31
additions and retirements, by tax July 1 - June 30
property for mining assets and by state (final)
for other assets
5. Leasehold cost basis and related July 1 - December 31
additions, retirements, and abandonments July 1 - June 30
by tax property (final)
6. Outstanding balance of recourse and Monthly (as of each
nonrecourse debt month end)
July 31 - December 31
January 31 - June 30
7. Interest and dividend income July 1 - December 31
July 1 - June 30
(final)
8. Code Section 1231 gains or losses, and July 1 - December 31
ordinary income recapture July 1 - June 30
(final)
9. Reconciliation of book to
taxable income July 1 - December 31
July 1 - June 30
(final)
10. Partnership gross
income consisting of July 1 - December 31
qualifying income under Code Section January 1 - June 30
7704 (d) as well as nonqualifying income
11. Fair market value evaluation by Calendar year
property
ITEM OF TAX INFORMATION PERIOD(S)
12. Additional state tax information July 1 - June 30
A. Sales by state based on the place (final)
of origin and place of shipping
destination
B. Inventory by state
C. Miscellaneous income (i.e.,
interest, dividends, gains and
losses, rental income and other
miscellaneous income) by state
D. Rent expense
E. Book original cost of depreciable
and depletable assets by state,
considering the effect of
additions and retirements
F. Book basis information for the
Louisiana corporation franchise
tax return
13. Tax basis of all assets and As of December 31
liabilities, by major category, for Code As of June 30
(final)
Section 743 and FAS 109 purposes
14. Depreciation and amortization, by tax July 1 - June 30
property, for mining assets for the (final)
following:
--Earnings and Profits
--State (where appropriate)
15. Estimate of permanent differences July 1 - December
31
between book and taxable income
16. Estimate of taxable
income for FAS 109 July 1 - December
31
purposes
17. Estimated regular and AMT taxable July 1 - June 30
income
18. Any other tax information and data
reasonably requested by the
Non-Operating Partner or its Affiliates
for purposes of complying with their
federal and state tax reporting
requirements
(TABLE CONTINUED)
ITEM OF TAX INFORMATION DATE
1. Ordinary income excluding January 25
depreciation and depletion (estimated October 25
where appropriate), including
workpapers supporting allocations
between partners
2. Depletable gross revenues, statutory January 25
depletion expenses (excluding October 25
depreciation) for purposes of Code
Section 613, production volumes, and
remaining reserves by property (taking
into account special tax allocations)
3. Depreciation and amortization expense, January 25
by tax property for mining assets and by October 25
state for other assets, as follows:
---Federal
---AMT
---ACE
4. Depreciable and amortizable asset January 25
additions and retirements, by tax October 25
property for mining assets and by state
for other assets
5. Leasehold cost basis and related January 25
additions, retirements, and abandonments October 25
by tax property
6. Outstanding balance of recourse and January 25
nonrecourse debt October 25
7. Interest and dividend income January 25
October 25
8. Code Section 1231 gains or losses, and January 25
ordinary income recapture October 25
9. Reconciliation of book to
taxable income January 25
October 25
10. Partnership gross
income consisting of January 25
qualifying income under Code Section October 25
7704 (d) as well as nonqualifying income
11. Fair market value evaluation by January 25
property
ITEM OF TAX INFORMATION DATE
12. Additional state tax information October 25
A. Sales by state based on the place
of origin and place of shipping
destination
B. Inventory by state
C. Miscellaneous income (i.e.,
interest, dividends, gains and
losses, rental income and other
miscellaneous income) by state
D. Rent expense
E. Book original cost of depreciable
and depletable assets by state,
considering the effect of
additions and retirements
F. Book basis information for the
Louisiana corporation franchise
tax return
13. Tax basis of all assets and January 25
liabilities, by major category, for Code October 25
Section 743 and FAS 109 purposes
14. Depreciation and amortization, by tax
property, for mining assets for the
following: November 25
--Earnings and Profits
--State (where appropriate)
15. Estimate of permanent differences
between book and taxable income January 6
16. Estimate of taxable
income for FAS 109 purposes January 6
17. Estimated regular and AMT taxable
income January 25
18. Any other tax information and data
reasonably requested by the
Non-Operating Partner or its Affiliates
for purposes of complying with their
federal and state tax reporting
requirements
Schedule 9.12
Sales to IMC Canada Ltd. of GTSP, DAP, GMAP 11-52-0, GMAP
10-50-0 and PFS: the price shall be the average market price
minus ten percent (10%) for domestic sales of similar products so
long as the aggregate volume for the above-mentioned products
does not exceed 57,619 P2O5 tons.
Sales to Operations' Rainbow Division of GTSP, DAP, RMAP, GMAP
and PFS: the price shall be the average market price minus ten
percent (10%), but not less than full production cost, for
domestic sales of similar products so long as the aggregate
volume for the above-mentioned products does not exceed 95,200
P205 tons.
EXHIBIT A
Schedule of Definitions
"Accounting Date" shall have the meaning given to such tern in
Section 12.03 of the Partnership Agreement.
Accounting Referee" shall have the meaning given to such term in
the Contribution Agreement.
"Acquiring Person shall have the meaning given to such term in
Section 2.08 (b) of the Partnership Agreement.
"Act" shall mean the Uniform Partnership Law as enacted in the
State of Delaware.
"Administrative Fee" shall have the meaning given to such term in
Section 9.11 of the Partnership Agreement.
"Affiliate" of any Person shall mean any corporation,
proprietorship, partnership or business entity which, directly of
indirectly, owns or controls, is under common ownership or
control with, or is owned or is controlled by, such Person.
"Affiliated Group" means a Person together with its affiliates
and all Persons who are members of a "group" with such Person
within the meaning of Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended.
"Agrico LP" or "FRP Partner" (in the case of "FRP Partner", prior
to the merger, liquidation or dissolution of the FRP Partner (or
the transfer by the FRP Partner of its Partnership Interests to
FRP or an Affiliate of FRP) contemplated by the Amendment, Waiver
and Consent Agreement) shall mean Agrico, Limited Partnership, a
Delaware limited partnership.
"Alternates" shall have the meaning given to such term in Section
6.04 of the Partnership Agreement.
"Amendment, Waiver and Consent Agreement" shall mean the
Amendment, Waiver and Consent Agreement dated as of May 26, 1995
among Global, Operations, IMC GPCo, the Managing Partner,
IMC-Agrico Company, FTX, FRP and the FRP Partner.
"Appraisal Procedure" shall mean the following: If any price,
value, amount or determination to be determined under the
Partnership Agreement cannot timely be established by agreement,
then either the IMC Partner (or, as set forth in the Partnership
Agreement, during the IMC GPCo Liquidation Period, Operations or
IMC GPCo) or the FRP Partner, by written notice to the other, may
invoke the Appraisal Procedure. Each of the IMC Partner (or,
during the IMC GPCo Liquidation Period, Operations or IMC GPCo)
and the FRP Partner shall appoint its Qualified Investment
Banking Firm to conduct an appropriate valuation and shall give
notice of such appointment to the other Non-Managing Partner(s)
within fifteen (15) days after delivery of the notice invoking
such procedure. If the IMC Partner (or, during the IMC GPCo
Liquidation Period, Operations or IMC GPCo) or the FRP Partner
does not appoint its Qualified Investment Banking Firm within
such fifteen (15) day period, the valuation made by the Qualified
Investment Banking Firm appointed by the other Non-Managing
Partner shall be conclusive and binding on the Partners. If
within thirty (30) days after appointment of the Qualified
Investment Banking Firms, such Qualified Investment Banking Firms
are unable to agree upon an appropriate valuation but the higher
valuation is not greater than 110% of the lower valuation, then
the valuation which shall be binding on the Partners shall be the
average of the two (2) valuations given by the Qualified
Investment Banking Firms. If the higher valuation is greater
than 110% of the lower valuation, the two (2) Qualified
Investment Banking Firms jointly shall appoint a third Qualified
Investment Banking Firm within fifteen (15) days thereafter, or,
if they do not do so, either the IMC Partner (or, in such cases,
Operations or IMC GPCo) or the FRP Partner may request the
American Arbitration Association, or any organization successor
thereto, to appoint the third Qualified Investment Banking Firm.
The decision of the third Qualified Investment Banking Firm shall
be given within sixty (60) days after its appointment, shall be
at least equal to the lower valuation, shall not exceed the
higher valuation and shall be binding on the Partners. "Approved
Debts" shall have the meaning given to such term in Section
12.06(a) of the Partnership Agreement.
"Asset Sale Amount" shall mean, with respect to any sale of any
Partnership asset other than in the ordinary course of business,
an amount equal to the greater of (a) the net book value of such
asset as shown on the most recent audited balance sheet of the
Partnership and (b) the net proceeds (including cash and the
value of property received) realized by the Partnership upon the
sale or other disposition of such asset.
"Assets" shall have the meaning given to such term in the
Contribution Agreement.
"Assumed Liabilities" and "Assumed Liability" shall have the
meanings given to such terms in the Contribution Agreement.
"Bankrupt" shall mean any Person with respect to which a
Bankruptcy shall have occurred.
"Bankruptcy" shall mean with respect to any Person the occurrence
of either of the following events"
(i) the Person shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief
with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part
of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against it, or
shall make a general assignment for the benefit of creditors, or
shall fail generally to pay its debts as they become due, or
shall take any corporate action to authorize any of the
foregoing; or
(ii) an involuntary case or other proceeding shall be commenced
against the Person seeking liquidation, reorganization or other
relief with respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part
of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of 60 days; or
an order for relief shall be entered against the Person under the
federal bankruptcy laws as now or hereafter in effect.
"Base Affiliate Transaction Amount" shall mean (i) for the Fiscal
Year ended June 30, 1994, five hundred thousand dollars
($500,000) and (ii) for each subsequent Fiscal Year, an amount
equal to the sum of (x) the Base affiliate Transaction Amount in
effect for the immediately preceding Fiscal Year, plus (y) the
product of (A) the percentage increase in the GNP Deflator Index
for the immediately preceding Fiscal Year, multiplied by (B) the
Base Affiliate Transaction Amount for the immediately preceding
Fiscal Year.
"Base Budget Amount" shall mean (i) for the Fiscal Year ended
June 30, 1994, two hundred fifty thousand dollars ($250,000), and
(ii) for each subsequent Fiscal Year, an amount equal to the sum
of (x) the Base Budget Amount in effect for the immediately
preceding Fiscal Year, plus (y) the product of (A) the percentage
increase in the GNP Deflator Index for the immediately preceding
Fiscal Year, multiplied by (B) the Base Budget Amount for the
immediately preceding Fiscal Year.
"Base Obligation Amount" shall mean (i) for the Fiscal Year ended
June 30, 1994, five million dollars ($5,000,000), and (ii) for
each subsequent Fiscal Year, an amount equal to the sum of (x)
the Base Obligation Amount in effect for the immediately
preceding Fiscal Year, plus (y) the product of (A) the percentage
increase in the GNP Deflator Index for the immediately preceding
Fiscal Year, multiplied by (B) the Base Obligation Amount for the
immediately preceding Fiscal Year.
"Base Sale Amount" shall mean (i) for the Fiscal Year ended June
30, 1994, twenty-five million dollars ($25,000,000), and (ii) for
each subsequent Fiscal Year, an amount equal to the sum of (x)
the Base Sale Amount in effect for the immediately preceding
Fiscal Year, plus (y) the product of (A) the percentage increase
in the GNP Deflator Index for the immediately preceding Fiscal
Year, multiplied by (B) the Base Sale Amount for the immediately
preceding Fiscal Year.
"Beneficial Interest" means with respect to either Ultimate
Parent, its beneficial ownership interest in the Partnership
(determined upon the basis of the Capital Interest of the Partner
or Partners controlled by such Ultimate Parent) proportionately
reduced by any minority ownership interest of any Person other
than such Ultimate Parent or any if its Intervening Persons in
the Partner or Partners controlled by such Ultimate Parent or any
Intervening Person of such Ultimate Parent; provided that in
calculating the Beneficial Interest of FTX or any subsequent
Ultimate Parent of the FRP Partner, the beneficial ownership
interest of FTX or any subsequent Ultimate Parent of the FRP
Partner in the Partnership shall only be reduced on account of
Non-Affiliated Unitholders to the extent such Non-Affiliated
Unitholders hold in excess of 49% of the limited partnership
interests of FRP.
"Capital Account" means, with respect to any Partner, the capital
account maintained for such Partner pursuant to Section 4.02 of
the Partnership Agreement.
"Capital Advance" shall have the meaning given to such term in
Section 3.02(b) of the Partnership Agreement.
"Capital Interest" shall have the meaning given to such term in
Section 4.01 of the Partnership Agreement.
"Capital Interest Cash" means, for any period any Capital
Proceeds received during such period less the sum of (A) Capital
Proceeds reinvested in a Capital Project during such period in
accordance with Section 5.07 of the Partnership Agreement plus
(B) (i) expenditures for Capital Projects during such period and
(ii) capital expenditures in any year for projects identified on
Annex VII to the Contribution Agreement, or alternative projects
of a substantially similar nature substituted by agreement of the
parties, to the extent that the aggregate amount of all such
capital expenditures exceed 110% of the aggregate amount shown on
such Annex VII as being spent for such projects in that year,
which in both cases are either specifically approved by the
Policy Committee (or, if not by the Policy Committee, by the CEOs
or the Managing Partner in accordance with Section 6.07 of the
Partnership Agreement) or in a budget approved by the Policy
Committee(or, if not by the Policy Committee, by the CEOs or the
Managing Partner in accordance with Section 6.07 of the
Partnership Agreement). Furthermore, any expenditure that would
otherwise be subtracted pursuant to clause (B) of this definition
of Capital Interest Cash shall not be so subtracted to the extent
that such expenditure is funded by either the incurrence of
indebtedness by the Partnership or cash contributions by the
Partners.
"Capital Proceeds" shall mean the cash proceeds of a Capital
Transaction received, whether the Capital Transaction occurred in
the current period or in a prior period.
"Capital Project" shall mean any project having an anticipated
useful life in excess of one year, with an anticipated cost
(including capitalized interest in connection with any Debt
incurred to fund such project) in excess of the Base Budget
Amount and involving the purchase, lease, license, acquisition,
manufacture, maintenance or construction of an asset, other than
those items set forth on Annex VII to the Contribution Agreement.
A Capital Project shall be deemed implemented or attributable to
the Fiscal Year in which the relevant asset is placed in service.
"Capital Transaction" shall mean the sale or disposition of any
asset of the Partnership having an anticipated useful life in
excess of one year other than in the ordinary course of business.
A Capital Transaction shall be deemed to have occurred in the
Fiscal Year in which the sale or disposition of the relevant
asset becomes effective. The sale of Big Bend or Port Sutton
terminal is not a Capital Transaction.
"CEOs" shall have the meaning given to such term in Section
6.07(b) of the Partnership Agreement.
"Claims" shall have the meaning given to such term in Section
8.01 of the Partnership Agreement.
"Closing" shall mean the consummation of the transactions
contemplated by the Contribution Agreement in accordance with
Section 2.08 thereof.
"Closing Date" shall have the meaning given to such term in the
Contribution Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended
and the regulations promulgated thereunder.
"Comparable Property" shall have the meaning given to such term
in Section 2.08(c) of the Partnership Agreement.
"Confidentiality Agreement" shall mean the Letter Agreement dated
November 18, 1992 among FRP, FTX and Group.
"Contributed Business" shall, with respect to Operations or FRP,
have the meaning given to such term in the Contribution
Agreement.
"Contributing Partner" shall have the meaning given to such term
in Section 3.03 of the Partnership Agreement.
"Contribution Agreement" shall mean that certain Contribution
Agreement dated as of April 5, 1993 IMC and FRP
"Contribution Agreement Claim" shall have the meaning given to
such term in Section 5.07(d) of the Partnership Agreement.
"Cure Period" shall mean the period ending sixty (60) days after
the earlier to occur of (i) the agreement between the
Non-Managing Partners that a Material Breach has occurred and
(ii) if a dispute exists between the Non-Managing Partners as to
whether a Material Breach has occurred, a determination through
the Dispute Resolution Mechanism that a Material Breach has
occurred; provided, that if during the sixty (60) day period, the
Operating Partner has promptly presented to the Non-Operating
Partner a remedy to cure such Material Breach and has promptly
begun and continuously pursued good faith efforts in attempting
to cure such Material Breach, then the Cure Period shall be
extended for so long as the Operating Partner is continuously
pursuing good faith efforts to cure such Material Breach, but in
no event shall the Cure Period be extended for more than a
reasonable period of time, taking into account the nature of the
cure.
"Current Interest" shall have the meaning given to such term in
Section 4.01 of the Partnership Agreement.
"Current Interest Cash" shall mean, for any period the sum of
(i) the consolidated net income (or loss) of the
Partnership for such period; plus
(ii) the depreciation, depletion, amortization and all
other non-cash expenses of the Partnership, including the
amount of net book value eliminated as a result of any
asset sales made by the Partnership during such period;
plus
(iii) the net cash proceeds with respect to any prior
period asset sales or liquidation of other non-current
assets of the Partnership received during the period to the
extent such proceeds are not already included in the
consolidated net income of the Partnership for such period;
minus
(iv) the non-cash proceeds of any asset sales made by the
Partnership during such period to the extent such non-cash
proceeds are included in the consolidated net income of the
Partnership for such period; minus (v) the Partnership's
earnings from non-consolidated investees during such
period; plus
(vi) the Partnership's share of losses in non-consolidated
investees during such period; plus
(vii) dividends and distributions of cash and cash
equivalents received by the Partnership from
non-consolidated investees during such period; minus
(viii) investments of cash and cash equivalents made by the
Partnership in non-consolidated investees during such
period; minus
(ix) capital expenditures (a) excluding expenditures for
Capital Projects but (b) including capital expenditures for
projects identified in Annex VII to the Contribution
Agreement but only to the extend that the aggregate among
of such expenditures in any year for projects identified in
Annex VII, or alternative projects of a substantially
similar nature substituted by agreement of the parties,
does not exceed 110% of the aggregate amount shown on such
Annex VII as being spent for such projects in that year;
minus
(x) the extent not previously deducted in computing the
consolidated net income (or loss) of the Partnership,
expenditures of the Partnership relating to the shut down
of facilities and reclamation of land during such period
and other payments in respect of previously accrued
liabilities; minus
(xi) principal repayments of Partnership indebtedness;
minus
(xii) Capital Proceeds of the Partnership during such
period; minus
(xiii) increases in cash reserves of the Partnership; plus
(xiv) decreases in cash reserves of the Partnership; plus
(xv) after consideration of noncash accruals and related
expenditures identified in (ii) and (x) above, decreases in
working capital loans from third parties at the end of the
period.
In calculating Current Interest Cash, to the extend applicable,
each item involved in the calculation shall be determined using
the financial statements of the Partnership prepared in
accordance with generally accepted accounting principles.
Furthermore, any expenditure that would otherwise be deducted
pursuant to this definition of Current Interest Cash shall not be
deducted from consolidated net income to the extent that such
expenditure is funded by either the incurrence of indebtedness by
the Partnership or cash contributions by the Partners.
"Debt" shall mean, as to any Person: (a) indebtedness created,
issued or incurred by such Person for borrowed money (whether by
loan or the issuance and sale of debt securities; (b) obligations
of such Person to pay the deferred purchase or acquisition price
of property or services, other than trade or other accounts
payable (other than for borrowed money) arising, and accrued
expenses incurred, in the ordinary course of business so long as
such trade or other accounts payable are payable within ninety
(90) days of the date the respective goods are delivered or
respective services rendered; )c) Debt of others secured by a
Lien on the property of such Person, whether or not the
respective indebtedness so secured has been assumed by such
Person; (d) obligations of such Person in respect of letters of
credit or similar instruments issued or accepted by banks and
other financial institutions for the account of such Person; (e)
capital lease obligations of such Person required to be reported
as such in accordance with generally accepted accounting
principles from time to time in effect; and (f) Debt of others
guaranteed by such Person.
"Delaware Law" shall have the meaning given to such term in the
Partnership Agreement and in the Parent Agreement.
"Developing Partner" shall have the meaning given to such term in
Section 2.08(c) of the Partnership Agreement.
"Dispute Resolution Mechanism" shall mean a proceeding for
resolution of disputes, submitted to Endispute Incorporated
("Endispute:) in San Francisco, California, with the Non-Managing
Partner whose position is substantially upheld by Endispute in
such proceeding being entitled to recover its attorneys' fees and
expenses from the other Non-Managing Partner. If at the time
that the dispute occurs Endispute is not in the business of
resolving disputes in San Francisco, California, the Non-Managing
Partners shall ask the Chief Judge of the United States Court of
Appeals for the Ninth Circuit to select a similar firm located in
San Francisco, California.
"Dissolution Event" shall have the meaning given to such term in
Section 12.01 of the Partnership Agreement.
"Distributable Cash" shall mean, with respect to any Partner for
any period, the sum of (i) Current Interest Cash for such period
multiplied by such Partner's Current Interest as of the last day
of such period, plus (ii) Capital Interest Cash for such period
multiplied by such Partner's Capital Interest as of the last day
of such period, except that the Capital Proceeds from a Capital
Transaction occurring in a prior period will be calculated using
the Capital Interest in effect as of the last day of the period
in which the Capital Transaction which generated such Capital
Proceeds was deemed to have occurred.
"Electing Partner" shall have the meaning given to such term in
Section 2.08(c) of the Partnership Agreement.
"Employee Cost Sharing Agreement" shall mean that certain
Employee Cost Sharing Agreement dated as of July 1, 1993 between
IMC and the Managing Partner.
"Environmental Liabilities" shall have the meaning given to such
term in the Contribution Agreement.
"Equivalent Sale Price" means the Triggering Event Partnership
Value, multiplied by the Capital Interest of the Non-Triggering
Partner immediately prior to the Triggering Event.
"Excluded Liability" shall have the meaning given to such term in
the Contribution Agreement.
"Exercise Notice" has the meaning given to such term in Section
7.04 of the Partnership Agreement.
"Exercising Partner" shall have the meaning given to such term in
Section 2.08(b) of the Partnership Agreement.
"Expansion" shall mean: (i) the construction or development of a
new mine, plant, building, structure or other facility for the
purpose of developing a new source of production capacity; (ii)
any construction, development, process improvement or other
improvement primarily designed to increase the production
capacity or decrease the cost structure of any existing mine,
plant or facility; or (iii) any purchases of materials related to
the items in (i) or (ii).
"FASB 109" shall mean the Financial Accounting Standards Board
Statement of Financial Accounting Standard No. 109.
"FCC" shall mean Freeport Chemical Company, a Delaware
corporation.
"Final IMC GPCo Liquidating Distribution" shall have the meaning
given to such term in the Partnership Agreement and in the Parent
Agreement.
"Fiscal Year" shall mean the twelve month period ending June 30th
for each year during the life of the Partnership or such other
month period as may be defined as the Fiscal Year of the
Partnership pursuant to Section 9.01 of the Partnership
Agreement.
"FRP" shall mean Freeport-McMoRan Resource partners, Limited
Partnership, a Delaware limited partnership and its successors.
"FRP Alternate" and "FRP Alternates" shall have the meanings
given to such terms in Section 6.04 of the Partnership Agreement.
"FRP GPCo" shall have the meaning given to such term in the
Parent Agreement.
"FRP GPCo/FCC/FTX Merger Documents" shall have the meaning given
to such term in the Amendment, Consent Waiver Agreement.
"FRP GPCo/FCC/FTX Mergers" shall have the meaning given to such
term in the Partnership Agreement and in the Parent Agreement.
"FRP Partner" shall mean (i) Agrico, Limited Partnership, a
Delaware limited partnership, or (ii) FRP or the Affiliate of FRP
that succeeds to the obligations, assets, properties, rights and
interests of Agrico, Limited Partnership, as a result of the
merger, liquidation or dissolution of Agrico, Limited Partnership
(or to which the Partnership Interests of Agrico, Limited
Partnership is transferred) as contemplated by the Amendment,
Waiver and Consent Agreement or (iii) any other Affiliate of FRP
which succeeds to the Partnership Interests of the entity
identified in (i) or (ii) above by means of the purchase,
transfer, assignment or other conveyance or succession of such
Partnership Interests in accordance with the terms of the
Partnership Agreement.
"FRP Representative" and FRP Representatives" shall have the
meanings given to such terms in Section 6.04 of the Partnership
Agreement.
"FRP Transferred Sales Employee" shall have the meaning given to
such term in the Contribution Agreement.
"FTX" shall mean Freeport-McMoRan Inc., a Delaware corporation
and its successors.
"FTX Common Shares" shall have the meaning given to such term in
the Parent Agreement.
"GNP Deflator Index" shall mean the GNP deflator index (final) as
published by the U.S. Department of Commerce (commencing with
the index as of June 30, 1993).
"Global" or "Group" shall mean IMC Global Inc. (formerly IMC
Fertilizer Group, Inc.), a Delaware corporation and its
successors.
"Group Structure" shall have the meaning given to such term in
the Parent Agreement.
"IMC" or "Operations" shall mean IMC Global Operations Inc.
(formerly IMC Fertilizer, Inc.), a Delaware corporation and its
successors.
"IMC Alternate" and "IMC Alternates" shall have the meanings
given to such terms in Section 6.04 of the Partnership Agreement.
"IMC Common Shares" shall have the meaning given to such term in
the Parent Agreement.
"IMC GPCo" shall mean IMC-Agrico GP Company, a Delaware
corporation.
"IMC GPCo Liquidation" shall have the meaning given to such term
in the Parent Agreement.
"IMC GPCo Liquidation Period" shall have the meaning given to
that term in Article I of the Partnership Agreement.
"IMC GPCo Plan of Liquidation" shall mean the Agreement and Plan
of Complete Liquidation and Dissolution among Operations, IMC
GPCo and MPCo.
"IMC Partner" shall, with respect to each such Agreement, have
the meaning given to such term in the Parent Agreement and the
Partnership Agreement, respectively.
"IMC Plans" shall have the meaning given to such term in Section
9.06 of the Partnership Agreement.
"IMC Representative" and "IMC Representatives" shall have the
meanings given to such terms in Section 6.04 of the Partnership
Agreement.
"Initial IMC GPCo Liquidating Distribution" shall have the
meaning given to such term in the Partnership Agreement and the
Parent Agreement.
"Intervening Person" of either Ultimate Parent means a Person
that is controlled by such Ultimate Parent and which has an
ownership interest in either the IMC Partner or the FRP Partner,
as the case may be, or in another Intervening Person of such
Ultimate Parent.
"Leased IMC Employees" shall have the meaning given to such term
in the Contribution Agreement.
"Leasing Agreement" shall have the meaning given to such term in
the Contribution Agreement.
"Lien" shall mean, with respect to any asset, and mortgage, lien,
pledge, charge, security interest, easement, right of way, title
defect or encumbrance of any kind with respect to such asset.
"Limestone Cost Sharing Agreement" shall mean that certain
Limestone Cost Sharing Agreement dated as of July 1, 1993, among
IMC, the Managing Partner and the Partnership.
"Liquidating Partner" shall have the meaning given to such term
in Section 12.02 of the Partnership Agreement.
"Major Decision" shall have the meaning given to such term in
Section 6.07 of the Partnership Agreement.
"Managing Partner" shall mean MPCo in its capacity as Managing
Partner under the Partnership Agreement.
"Marketing and Administrative Services Agreement" shall have the
meaning given to such term in the Contribution Agreement.
"Material Asset Sale" shall mean the sale or other disposition of
any asset of the Partnership other than in the ordinary course of
business, if, as a result of such sale, the aggregate Asset Sale
Amount for all such sales other than in the ordinary course of
business consummated in the Fiscal Year of such sale would exceed
the Base Sale Amount for such Fiscal Year.
"Material Breach" shall mean the occurrence of either of the
following events" (i) a material failure by the Managing Partner
to perform its duties or responsibilities as Managing Partner
under this Agreement of (ii) the Bankruptcy of the Operating
Partner or any of its direct or indirect parent entities.
"Material Breach Event" shall mean either: (a) (i) the occurrence
of a Material Breach referred to in clause (i) of the definition
of "Material Breach", (ii) the giving of written notice of such
Material Breach by the Non-Operating Partner to the Operating
Partner and (iii) the failure to cure such Material Breach during
the Cure Period;
(b) the occurrence of a Material Breach referred to in clause
(ii) of the definition of "Material Breach" and, if such Material
Breach results from a Bankruptcy referred to in clause (i) of the
definition of "Bankruptcy", the continuance of such Material
Breach for sixty (60) days; or
(c) the occurrence of an event that would have constituted a
Triggering Event but for the proviso in the definition of
"Triggering Event."
A "cure" of a Material Breach referred to in clause (i) of the
definition of "Material Breach" includes, without limitation,
reimbursement of the Partnership for any costs, expenses,
liabilities, obligations, losses, damages or penalties caused by
such Material Breach.
"Material Facility" shall mean any facility of the Partnership
having a book value, as shown on the latest quarterly balance
sheet of the Partnership, in excess of five percent (5%) of the
net property, plant and equipment of the Partnership, as shown on
the latest quarterly balance sheet of the Partnership, at the
time of such determination.
"Material Obligation" shall mean any liability or obligation
(known to the Managing Partner at the time of incurrence or
assumption) incurred or assumed by or on behalf of the
Partnership for Expansion and other than in the ordinary course
of business in an aggregate amount, based on the knowledge of the
Managing Partner at the time of such incurrence or assumption, in
excess of the Base Obligation Amount in effect at the time such
liability or obligation is incurred or assumed.
"Material Purchase and Cost Sharing Agreement" shall mean that
certain Material Purchase and Cost Sharing Agreement dated as of
July 1, 1993 between IMC and the Partnership.
"MP Benefit Plans" shall have the meaning given to such term in
the Contribution Agreement.
"MB Contribution Plans" shall have the meaning given to such term
in the Contribution Agreement.
"MB Pension Plans" shall have the meaning given to such term in
the Contribution Agreement.
"MPCo" shall mean IMC-Agrico MP, Inc., a Delaware corporation and
its successors.
"Negotiating Interval" shall have the meaning given to such term
in the Parent Agreement.
"Negotiation period" shall have the meaning given to such term in
Section 7.02(b) of the Partnership Agreement.
"New Partners" shall have the meaning given to such term in
Section 12.01 of the Partnership Agreement.
"Non-Affiliated Unitholders" means limited partners of FRP other
than FTX and its Affiliates.
"Non-Contributing Partner" shall have the meaning given to such
term in Section 3.03 of the Partnership Agreement.
"Non-Contributing Partner's Share" shall have the meaning given
to such term in Section 3.03 of the Partnership Agreement.
"Non-Defaulting Partner" shall have the meaning given to such
term in Section 5.07(d) of the Partnership Agreement.
"Non-Developing partner" shall have the meaning given to such
term in Section 2.08(c) of the Partnership Agreement.
"Non-Managing Partner shall mean any Partner other than the
Managing Partner.
"Non-Operating Partner" shall have the meaning given to such term
in Section 2.06 of the Partnership Agreement.
"Non-Presenting Partner" shall have the meaning given to such
term in Section 2.08(b) of the Partnership Agreement.
"Non-Qualifying Income" shall mean any income other than
Qualifying Income.
"Non-Triggering Partner" means (i) if the IMC Partner is the
Triggering Partner, the FRP Partner and (ii) if the FRP Partner
is the Triggering Partner, the IMC Partner (which, during the IMC
GPCo Liquidation period, shall mean both Operations and IMC
GPCo).
"Non-Withdrawing Partner" shall have the meaning given to such
term in Section 12.01 of the Partnership Agreement.
"No-Shop Period" shall have the meaning given to such term in
Section 7.02(b) of the Partnership Agreement.
"No-Shop Interval" shall have the meaning given to such term in
Section 3.0(d) of the Parent Agreement.
"Notice of Intent to Sell" shall have the meaning given to such
term in Section 7.02(b) of the Partnership Agreement.
"Notice of Intent to Transfer" shall have the meaning given to
such term in Section 3.0(d) of the Parent Agreement.
"Notified Partner" shall have the meaning given to such term in
Section 7.02(b) of the Partnership Agreement.
"Notified Person" shall have the meaning given to such term in
Section 3.0(d) of the Parent Agreement.
"Operating Partner" shall have the meaning given to such term in
Section 2.06 of the Partnership Agreement.
"Operations" or "IMC" shall mean IMC Global Operations Inc.
(formerly IMC Fertilizer, Inc.), a Delaware corporation and its
successors.
"Parent Agreement" shall mean the Parent Agreement among IMC, FRP
and the Partnership, as amended and restated as of May 26, 1995,
and as thereafter amended, modified or supplemented from time to
time.
"Partner" or "Partners" shall have the meanings given to such
terms in Article I to the Partnership Agreement.
"Partner Loan" shall have the meaning given to such term in
Section 3.03 of the Partnership Agreement.
"Partnership" shall mean IMC-Agrico Company, a Delaware general
partnership formed pursuant to the Partnership Agreement.
"Partnership Agreement" shall mean the Partnership Agreement
between Operations, IMC GPCo, FRP and the Managing Partner, as
amended and restated as of July 1, 1993 and as further amended
and restated as of May 26, 1995 and as thereafter amended,
modified or supplemented from time to time.
"Partnership Interests" shall mean all right, title and interest
of a Partner in the Partnership, including, without limitation,
its Current Interest and Capital Interest.
"Partnership Units" shall have the meaning given to such term in
the Parent Agreement.
"Partnership Working Capital Facility" shall have the meaning
given to such term in Section 3.02(b) of the Partnership
Agreement.
"Permitted Liens" shall have the meaning given to such term in
the Contribution Agreement.
"Person" shall mean an individual, a partnership, a corporation,
a trust, an unincorporated organization, a governmental authority
and any other entity.
"PhosChem" shall have the meaning given to such term in Section
2.03 of the Partnership Agreement.
"Phosphate Chemicals Business" means and includes (i) the
exploration for, and the acquisition, leasing, development,
mining and disposition of, phosphate rock reserves, (ii) engaging
in contract mining, tolling, processing, management and other
activities regarding the phosphate-related reserves, properties,
facilities or materials of third parties, (iii) the processing,
manufacture, purchase, exchange and sale of phosphate fertilizers
and other phosphate chemicals (including, without limitation,
monoammonium phosphate, diammonium phosphate, triple
superphosphate and phosphoric acid) and related raw materials and
by-products (including, without limitation, the purchase and use
of sulphur, but excluding the manufacture, production, exchange
or sale of sulphur), (iv) the processing, manufacture, purchase,
exchange and sale of nitrogen chemicals (including anhydrous
ammonia and urea), (v) the extraction and recovery from phosphate
rock and the exchange and sale of uranium oxide, (vi) the
management and operation of agricultural, farming and livestock
businesses as an incidental activity relating to holding lands
originally acquired or leased by the Partnership or one of the
Partners as phosphate rock reserves; (vii) the acquisition,
construction, ownership, leasing, operation, management,
alteration and disposition of real property (and interests
therein) and mining, manufacturing, mixing, granulation,
processing, refining, shipping and other equipment and facilities
(including, without limitation, motor vehicles, railroads,
railcars, pipelines, storage facilities, ports and vessels)
related to any of the foregoing, (viii) developing, subdividing,
construction roads, sewers, utility, water, sewage and water
treatment and other facilities on, constructing and selling,
leasing or managing residential, commercial and other
improvements on, and otherwise dealing with, reclaimed and other
land originally acquired or leased as phosphate rock reserves,
and (ix) all other business and activities related or incidental
thereto. Notwithstanding the foregoing, "Phosphate Chemicals
Business" shall not include (i) the animal feeds business or (ii)
the mixed fertilizer business.
"PhosRock" shall have the meaning given to such term in Section
2.03 of the Partnership Agreement.
"Policy Committee" shall have the meaning given to such term in
Section 6.04 of the Partnership Agreement.
"Presenting Partner" shall have the meaning given to such term in
Section 2.08(b) of the Partnership Agreement.
"Prime Rate" shall mean the rate publicly announced from time to
time by Citibank, N.A. in New York City as its prime rate.
"Purchasing Partner" shall have the meaning given to such term in
Section 7.04 of the Partnership Agreement.
"Qualified Appraiser" shall mean an MIA appraiser which has been
appraising property in the county in which the real property to
be valued is located for at least the preceding five (5) years.
"Qualified Investment Banking Firm" shall mean in investment
banking firm of national and international reputation.
"Qualifying Income" shall have the same meaning as the term
"qualifying income" defined in Section 7704(d) of the Code and
any successor provision.
"Real Estate Appraisal Procedure" shall mean the following: If
the value of any real property to be determined under the
Partnership Agreement cannot timely be established by agreement,
then either the IMC Partner or the FRP Partner, by written notice
to the other, may invoke the process described below. Each of
the IMC Partner and the FRP Partner shall appoint its Qualified
Appraiser to conduct an appropriate valuation and shall give
notice of such appointment to the other Non-Managing Partner
within fifteen (15) days after delivery of the notice invoking
such procedure. If either the IMC Partner or the FRP Partner
does not appoint its Qualified Appraiser within such fifteen (15)
day period, the valuation made by the Qualified Appraiser
appointed by the other Non-Managing Partner shall be conclusive
and binding on the Partners. If within thirty (30) days after
appointment of the Qualified Appraisers, such Qualified
Appraisers are unable to agree upon an appropriate valuation but
the higher valuation is not greater than 110% of the lower
valuation, then the valuation which shall be binding on the
Partners shall be the average of the two (2) valuations given by
the Qualified Appraisers. If the higher valuation is greater
than 110% of the lower valuation, the two (2) Qualified
Appraisers jointly shall appoint a third Qualified Appraiser
within fifteen (15) days thereafter, or, if they do not do so,
either the IMC partner or the FRP Partner may request MIA, or any
organization successor thereto, to appoint the third Qualified
Appraiser. The decision of the third Qualified Appraiser shall
be given within sixty (60) days after its appointment, shall be
at least equal to the lower valuation, shall not exceed the
higher valuation and shall be binding on the Partners.
"Real Estate Development Project" shall mean any project
involving the developing, subdividing, construction roads,
sewers, utility, water, sewage and water treatment and other
facilities on, construction and selling, leasing or managing
residential, commercial and other improvements on, and otherwise
dealing with, the land of the Partnership.
"Related Persons" shall have the meaning given to such term in
Section 8.01 of the Partnership Agreement.
"Representatives" shall have the meaning given to such term in
Section 6.04 of the Partnership Agreement.
"Residual Net Loss" for any period, means the excess of all items
of expense over all items of income determined in accordance with
the principles set forth in Section 4.02(c) of the Partnership
Agreement, as computed and adjusted for allocations pursuant to
Section 5.02 of the Partnership Agreement.
"Retained Environmental Liability" shall have the meaning given
to such term in Section 6.08 of the Partnership Agreement.
"Retaining Partner" shall have the meaning given to such term in
Section 6.08 of the Partnership Agreement.
"SEC" shall mean the Securities and Exchange Commission of the
United States of America or any successor agency.
"Soliciting Partner" shall have the meaning given to such term in
Section 7.02(b) of the Partnership Agreement.
"Soliciting Person" shall have the meaning given to such term in
the Parent Agreement.
"Special Purpose Partner" shall mean any IMC Partner or FRP
Partner (i) the principal business purpose of which is the
ownership of its Partnership Interests in the Partnership and
(ii) in respect of which its Partnership Interests in the
Partnership constitute substantially all of its assets; provided,
however, that (a) neither Operations nor FRP shall constitute a
"Special Purpose Partner" unless Operations or FRP (x) acquires a
Partnership Interest (or portion thereof) and (y) its ownership
interest in all of its other business assets or operations
constitutes a less than 5% portion of its total assets or
operations, and (b) each of IMC GPCo and Agrico, Limited
Partnership, as constituted as of May 26, 1995, would have
constituted a "Special Purpose Partner" as of such date.
Notwithstanding the foregoing, no entity that, as of the date
such entity would have become a Special Purpose Partner pursuant
to the foregoing definition, has outstanding securities
registered under Section 12 of the Securities Exchange Act of
1934, as amended (or any similar or successor provision or
statute), shall be a Special Purpose Partner.
"Subject Interest" shall have the meaning given to such term in
the Parent Agreement.
"Subject Partnership Interest" shall have the meaning given to
such term in Section 7.02(b) of the Partnership Agreement.
"Target Cash" for any year means the aggregate amount of Current
Interest Cash that would have been required for that year, when
distributed in accordance with the provisions of Sections 5.06
and 5.07 of the Partnership Agreement, to cause the ending
balances in the Partners' Capital Accounts, immediately prior to
the allocations provided in Sections 5.01, 5.02(c) and 5.02(d) of
the Partnership Agreement, to be in the same ratio as the Capital
Interest percentages for the following year. The calculation of
Target Cash is illustrated by the formula attached to the
Partnership Agreement as Schedule X.
"Tax Matters Partner" shall have the meaning given to such term
in Section 10.06 of the Partnership Agreement.
"Transaction Agreements" shall mean collectively, the
Contribution Agreement, the Partnership Agreement, the Parent
Agreement and the Confidentiality Agreement.
"Transaction Costs" shall mean, collectively, (i) all documentary
stamp taxes, transfer taxes excise taxes and other similar taxes
imposed in connection with the transactions contemplated by the
Transaction Agreements by any state or other jurisdiction,
including, without limitation, the State of Florida or the State
of Louisiana, (ii) severance costs relating to the termination of
employment of FRP's, FTX's and IMC's operating personnel to the
extent such termination is directly attributable to the
transactions contemplated by the Transaction Agreements, (iii)
severance costs, not to exceed an aggregate of $12,600,000,
relating to the termination of FRP's and FTX's marketing and
administrative personnel to the extent such termination is
directly attributable to the transactions contemplated by the
Transaction Agreements and (iv) severance costs, not to exceed an
aggregate of $1,000,000, relating to the termination of IMC's
marketing and administrative personnel to the extent such
termination is directly attributable to the transactions
contemplated by the Transaction Agreements.
"Transfer" shall have the meaning given to such term in Section
7.02(a) of the Partnership Agreement.
"Transfer Price" means (A) in the case of a sale resulting from a
Triggering Event described in clauses (ii) or (iv) of the
definition thereof, the fair market value of the Partnership
Interest that is the subject of such sale, as mutually determined
by the IMC Partner and the FRP Partner or, if no such fair market
value is agreed upon within thirty (30) days of the receipt by
the Triggering Partner of the Exercise Notice by the
Non-Triggering Partner, by the Appraisal Procedure; (b) in the
case of a sale resulting from a Triggering Event described in
clauses (i) or (iii) of the definition thereof, (I) if the
transaction giving rise to the Triggering Event involved the sale
of all or a portion of the Partnership Interest of the Triggering
Partner, the Equivalent Sale Price and (II) if the transaction
giving rise to the Triggering Event was the sale of an ownership
interest in the IMC Partner or the FRP Partner or a Person
controlling or under common control with the IMC Partner or the
FRP Partner, the fair market value of the Non-Triggering
Partner's Partnership Interest taking into account the structure
of the transaction which gave rise to the Triggering Event, as
mutually determined by the IMC Partner and the FRP Partner or, if
no such fair market value is agreed upon within thirty (30) days
of the receipt by the Triggering Partner of the Exercise Notice,
by the Appraisal Procedure; and(C) in all other cases, the fair
market value of the Partnership Interest (or portion thereof) to
be sold or transferred in accordance with the terms of the
Partnership Agreement as determined by the mutual agreement of
the Partners, or, if the Partners fail to agree upon such fair
market value within the time period set forth in the Partnership
Agreement, determined in accordance with the Appraisal Procedure.
"Triggering Event" means any of the following events: (i) at any
time that the IMC Partner is the Operating Partner, the
occurrence of a transaction which, after giving effect thereto,
results in the Ultimate Parent of the IMC Partner owning less
than a 35% Beneficial Interest in the Partnership;
(ii) at any time that the IMC Partner is the Operating Partner,
the occurrence of a transaction which, after giving effect
thereto, results in 65% or more of the issued and outstanding
voting stock of the Ultimate Parent of the IMC Partner being
owned by an Affiliated Group;
(iii) at any time that the FRP Partner is the Operating Partner,
the occurrence of a transaction which results in the Ultimate
Parent of the FRP Partner owning less than a 35% Beneficial
Interest in the Partnership; or
(iv) at any time that the FRP Partner is the Operating Partner,
the occurrence of a transaction which results in 65% or more of
the issued and outstanding stock of the Ultimate Parent of the
FRP Partner being owned by an Affiliated Group;
provided that none of the circumstances described in clauses (i)
through (iv) above arising out of the foreclosure of a Lien
covering the Partnership Interest of the IMC Partner (or, during
the IMC GPCo Liquidation Period, Operations or IMC GPCo) or the
FRP Partner, the capital stock or partnership interests, as the
case may be, of the IMC partner (or, during the IMC GPCo
Liquidation Period, Operations or IMC GPCo) or the FRP Partner of
the capital stock or partnership interests of any Intervening
Person shall constitute a "Triggering Event."
"Triggering Event Notice" shall have the meaning given to such
term in Section 7.04 of the Partnership Agreement.
"Triggering Event Partnership Value" means an amount equal to the
purchase price paid to the Triggering Partner by the Purchasing
Partner in the transaction giving rise to the Triggering Event,
divided by the portion of the Capital Interest of the Triggering
Partner sold in such transaction.
"Triggering Partner" means (A) in the case of a Triggering Event
described in clauses (i) or (ii) of the definition thereof, the
IMC Partner and (B) in the case of a Triggering Event described
in clauses (iii) or (iv) or the definition thereof, the FRP
Partner.
"Ultimate Parent" means (i) with respect to the IMC Partner, (A)
initially, Global, and (B) if at any time a Triggering Event
occurred without a Triggering Event Notice having been delivered,
the Affiliated Group that acquired 65% or more of the stock of
Group or the Person that is then the Ultimate Parent of the IMC
Partner and (ii) with respect to the FRP Partner, (A) initially,
FTX and (B) if at any time a Triggering Event referred to in
clause (iv) of the definition thereof shall have occurred without
a Triggering Event Notice having been delivered, the Affiliated
Group that acquired 65% or more of the stock of FTX or the Person
that is then the Ultimate Parent of the FRP Partner.
"Withdrawing Partner" shall have the meaning given to such term
in Section 12.01 of the Partnership Agreement.
"Working Capital Contribution Arrangement" shall have the meaning
given to such term in Section 3.02(b) of the Partnership
Agreement.
EXHIBIT 10.5
EXECUTION COPY
AMENDED AND RESTATED PARENT AGREEMENT
THIS AMENDED AND RESTATED PARENT AGREEMENT (this "Agreement"),
made as of the 1st day of July, 1993 and amended and restated as
of the 26th day of May, 1995 among IMC GLOBAL OPERATIONS INC.
(formerly IMC Fertilizer, Inc.), a Delaware corporation
("Operations"), FREEPORT- McMoRan RESOURCE PARTNERS LIMITED
PARTNERSHIP, a Delaware limited partnership ("FRP"),
FREEPORT-McMoRan INC., a Delaware corporation ("FTX"), and
IMC-AGRICO COMPANY, a Delaware general partnership (the
"Partnership").
WITNESSETH
WHEREAS, pursuant to a Contribution Agreement dated as of April
5, 1993, as amended (as so amended, the "Contribution Agreement")
between Operations and FRP, Operations and FRP agreed to cause
the formation of the Partnership to engage in the Phosphate
Chemicals Business, and Operations agreed to form IMC-Agrico GP
Company, a subsidiary of Operations ("IMC GPCo"), and FRP agreed
to form Agrico, Limited Partnership, a Delaware limited
partnership, to be non-managing general partners of the
Partnership;
WHEREAS, it was a condition precedent to the obligations of
Operations and FRP under the Contribution Agreement that each of
Operations, IMC Global Inc. (formerly IMC Fertilizer Group,
Inc.), a Delaware corporation ("Global"), FTX, FRP and the
Partnership shall have entered into the Parent Agreement, as
originally entered into as of July 1, 1993;
WHEREAS, the parties hereto have approved and consented to (i)
(a) the voluntary complete liquidation and dissolution of IMC
GPCo, in accordance with the General Corporation Law of the State
of Delaware ("Delaware Law"), (b) the admission of Operations as
a Partner in the Partnership in accordance with the terms of the
Partnership Agreement (as defined below), (c) the assumption by
Operations (A) as of the date hereof, of 80% of all obligations
of IMC GPCo incurred by IMC GPCo (x) as a general partner of the
Partnership and (y) pursuant to the terms of the Partnership
Agreement, and (B) upon the completion of the liquidation and
dissolution of IMC GPCo, of all remaining obligations of IMC
GPCo, (d) the transfer to Operations of the assets, properties,
rights and interests of IMC GPCo, and (e) the repurchase by IMC
GPCo of the preferred stock of IMC GPCo owned by IMC-Agrico MP,
Inc., a Delaware corporation ("MPCo") at its liquidation value
(collectively, the "IMC GPCo Liquidation"), in each case in
accordance with the Agreement and Plan of Complete Liquidation
and Dissolution dated as of May 26, 1995 among Operations, IMC
GPCo and MPCo (the "IMC GPCo Plan of Liquidation") and (ii) (a)
liquidation of Agrico, Inc. ("FRP GPCo"), a Delaware corporation
and the owner of a 0.2% general partnership interest in the FRP
Partner, or the merger of FRP GPCo with and into Freeport
Chemical Company, a Delaware corporation ("FCC"), and the
liquidation of FCC or the merger of FCC with and into FTX, in
each case in accordance with the FRP GPCo/FCC/FTX Merger
Documents (the "FRP GPCo/FCC/FTX Mergers"), with the result that
FTX shall become the owner of such 0.2% general partnership
interest in the FRP Partner and shall have assumed as of the date
of completion of such FRP GPCo/FCC/FTX Mergers all obligations of
FRP GPCo and FCC, (b) the repurchase by FRP GPCo of the preferred
Stock of FRP GPCo owned by MPCo at its liquidation value, and (c)
at the option of FTX AND FRP, the merger, liquidation or
dissolution of the FRP Partner under Delaware Law at some time in
the future (or the transfer by the FRP Partner of its Partnership
Interests to FRP or an Affiliate of FRP) and the admission of FRP
or an Affiliate of FRP as a Partner in the Partnership, in each
case, in accordance with this Agreement, the Amended and Restated
Partnership Agreement dated as of July 1, 1993, and further
amended and restated as of May 26, 1995, among IMC GPCo, the FRP
Partner and MPCo (the "Partnership Agreement"), and the
Amendment, Waiver and Consent Agreement dated as of May 26, 1995
among Global, Operations, IMC GPCo, MPCo, IMC-Agrico Company, a
Delaware general partnership, FTX, FRP and the FRP Partner (the
"Amendment, Waiver and Consent Agreement");
WHEREAS, the above described transactions are to be accomplished
in the following manner:
(i) with respect to the liquidation and dissolution of IMC GPCo,
80% of the interests of IMC GPCo shall be transferred to
Operations effective as of May 26, 1995 (except that 100% of IMC
GPCo's 50% common stock interest in MPCo shall be transferred to
Operations as of May 26, 1995) and the preferred stock of IMC
GPCo owned by MPCo shall be repurchased by IMC GPCo at its
liquidation value as of May 26, 1995 (the "Initial IMC GPCo
Liquidating Distribution"), with the remaining 20% of such
interests (other than IMC GPCo's common stock interest in MPCo)
to be transferred to Operations (the "Final IMC GPCo Liquidating
Distribution") in accordance with the following time schedule and
the terms of the IMC GPCo Plan of Liquidation:
(A) if (x) FTX and FRP elect by written notice to the
Partners and the Partnership, after November 30, 1995 and
on or prior to June 4, 1996, to cause the merger,
liquidation or dissolution of the FRP Partner (or the
transfer by the FRP Partner of its Partnership Interests to
FRP or an Affiliate of FRP) as contemplated by this
Agreement, the Partnership Agreement and the Amendment,
Waiver and Consent Agreement and (y) such merger,
liquidation or dissolution of the FRP Partner (or such
transfer of its Partnership Interests) is completed not
earlier than June 5, 1996 and not later than June 15, 1996,
the Final IMC GPCo Liquidating Distribution shall be
undertaken promptly after June 22, 1997;
(B) if (x) FTX and FRP elect by written notice to the
Partners and the Partnership, after November 30, 1995 and
on or prior to June 4, 1996, to cause the merger,
liquidation or dissolution of the FRP Partner (or the
transfer by the FRP Partner of its Partnership Interests to
FRP or an Affiliate of FRP) as contemplated by this
Agreement, the Partnership Agreement and the Amendment,
Waiver and Consent Agreement, but (y) such merger,
liquidation or dissolution of the FRP Partner (or such
transfer of its Partnership Interests) is not completed by
June 15, 1996, the Final IMC GPCo Liquidating Distribution
shall be undertaken after June 15, 1996 and shall be
completed no later than June 30, 1996; and
(C) if FTX and FRP do not elect, after November 30, 1995
and on or prior to June 4, 1996, to cause the merger,
liquidation or dissolution of the FRP Partner (or the
transfer by the FRP Partner of its Partnership Interests to
FRP or an Affiliate of FRP) as contemplated by the
Amendment, Waiver and Consent Agreement, the Final IMC GPCo
Liquidating Distribution shall be undertaken after June 4,
1996 and shall be completed by June 30, 1996; and
(ii) with respect to such optional merger, liquidation or
dissolution of the FRP Partner (or such transfer of its
Partnership Interests), such option may be exercised in
accordance with the terms of the Partnership Agreement and the
Amendment, Waiver and Consent Agreement: at any time after
November 30, 1995 and on or prior to June 4, 1996; provided that
if FTX and FRP exercise such option on or prior to June 4, 1996,
their right to cause such merger, liquidation or dissolution of
the FRP Partner (or such transfer of its Partnership Interests)
at that time will be forfeited unless such merger, liquidation or
dissolution of the FRP Partner (or such transfer of its
Partnership Interests) is completed not earlier than June 5, 1996
and not later than June 15, 1996; provided further that if after
November 30, 1995 and on or prior to June 4, 1996 FTX and FRP
exercise such option, but such merger, liquidation or dissolution
of the FRP Partner (or such transfer of its Partnership
Interests) is not completed on or prior to June 15, 1996, FTX and
FRP will have an additional option to cause such merger,
liquidation or dissolution of the FRP Partner (or such transfer
of its Partnership Interests) at any time after July 15, 1997;
and provided further that if after November 30, 1995 and on or
prior to June 4, 1996, FTX and FRP do not exercise their option
to cause the merger, liquidation or dissolution of the FRP
Partner (or the transfer of its Partnership Interests), FTX and
FRP will have the right to exercise such option at any time after
July 15, 1997; provided however that, notwithstanding the
provisions of this paragraph (ii), FTX and FRP may merge,
liquidate or dissolve the FRP Partner (or transfer its
Partnership Interests) in accordance with the terms of the
Amendment, Waiver and Consent Agreement at any time so long as
FTX and FRP bear, and assume liability for, any expense, cost or
loss (including any increase in taxes, other than any increase in
income taxes which arises solely from the timing of the reporting
of income, deductions and credits attributable to the normal
business activities of the Partnership) suffered by the
Partnership, any other Partner or any of their Related Persons
resulting therefrom; and
WHEREAS, the IMC GPCo Liquidation, the FRP GPCo/FCC/FTX Mergers
and such optional merger, liquidation or dissolution of the FRP
Partner (or such transfer of its Partnership Interests) make it
necessary and desirable to amend and restate certain provisions
of the Parent Agreement as originally entered into by the
parties.
NOW, THEREFORE, in consideration of the foregoing and the mutual
obligations contained herein, the parties hereto agree as
follows:
1.0 Defined Terms. Except as otherwise defined herein,
capitalized terms used in this Agreement shall have the meaning
ascribed to such terms in Exhibit A to the Amended and Restated
Partnership Agreement, dated as of July 1, 1993 and further
amended and restated as of May 26, 1995 among IMC GPCo,
Operations, the FRP Partner and MPCo, as managing partner (the
"Managing Partner"). During the period subsequent to the Initial
IMC GPCo Liquidating Distribution and prior to the Final IMC GPCo
Liquidating Distribution, the term "IMC Partner," as used herein,
shall (except as otherwise indicated in this Agreement) refer to
IMC GPCo and Operations, collectively; subsequent to the Final
IMC GPCo Liquidating Distribution, such term shall refer to
Operations; and at all such times, such term shall refer to any
other Affiliate of Operations which succeeds to the Partnership
Interests of IMC GPCo or Operations by means of the purchase,
transfer, assignment or other conveyance or succession of such
Partnership Interests in accordance with the terms of the
Partnership Agreement.
2.0 Other and/or Competing Businesses. Each of FTX, FRP,
Global and Operations agrees that neither it nor any of its
Affiliates will, directly or indirectly, anywhere in the world,
own, manage, operate, control or invest in any business that is
engaged in the Phosphate Chemicals Business without first
complying with the provisions of Section 2.08(b) of the
Partnership Agreement, it being understood that (i) purchases and
resales of phosphate chemicals in Canada by Affiliates of
Operations in volumes not materially greater than the amounts
indicated on Schedule 9.12 to the Partnership Agreement and (ii)
the conduct of the business of the Rainbow Division of
Operations, substantially as currently conducted shall not
constitute a breach or violation of this Section 2.0. If FRP
desires to expand its existing operations (or pursue other
business opportunities which are part of or related to the
Phosphate Chemicals Business) in Sri Lanka or to pursue the
opportunities described in the memorandum of understanding
between FTX and Ercros, S.A. relating to FESA and ENFERSA, it
shall first offer such opportunities to the Partnership in
accordance with the provisions of Section 2.08(b) of the
Partnership Agreement; provided that if the Partnership elects to
pursue any of such opportunities, the Partnership shall reimburse
FRP in an amount equal to the direct costs incurred by FRP in
connection with developing such opportunity prior to the date of
the Partnership's election to pursue such opportunity.
Notwithstanding the foregoing, any Person that acquires or
succeeds to (or whose Affiliate acquires or succeeds to) any of
the Partnership Interest in which Affiliates of FTX, FRP or
Operations currently have an interest (or any Person that
directly or indirectly has or acquires an interest in such
Partnership Interest) shall not be subject to the provisions of
this Section 2.0 with respect to any business conducted by such
Person or its Affiliates that is conducted substantially as
conducted on the date of such acquisition or succession.
Notwithstanding the foregoing, nothing contained in this Section
2.0 shall prevent FTX, FRP, Global, Operations or any of their
respective Affiliates from (A) owning, directly or indirectly, an
aggregate of less than five percent (5%) of the common stock of,
or other ownership interest in, any Person engaged in the
Phosphate Chemicals Business or (B) acquiring (by stock purchase,
asset purchase, merger, consolidation or otherwise) any Person
engaged in the Phosphate Chemicals Business so long as (I) the
revenues derived by such Person from its Phosphate Chemicals
Business represent (and can reasonably be expected to continue to
represent) less than ten percent (10%) of the total revenues of
such Person and (II) the Person acquiring such Person (the
"Acquiring Person") either offers to sell such Person's Phosphate
Chemicals Business to the Partnership at its fair market value
or sells such Person's Phosphate Chemicals Business to an
independent third Person, it being understood that, in the case
of this clause (B), the Acquiring Person may continue to own and
operate, directly or indirectly, such acquired Person's Phosphate
Chemicals Business if it has offered to sell such Phosphate
Chemicals Business to the Partnership in accordance with this
sentence and (x) if any Affiliate of the FRP Partner is the
Acquiring Person, two (2) Policy Committee Representatives or
Alternates of the IMC Partner (or any combination thereof) fail,
on behalf of the Partnership, to accept such offer within thirty
(30) days of such offer to sell, or (y) if any Affiliate of IMC
GPCo or Operations is the Acquiring Person, two (2) Policy
Committee Representatives or Alternates of the FRP Partner (or
any combination thereof) fail, on behalf of the Partnership to
accept such offer within thirty (30) days of such offer to sell.
Each party acknowledges and agrees that the covenants contained
in this Section 2.0 have been negotiated in good faith by the
parties hereto, and are reasonable and are not more restrictive
or broader than necessary to protect the interests of the parties
hereto, and would not achieve their intended purpose if they were
on different terms or for periods of time shorter than the
periods of time provided herein or were applied in more
restrictive geographical areas than are provided herein. Each
party further acknowledges and agrees that the business of the
Partnership is highly competitive, that no party hereto would
enter into this Agreement but for the covenants contained in this
Section 2.0 and that such covenants are essential to protect the
interests of the parties hereunder. If any provision of this
Section 2.0 is held to be unenforceable because of the scope or
area of its applicability, the court making such determination
shall have the power to modify such scope and area or either of
them, and such provision shall then be applicable in such
modified form.
3.0 Interests in IMC GPCo, FRP GPCo and the FRP Partner;
Appointment of CEOs.
(a) At any time that the IMC Partner (which for purposes of this
Section 3.0 and Section 4.0 of this Agreement shall mean, during
the IMC GPCo Liquidation Period, either of IMC GPCo or
Operations) is a Special Purpose Partner, neither Global nor
Operations shall, without the prior written consent of FRP, cause
or permit such IMC Partner to issue to any Person other than
Global or Operations or their respective Affiliates any capital
stock or other equity interests other than its capital stock or
other equity interests issued and outstanding on the date such
IMC Partner became a Special Purpose Partner (which, in the case
of IMC GPCo, shall be July 1, 1993); and Provided, in each case,
that FRP's written consent shall not be unreasonably withheld,
but the granting of such consent may be conditioned upon, among
other things (I) such IMC Partner's compliance with the
applicable provisions of this Section 3.0 with respect to the
issuance of such capital stock and (ii) FRP's being satisfied, in
its reasonable discretion, that the issuance of such capital
stock is being undertaken in a transaction and under
circumstances that will not result in any material liability of
such IMC Partner.
(b) (i) Without the prior written consent of Operations, neither
FRP nor FTX shall cause or permit FRP GPCo, prior to the
completion of the FRP GPCo/FCC/FTX Mergers, to issue to any party
other than FTX or its Affiliates (other than FRP) any capital
stock of FRP GPCo other than its capital stock issued and
outstanding on July 1, 1993, and (ii) at any time that the FRP
Partner is a Special Purpose Partner, neither FRP nor FTX shall,
without the prior written consent of Operations, cause or permit
the FRP Partner to issue to any Person other than FRP or FTX or
their respective Affiliates any partnership interests or other
equity interests in the FRP Partner other than the partnership
interests or other equity interests issued and outstanding on the
date such FRP Partner became a Special Purpose Partner (which in
the case of Agrico, Limited Partnership, shall be July 1, 1993);
provided, in each case, that Operations' written consent shall
not be unreasonably withheld, but the granting of such consent
may be conditioned upon, among other things (i) FRP GPCo's or the
FRP Partner's, as the case may be, compliance with the applicable
provisions of this Section 3.0 with respect to the issuance of
such capital stock or partnership or other equity interests and
(ii) Operations' being satisfied, in its reasonable discretion,
that the issuance of such capital stock or partnership or other
equity interests is being undertaken in a transaction and under
circumstances that will not result in any material liability of
FRP GPCo or the FRP Partner, as the case may be.
(c) Global and Operations will, and will cause their Affiliates
to, use all commercially reasonable efforts to assure that the
Chief Executive Officer from time to time of their Ultimate
Parent is appointed to serve as the CEO of the IMC Partner. FTX
will, and will cause its Affiliates to, use all commercially
reasonable efforts to assure that the Chief Executive Officer of
its Ultimate Parent is appointed to serve as the CEO of FRP GPCo
(until completion of the FRP GPCo/FCC/FTX Mergers) and any future
general partner (or controlling stockholder) of the FRP Partner
other than FTX. Such efforts will in each case include without
limitation voting, and causing its Affiliates to vote, all
capital stock of IMC GPCo and/or Operations or of FRP GPCo or
such other future general partner (or controlling stockholder) of
the FRP Partner other than FTX, as the case may be, in favor of
such appointment.
(d) Except in compliance with this Section 3.0(d):
(i) at any time that the IMC Partner is a Special Purpose
Partner, neither Global nor Operations shall sell, transfer
or otherwise dispose of any capital stock of or other
equity interest in such IMC Partner to any Person other
than an Affiliate of Operations or Global, as the case may
be;
(ii) prior to the completion of the FRP GPCo/FCC/FTX
Mergers, FTX shall not sell, transfer or otherwise dispose
of any capital stock of FRP GPCo to any Person other than
an Affiliate of FTX (other than FRP); and
(iii) at any time that the FRP Partner is a Special Purpose
Partner, neither FTX nor FRP shall sell, transfer or
otherwise dispose of any partnership interest or other
equity interest in the FRP Partner to any Person other than
an Affiliate of FRP or FTX, as the case may be.
If (with respect to actions relating to (i) the capital stock of
or other equity interests in the IMC Partner, at any time that
such IMC Partner is a Special Purpose Partner, (ii) the capital
stock of or other equity interests in FRP GPCo, prior to the
completion of the FRP GPCo/FCC/FTX Mergers, (iii) the partnership
interest or other equity interests in the FRP Partner, at any
time that the FRP Partner is a Special Purpose Partner, Global,
Operations, such IMC Partner, FRP, FRP GPCo, the FRP Partner or
FTX or any of their respective Affiliates (in any case, the
"Soliciting Person") desires to sell or otherwise dispose of to
any third party (other than an Affiliate of such Soliciting
Person), or to solicit bids from any third party (other than an
Affiliate of such Soliciting Person) to purchase or otherwise
acquire, directly or indirectly, all or any portion of the
capital stock of or other equity interests in such IMC Partner or
FRP GPCo, or any partnership interest or other equity interests
in the FRP Partner, or to issue (other than to an Affiliate of
such Soliciting Person) any capital stock of or other equity
interests
in such IMC Partner or FRP GPCo or any partnership interest or
other equity interests in the FRP Partner (the "Subject
Interest"), such Soliciting Person shall (i) if the Soliciting
Person is Global, Operations, such IMC Partner or their
Affiliates, notify FRP in writing of its desire to sell (or the
desire of such IMC Partner to issue) such Subject Interest or
(ii) if the Soliciting Person is FTX, FRP, FRP GPCo, the FRP
Partner or their Affiliates, notify Operations in writing of its
desire to sell (or the desire of the FRP Partner or FRP GPCo to
issue) such Subject Interest. The notice referred to in the
preceding sentence is hereinafter referred to as the "Notice of
Intent to Transfer", and the Person receiving the Notice of
Intent to Transfer is hereinafter referred to as the "Notified
Person". For a period (the "No-Shop Interval") of thirty (30)
days following the date it gives Notice of Intent to Transfer,
and during the duration of any Negotiation Interval (as defined
below), neither the Soliciting Person nor any of its Affiliates,
officers, directors, employees, representatives or agents will,
without the prior written consent of the Notified Person,
commence or continue any discussions, negotiations or exchanges
of information with any Person other than the Notified Person
with respect to the issuance or sale of the Subject Interest.
During the No-Shop Interval, both the Soliciting Person and the
Notified Person shall co- operate with each other by exchanging
all due diligence materials they deem to be reasonably necessary
to determine the price and terms of any potential offer. If the
Notified Person makes a bona fide offer to purchase the Subject
Interest prior to the end of the No-Shop Interval, then the
Soliciting Person and the Notified Person shall negotiate in good
faith for the purchase and sale of the Subject Interest and the
No-Shop Interval shall be extended for fifteen (15) days (the
"Negotiation Interval"); provided that a decision to accept or
reject shall be in the sole discretion of the Soliciting Person.
If the Notified Person fails to make a bona fide offer to
purchase the Subject Interest (the making or failure to make such
offer being in its sole discretion) prior to the expiration of
the No-Shop Interval, or if the Soliciting Person and the
Notified Person fail to execute a letter of intent relating to
the purchase and sale of the Subject Interest or terminate
negotiations prior to the expiration of the Negotiation Interval,
then the Soliciting Person may, but shall not be obligated to,
immediately commence discussions, negotiations or exchanges of
information with, and/or issue or sell its Subject Interest to,
any third party; provided that if the Notified Person made a bona
fide offer during the No-Shop Interval, the Soliciting Person
shall not so issue or sell the Subject Interest to a third party
unless (i) definitive, binding agreements relating to such
issuance or sale are executed within two hundred twenty (220)
days of the expiration of the Negotiation Interval, (ii) the cash
value of the consideration received in connection with such sale
is at least equal to 95% of the cash value of such offer made by
the Notified Person and (iii) the transferee (and, where
appropriate to create the same protections as existed prior to
such transfer, the ultimate parent entity and the direct parent
of such transferee) of such Subject Interest agrees in writing to
be bound by the terms of this Agreement as if it had originally
been a party hereto.
The cash value of such issuance or sale and the cash value of
such offer by the Notified Person, respectively, shall be
determined by agreement between the Soliciting Person and the
Notified Person (i) in the case of the cash value of such
issuance or sale, within ten (10) days following the execution of
definitive, binding agreements by the parties relating thereto
and (ii) in the case of the cash value of such offer by the
Notified Person, within ten (10) days following the earliest to
occur of (A) the termination of negotiations between the
Soliciting Person and the Notified Person and (B) the expiration
of the Negotiation Interval, provided that if such agreement is
not reached during either of such ten (10) day periods, then, in
either such case, such cash value shall be determined by means of
the Appraisal Procedure, with the expense thereof to be paid
fifty percent (50%) by the Soliciting Person and fifty percent
(50%) by the Notified Person and with the determination made
thereby being final, unappealable, binding on both the Soliciting
Person and the Notified Person and enforceable in a court of law
or equity. After the expiration of such two hundred twenty (220)
day period, such Subject Interest shall again be subject to the
terms of this Section 3.0. The failure of either the Soliciting
Person or the Notified Person to exercise its rights under this
Section 3.0 shall not be deemed to be a waiver of its respective
rights under this Section 3.0 with respect to subsequent Subject
Interests.
(e) The restrictions contained in this Section 3.0 shall not
apply to bona fide pledges or other transfers as security, which
shall be subject to Section 4.0 below.
(f) Notwithstanding any other provision of this Agreement, no
transfer described in this Section 3.0 (whether to an Affiliate
of the transferor or otherwise) may be made unless (i) such
transfer is pursuant to a written agreement pursuant to which the
transferee (and, where appropriate to create the same protections
as existed prior to such transfer, the ultimate parent entity and
the direct parent of such transferee) agrees to be bound by all
of the terms of this Agreement as if it were originally a party
hereto, and (ii) such transfer does not cause a termination of
the Partnership for Federal income tax purposes.
4.0 Liens. None of Operations, Global, FRP or FTX may (i)
with respect to interests in the capital stock of or other equity
interest in the IMC Partner, at any time that such IMC Partner is
a Special Purpose Partner, (ii) with respect to interests in the
capital stock of or other equity interests in FRP GPCo, prior to
the completion of the FRP GPCo/FCC/FTX Mergers), and (iii) with
respect to partnership interests or other equity interests in the
FRP Partner, at any time that the FRP Partner is a Special
Purpose Partner, except with the consent of the others (which
consent may be granted or withheld in such Person's sole
discretion), create or permit to exist, directly or indirectly,
any Lien on its partnership interest or other equity interests in
the FRP Partner or any portion thereof, or in its capital stock
of or other equity interests in such IMC Partner or FRP GPCo or
any portion thereof (except (i) Liens for current taxes not
delinquent or taxes being contested in good faith and by
appropriate proceedings, (ii) Liens arising in the ordinary
course of business for sums not due or sums being contested in
good faith and by appropriate proceedings and (iii) Liens
pursuant to bona fide credit arrangements provided that a Person
providing credit pursuant to such arrangements shall acknowledge
that, if such Person acquires ownership of any such interest or
capital stock, such interest or capital stock shall nevertheless
be subject to all of the terms hereof). Any attempt by any of
Global, Operations, FRP or FTX so to create or permit to exist,
directly or indirectly, any Lien (other than the excepted Liens
described in this Section 4.0 above) on its partnership interest
or other equity interests in the FRP Partner or any portion
thereof or in its capital stock of or other equity interests in
such IMC Partner or FRP GPCo, or any portion thereof shall be
null, void ab initio and of no force and effect. Notwithstanding
anything to the contrary contained herein, if any Person obtains
a Lien on a partnership interest or other equity interests in the
FRP Partner or the capital stock of or other equity interests in
such IMC Partner or FRP GPCo during a period during which such a
Lien could not be granted to such Person in accordance with the
terms of this Section 4.0 and forecloses on such Lien, any sale
or other disposition to any Person other than the holder of such
Lien in conjunction with or following such foreclosure of the
partnership interest or other equity interests in the FRP Partner
or the capital stock of or other equity interests in such IMC
Partner or FRP GPCo upon which such Person foreclosed shall be
subject to the terms of Section 3.0 hereof (including, without
limitation, that the Person shall have the obligations of FTX,
FRP, Global and Operations under such Section 3.0 and such Person
shall perform such obligations in the context of a transfer to
any other Person in conjunction with or following a foreclosure
as if such was a transfer to which Section 3.0 applied).
5.0 Standstill With Respect to Operations and Global. Until
the date that is five years following the earlier of (a) the date
the Partnership ceases to exist or (b) the earliest date upon
which neither FRP nor any of its Affiliates is a Partner, none of
FRP, FTX, any successor to FTX as Administrative Managing General
Partner of FRP, the chief executive officer of FTX as of July 1,
1993 nor any Person controlled by any of them shall, directly or
indirectly, without the prior written consent of Operations and
Global, (i) acquire, or offer or agree to acquire, any shares of
common stock of Operations or Global, or securities convertible
or exchangeable into, or rights to acquire, such common stock
(collectively, the "IMC Common Shares") (provided that this
clause (i) shall not restrict the chief executive officer of FTX
as of July 1, 1993, or any benefit or similar plan (with respect
to assets that are under independent management) that is
maintained for employees of FRP, of FTX or any successor to FTX
as the Administrative Managing General Partner of FRP or of any
Person controlled by either of them from acquiring up to 2% of
the outstanding common stock of either of Operations or Global
solely for investment), (ii) solicit proxies or consents with
respect to the common stock of Operations or Global, become a
participant in any election contest relating to the election of
directors of Operations or Global or initiate, propose or
otherwise solicit holders of the common stock of Operations or
Global with respect to any proposal, (iii) form, join or
participate in a group within the meaning of Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended, with respect to
the common stock of Operations or Global, (iv) arrange or
participate in the arranging of financing for the purchase of
shares of the common stock of Operations or Global, (v) propose,
disclose any intent to propose or contact any officers,
employees, directors, stockholders or agents of Operations or
Global or any other Person or entity with respect to any
acquisition of shares of the common stock of Operations or Global
or acquisition, business combination, recapitalization or similar
transaction with respect to Operations or Global or their
respective Affiliates or any material amount of their assets, or
request any waiver, amendment or termination of the provisions of
this Section 5.0 or (vi) attempt in any way to control Operations
or Global; provided that, notwithstanding clauses (i) through
(vi) of this Section 5.0, FRP, FTX, any successor to FTX as the
Administrative Managing General Partner of FRP or representatives
of any either of them may make any proposals or communications to
Operations or Global or their respective senior officers or to
representatives of Operations or Global which do not require
public disclosure to be made.
6.0 Standstill With Respect to FRP and FTX. Until the date
that is five years following the earlier of (a) the date the
Partnership ceases to exist or (b) the earliest date upon which
neither Operations nor any of its Affiliates is a Partner, none
of Operations, Global nor their respective chief executive
officers as of July 1, 1993 nor any Person controlled by either
of them shall, directly or indirectly, without the prior written
consent of the Administrative Managing General Partner of FRP,
(i) (A) acquire, or offer or agree to acquire, any partnership
interests or depositary units representing partnership interests
of FRP, or securities convertible or exchangeable into, or rights
to acquire, such partnership interests or depositary units
representing partnership interests (collectively, the
"Partnership Units") or (B) acquire, or offer or agree to
acquire, any shares of common stock of FTX, or securities
convertible or exchangeable into, or rights to acquire, such
common stock (collectively, the "FTX Common Shares") (provided
that this clause (i) shall not restrict the chief executive
officer of Global or Operations as of July 1, 1993, or any
benefit or similar plan (with respect to assets that are under
independent management) that is maintained for employees of
Operations or of Global or of any Person controlled by either of
them from acquiring up to 2% of either of the outstanding
Partnership Units or FTX Common Shares solely for investment),
(ii) solicit proxies or consents with respect to the Partnership
Units or the FTX Common Shares, become a participant in any
election contest relating to the removal or election of a general
partner of FRP or the election of directors of FTX or initiate,
propose or otherwise solicit holders of the Partnership Units or
the FTX Common Shares with respect to any proposal, (iii) form,
join or participate in a group within the meaning of Section
13(d)(3) of the Securities Exchange Act of 1934, as amended, with
respect to the Partnership Units or the FTX Common Shares, (iv)
arrange or participate in the arranging of financing for the
purchase of Partnership Units or FTX Common Shares, (v) propose,
disclose any intent to propose or contact any officers,
employees, directors, stockholders or agents of FRP or FTX or any
other Person or entity with respect to any acquisition of
Partnership Units or FTX Common Shares or acquisition, business
combination, recapitalization or similar transaction with respect
to FRP or FTX or their respective Affiliates or any material
amount of their respective assets, or request any waiver,
amendment or termination of this Section 6.0 or (vi) attempt in
any way to control FRP or FTX; provided that, notwithstanding
clauses (i) through (vi) of this Section 6.0, Operations, Global
or representatives of either of them may make any proposals or
communications to FRP or FTX or the Administrative Managing
General Partner of FRP or their respective senior officers or to
representatives of FRP or FTX or the Administrative Managing
General Partner of FRP which do not require public disclosure to
be made.
7.0 Access. On and after the Closing Date, Operations and
FRP will give each other and their respective agents reasonable
access to its and its Affiliates' properties, books, records,
employees and auditors to the extent necessary to permit
Operations or FRP, as the case may be, to determine any matter
relating to its rights and obligations under the Contribution
Agreement or to any period ending on or before the Closing Date;
provided that any such access by Operations or FRP shall not
unreasonably interfere with the conduct of the business of the
Person granting such access. The Person granted such access will
hold, and will use all commercially reasonable efforts to cause
its respective officers, directors, partners, employees,
accountants, counsel, consultants, advisors and agents to hold,
in confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of law, all
confidential documents and information concerning the Person
granting such access or its Contributed Business provided to it
pursuant to this Section 7.0.
8.0 Release of Guaranties. As promptly as practical after
the Closing Date, each of Operations and FRP shall use all
commercially reasonable efforts to cause the Partnership to have
each of Operations and FRP and their respective Affiliates
released from its financial obligations under any letters of
credit, surety bonds or guaranties outstanding as of July 1, 1993
pursuant to which Operations or FRP, as the case may be, has
guaranteed the obligations of its Contributed Business to third
parties.
9.0 Tax Information and Other Reports.
(a) Each of Operations and FRP shall provide to the Partnership
such information, if any, as may be required by the Partnership
for purposes of preparing all necessary federal, state and local
Partnership income tax returns and information returns.
(b) Operations and FRP shall cause the Managing Partner to
provide to each of the shareholders of the Managing Partner (A)
unaudited financial statements of the Managing Partner within 30
days after the end of each of the first three quarters of its
fiscal year, and (B) audited financial statements, including
notes, of the Managing Partner within 90 days after the end of
its fiscal year.
10.0 Certain Actions.
(a) The parties hereto shall not take any action with respect to
(i) the Initial IMC GPCo Liquidating Distribution, (ii) the Final
IMC GPCo Liquidating Distribution, (iii) the FRP GPCo/FCC/FTX
Mergers, (iv) the optional merger, liquidation or dissolution of
the FRP Partner (or the transfer of its Partnership Interests)
contemplated by the Amendment, Waiver and Consent Agreement or
(v) any related transactions in violation of the provisions of
this Agreement, the Partnership Agreement, the Amendment, Waiver
and Consent Agreement or the IMC GPCo Plan of Liquidation (in
each case, taking into account the consent, waiver and other
provisions of the Amendment Waiver and Consent Agreement).
(b) As a condition to the effectiveness of the transactions
described in Section 10.0(a) of this Agreement, each Partner
hereby agrees to bear, and assume liability for, any expense,
cost or loss (including any increase in taxes, other than any
increase in income taxes which arises solely from the timing of
the reporting of income, deductions and credits attributable to
the normal business activities of the Partnership) suffered by
the Partnership, any other Partner or any of their Related
Persons arising from violation of Section 10.0(a) of this
Agreement.
11.0 Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors and assigns. Except as set forth below:
(i) Each of Operations and Global shall be relieved of all
obligations under this Agreement on and after the date that
such Person and its Affiliates cease to own a direct or
indirect interest in the Partnership or (prior to the
completion of the Final IMC GPCo Liquidating Distribution)
IMC GPCo; and
(ii) FRP and FTX shall be relieved of all obligations under
this Agreement on and after the date that such Person and
its Affiliates cease to own a direct or indirect interest
in the FRP Partner or the Partnership; provided, that (x)
the provisions of Sections 2.0, 7.0 and 9.0 shall continue
to apply to each such Person for a period of two years
after it ceases to own such an interest, (y) the provisions
of Sections 5.0 and 6.0 shall continue to apply for the
periods set forth therein and (z) the provisions of
Sections 14.0, 15.0, 16.0 and 22.0 shall continue to apply.
12.0 Notices. All communications, notices and consents
provided for herein shall be in writing and be given in person
(or air freight delivery) or by means of telecopy (with request
for assurance of receipt in a manner typical with respect to
communications of that type) or by mail, and shall become
effective (x) on delivery if given in person or by air freight
delivery, (y) on the date of transmission if sent by telecopy or
(z) three business days after being deposited in the mails, with
proper postage for first-class registered or certified air mail
prepaid. Notices shall be addressed as follows:
(i) if to Operations at:
2100 Sanders Road
Northbrook, Illinois 60062
Facsimile: 708-205-4805
Attention: Corporate Secretary
(ii) If to IMC GPCo at:
2100 Sanders Road
Northbrook, Illinois 60062
Facsimile: 708-205-4805
Attention: Corporate Secretary
(iii) if to the Partnership at:
2100 Sanders Road
Northbrook, Illinois 60062
Facsimile: 708-205-4805
Attention: Corporate Secretary
(iv) if to FRP at:
1615 Poydras Street
New Orleasn, Louisiana 70112
Facsimile: 504-585-3513
Attention: General Counsel
(v) if to Global at:
2100 Sanders Road
Northbrook, Illinois 60062
Facsimile: 708-205-4805
Attention: Corporate Secretary
and (vi) if to FTX at:
1615 Poydras Street
New Orleasn, Louisiana 70112
Facsimile: 504-585-3513
Attention: General Counsel
or at such other address as any party hereto may from time to
time designate by notice duly given in accordance with the
provisions of this Section to the other parties hereto.
13.0 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of
Delaware without regard to the conflicts of law rules of such
state.
14.0 Choice of Forum. All suits, actions or proceedings
arising out of or relating to this Agreement shall be brought in
a state or federal court located in the State of Delaware, which
courts shall be an appropriate forum for all such suits, actions
or proceedings. Each party hereby waives any objection which it
may now or hereafter have to the laying of venue in any such
court of any such suit, action or proceeding.
15.0 Consent to Jurisdiction. Each party hereby
irrevocablysubmits to the jurisdiction of any state or federal
court located in the State of Delaware in any such suit, action
or proceeding referred to in Section 14.0 above. Operations
hereby designates and appoints The Corporation Trust Company,
with an office on the date hereof at 1209 Orange Street,
Wilmington, Delaware 19801, or any successor thereof, as its
authorized agent to accept and acknowledge on its behalf service
of any and all process which may be served in any such suit,
action or proceeding in any state or federal court in the State
of Delaware and agrees that service of process upon The
Corporation Trust Company, or any successor thereof, shall be
deemed in every respect effective service of process upon
Operations in any such suit, action or proceeding. FRP hereby
designates and appoints The Corporation Trust Company, with an
office on the date hereof at 1209 Orange Street, Wilmington,
Delaware 19801, or any successor thereof, as its authorized agent
to accept and acknowledge on its behalf service of any and all
process which may be served in any such suit, action or
proceeding in any state or federal court in the State of Delaware
and agrees that service of process upon The Corporation Trust
Company, or any successor thereof, shall be deemed in every
respect effective service of process upon FRP in any such suit,
action or proceeding. The Partnership hereby designates and
appoints The Corporation Trust Company, with an office on the
date hereof at 1209 Orange Street, Wilmington, Delaware 19801, or
any successor thereof, as its authorized agent to accept and
acknowledge on its behalf service of any and all process which
may be served in any such suit, action or proceeding in any state
or federal court in the State of Delaware and agrees that service
of process upon The Corporation Trust Company, or any successor
thereof, shall be deemed in every respect effective service of
process upon the Partnership in any such suit, action or
proceeding. FTX hereby designates and appoints The Corporation
Trust Company, with an office on the date hereof at 1209 Orange
Street, Wilmington, Delaware 19801, or any successor thereof, as
its authorized agent to accept and acknowledge on its behalf
service of any and all process which may be served in any such
suit, action or proceeding in any state or federal court in the
State of Delaware and agrees that service of process upon The
Corporation Trust Company, or any successor thereof, shall be
deemed in every respect effective service of process upon FTX in
any such suit, action or proceeding. Global hereby designates
and appoints The Corporation Trust Company, with an office on the
date hereof at 1209 Orange Street, Wilmington, Delaware 19801, or
any successor thereof, as its authorized agent to accept and
acknowledge on its behalf service of any and all process which
may be served in any such suit, action or proceeding in any state
or federal court in the State of Delaware and agrees that service
of process upon The Corporation Trust Company, or any successor
thereof, shall be deemed in every respect effective service of
process upon Global in any such suit, action or proceeding. Said
designation and appointment by each of Global, Operations, FTX,
FRP and the Partnership shall be irrevocable during the term of
this Agreement, and each party shall pay all costs and expenses
of its respective designation and appointment as and when due and
payable.
16.0 Waiver of Jury Trial. EACH OF GLOBAL, OPERATIONS,
FTX, FRP AND THE PARTNERSHIP HEREBY WAIVES ANY RIGHT TO A TRIAL
BY JURY IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT AND AGREES THAT ANY SUCH SUIT, ACTION
OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A
JURY.
17.0 Entire Agreement; Amendments. This Agreement
(including the exhibits hereto) together with the other
Transaction Agreements (including any exhibits or schedules
thereto) and the Amendment, Waiver and Consent Agreement embody
the entire agreement and understanding between the parties with
respect to the subject matter hereof and thereof, and supersede
any agreements, representations, warranties or understandings,
oral or written, between the parties with respect to the subject
matter of this Agreement, the other Transaction Agreements
entered into prior to the date hereof and the Amendment, Waiver
and Consent Agreement. This Agreement may be amended or modified
only by an instrument in writing executed by all of the parties
hereto.
18.0 Execution in Counterparts. This Agreement may be
signed in counterparts. Any single counterpart or set of
counterparts signed, in either case, by all the parties hereto
shall constitute a full and original agreement for all purposes.
19.0 Remedies and Waiver. No failure or delay in exercising
any right hereunder shall operate as a waiver of or impair any
such right. No single or partial exercise of any such right shall
preclude any other or further exercise thereof or the exercise of
any other right. Any waiver must be given in writing to be
effective, and no waiver shall be deemed a waiver of any other
right.
20.0 Headings. The headings of Articles and Sections have
been included herein for convenience only and shall not
constitute a part of this Agreement for any other purpose.
21.0 Third Party Beneficiaries. This Agreement is solely
for the benefit of the parties hereto and their respective
Affiliates, and no provision of this Agreement shall be deemed to
confer upon third parties, other than such respective Affiliates,
any remedy, claim, liability, reimbursement, claim of action or
other right in excess of those existing without reference to this
Agreement.
22.0 Further Assurances. Each of Operations and FRP agrees
to, and to cause IMC GPCo and the FRP Partner, respectively, to,
execute and deliver such other documents, certificates,
agreements and other writings and to take such other actions as
may be necessary or desirable in order to consummate or implement
expeditiously the transactions contemplated by the Transaction
Agreements and to vest in the Partnership good title to the
Assets, subject only to Permitted Liens.
23.0 Public Announcements. Except as may be required by
applicable law or any listing agreement with any national
securities exchange, none of Global, Operations, FTX or FRP nor
any Affiliate of any thereof will issue any press release or make
any public statement with respect to the business of the
Partnership or its financial performance or condition without the
prior written consent of the other parties unless either (i) a
draft of the proposed press release has been provided to each
party hereto at least twenty-four (24) hours prior to its
proposed release in order to permit such party to comment thereon
or (ii) such press release or other public statement contains
factual information (or discussion or analysis of or comment
based upon such factual information) previously provided to such
Person by the Managing Partner; provided that none of Global,
Operations, FTX or FRP nor any of their Affiliates will present
projections or forward-looking information that is attributed to
any of the other parties hereto, the Partners, or any of their
Affiliates without the prior written consent of the parties
hereto and the Partners.
24.0 Partnership Agreement. Each of Operations and FRP
agrees to be bound by Sections 5.07(d) and 9.03 of the
Partnership Agreement.
* * * * *
IN WITNESS WHEREOF, the parties have signed this Agreement on the
date first written above.
IMC GLOBAL OPERATIONS INC. (formerly IMC
Fertilizer, Inc.)
By: PETER HONG
Name Printed: Peter Hong
Title: Vice President
FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED
PARTNERSHIP
By: Freeport McMoRan Inc., its
general partner
By:
Name Printed:
Title:
IMC-AGRICO COMPANY
By: IMC-AGRICO MP, INC., its
general partner
By: ROBERT C. BRAUNEKER
Name Printed: Robert C. Brauneker
Title: Vice President
By: IMC-AGRICO GP, COMPANY, its
general partner
By: ROBERT C. BRAUNEKER
Name Printed: Robert C. Brauneker
Title: Vice President
IN WITNESS WHEREOF, the parties have signed this Agreement on the
date first written above.
IMC GLOBAL OPERATIONS INC. (formerly IMC
Fertilizer, Inc.)
By:
Name Printed:
Title:
FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP
By: Freeport McMoRan Inc., its
general partner
By: CHARLES W. GOODYEAR
Name Printed: Charles w. Goodyear
Title: Senior Vice President
IMC-AGRICO COMPANY
By: IMC-AGRICO MP, INC., its
general partner
By:
Name Printed:
Title:
By: IMC-AGRICO GP, COMPANY, its general partner
By:
Name Printed:
Title:
By: AGRICO, LIMITED PARTNERSHIP, its general partner
By: Agrico, Inc., its general
partner
By: CHARLES W. GOODYEAR
Name Printed: Charles W. Goodyear
Title: Vice President
FREEPORT-McMoRan INC.
By: CHARLES W. GOODYEAR
Name Printed: Charles W. Goodyear
Title: Senior Vice President
IMC GLOBAL INC. (formerly IMC Fertilizer Group, Inc.) (solely
for the purposes of Sections 2.0, 3.0(a), (c), (d), (e) and (f),
4.0 and 6.0)
By:
Name Printed:
Title:
By: AGRICO, LIMITED PARTNERSHIP, its general partner
By: Agrico, Inc., its general partner
By:
Name Printed:
Title:
FREEPORT-McMoRan INC.
By:
Name Printed:
Title:
IMC GLOBAL INC. (formerly IMC Fertilizer Group, Inc.) (solely
for the purposes of Sections 2.0, 3.0(a), (c), (d), (e) and (f),
4.0 and 6.0)
By: PETER HONG
Name Printed: Peter Hong
Title: Vice President
EXHIBIT 12.1
FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP
Computation of Ratio of Earnings to Fixed Charges
Years Ended December 31,
---------------------------------------------------------
1991 1992 1993 1994 1995
---------- ---------- ---------- ---------- ----------
(In Thousands)
Income (loss) from
continuing
operations $ 111,839 $ 20,211 $ (222,411) $ 83,966 $ 161,408
Add:
Interest
expense 506 869 12,870 33,519 31,518
Rental expense
factor(a) 1,915 2,371 1,378 3,899 4,011
---------- ---------- ---------- ---------- ----------
$ 114,260 $ 23,451 $ (208,163) $ 121,384 $ 196,937
========== ========== ========== ========== ==========
Interest expense $ 506 $ 869 $ 12,870 $ 33,519 $ 31,518
Capitalized
interest 23,271 19,116 11,070 - -
Rental expense
factor(a) 1,915 2,371 1,378 3,899 4,011
---------- ---------- ---------- ---------- ----------
Fixed charges $ 25,692 $ 22,356 $ 25,318 $ 37,418 $ 35,529
========== ========== ========== ========== ==========
Ratio of earnings
to fixed
charges(b) 4.4x 1.0x c 3.2x 5.5x
==== ==== ==== ====
a. Portion of rent deemed representative of an interest factor.
b. For purposes of this calculation, earnings are income from
continuing operations before fixed charges. Fixed charges consist of
interest and that portion of rent deemed representative of interest.
c. Earnings were inadequate to cover fixed charges by $233.5
million.
EXHIBIT 13.1
SELECTED FINANCIAL AND OPERATING DATA
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
(Financial Data in Thousands, Except Per Unit Amounts)
FINANCIAL DATA
Years Ended December 31:
Revenues $ 995,112 $ 765,278 $ 669,160 $ 877,058 $ 885,209
Operating
income (loss) 194,625a 120,618b (210,848)c 20,743 67,196
Net income (loss) 161,408a 83,966b (246,111)c,d 20,211 15,046e
Net income (loss)
per unit 1.56a .81b (2.37)c,d .20 .18e
Distributions paid
per publicly held
unit 2.415 2.40 2.40 2.40 2.40
Average units
outstanding 103,487 103,683 103,698 101,449 83,630
At December 31:
Property, plant and
equipment, net 949,131 910,469 970,960 1,074,332 1,009,517
Total assets 1,229,105 1,146,931 1,296,873 1,493,507 1,443,114
Long-term debt 384,241 368,637 488,102 356,563 542,766
Partners' capital 404,466 447,660 492,404 859,695 560,160
OPERATING DATA
Phosphate fertilizers -primarily DAP
Sales
(short tons) f 3,427,700 3,193,400 3,346,600 3,984,000 4,027,000
Average
realized price g
All phosphate
fertilizers $169.07 $144.13 $110.03 $127.27 $147.10
DAP 175.11 149.32 113.09 132.11 154.07
Phosphate rock
Sales
(short tons)f 4,470,400 4,373,400 3,840,300 3,440,500 2,247,000
Average
realized price g $22.53 $21.38 $22.02 $26.96 $28.21
Sulphur
Sales
(long tons)h 3,049,700 2,087,800 1,973,200 2,346,100 2,528,200
Oil (barrels)
Sales 2,217,600 2,533,700 3,443,000 4,884,000 350,800
Average
realized price $15.82 $13.74 $14.43 $15.91 $13.34
a. Includes charges totaling $18.1 million ($0.18 per unit) for
stock option costs resulting from the rise in FTX's common stock
price during the year and an early retirement program.
b. Includes a $10.9 million charge ($0.11 per unit) primarily
for certain remediation costs.
c. Includes a net charge of $173.6 million ($1.67 per unit)
primarily for restructuring, asset recoverability and other
related charges.
d. Includes a $23.7 million cumulative charge ($0.23 per unit)
for changes in accounting principle.
e. Includes a $17.7 million ($0.21 per unit) insurance
settlement gain and a $96.8 million cumulative charge ($1.16 per
unit) for the change in accounting for postretirement benefits
other than pensions.
f. Reflects FRP's 43.6 percent, 45.1 percent and 46.5 percent
share of the IMC-Agrico assets for the years ended June 30, 1996-
1994, respectively, while FRP received 53.1 percent, 55 percent
and 58.6 percent, respectively, of the cash flow generated during
such periods.
g. Represents average realization f.o.b. plant/mine.
h. Includes internal consumption totaling 754,400 tons, 739,900
tons, 1,138,800 tons, 1,654,300 tons and 1,612,400 tons for
1995-1991, respectively.
FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS
Freeport-McMoRan Resource Partners, Limited Partnership (FRP) has
benefited from the favorable pricing trends for its phosphate
fertilizer products which began in mid-1993 and have continued
through 1995, as evidenced by its dramatically improved operating
results and significantly higher operating cash flow. Phosphate
fertilizer market fundamentals continue to remain positive with
the anticipation of increased global demand coupled with a
currently tight supply/demand situation.
FRP also obtained a new credit facility (Note 5) in
connection with Freeport-McMoRan Inc. (FTX), FRP's general
partner and 51.5 percent owner, completing a restructuring plan
to separate its copper/gold and agricultural minerals businesses
into two independent financial and operating entities. The new
credit agreement provides greater financial flexibility for FRP
and reduced financing costs. In addition, Standard & Poor's
raised FRP's senior debt rating to an investment grade of BBB-,
also serving to reduce financing costs.
Additionally, during 1995 FRP built on its already strong
asset base by participating in two separate acquisitions (Note
4); the purchase of Pennzoil Co.'s Culberson sulphur mine and
related assets, and the IMC-Agrico Company (IMC-Agrico) purchase
of the animal feed ingredients business of Mallinckrodt Group
Inc. Both acquisitions served to strengthen FRP's strategic
market position. The Pennzoil transaction added both sulphur
reserves and a significant sulphur transportation system. The
Mallinckrodt animal feed ingredients business is one of the
world's largest producers of phosphate-based animal feed
ingredients with an annual capacity in excess of 700,000 tons.
This business is IMC-Agrico's largest phosphoric acid customer,
consuming nearly 300,000 tons per year or about seven percent of
IMC-Agrico's capacity. FRP continues to evaluate additional
growth opportunities.
RESULTS OF OPERATIONS
1995 1994 1993
---------- ---------- ---------
(In Millions, Except Per Unit Amounts)
Revenues $ 995.1 $ 765.3 $ 669.2
Operating income (loss) 194.6a 120.6b (210.8)c
Net income (loss) 161.4a 84.0b (246.1)c,d
Net income (loss) per unit 1.56a .81b (2.37)c,d
a. Includes charges totaling $18.1 million ($0.18 per unit) for
stock option costs resulting from the rise in FTX's common stock
price during the year (Note 6) and an early retirement program.
b. Includes a $10.9 million charge ($0.11 per unit) primarily
for certain remediation costs (Note 7).
c. Includes a net charge of $173.6 million ($1.67 per unit)
primarily for restructuring, asset recoverability and other
related charges.
d. Includes a $23.7 million cumulative charge ($0.23 per unit)
for changes in accounting principle.
1995 Compared With 1994. FRP benefited from the significant
strengthening in the phosphate fertilizer markets throughout 1995
and the expansion of its sulphur production capacity (see
Selected Financial and Operating Data) resulting in higher
revenues and improved operating results.
Depreciation and amortization for 1995 decreased $7.5
million from the 1994 amount, primarily caused by a $10.5 million
decline relating to FRP's disproportionate interest in the IMC-
Agrico joint venture cash distributions, partially offset by a
$2.7 million increase resulting from the acquired sulphur assets.
General and administrative expenses for 1995 increased by
$23.1 million, primarily because of the $18.1 million of stock
option and early retirement charges noted above. The 1994 amount
benefited from a $2.2 million reduction in the estimated cost of
excess office space FTX allocated to FRP, discussed later. FRP's
general and administrative expenses include costs incurred by FTX
on FRP's behalf which are allocated to FRP on a cost-
reimbursement basis under a management services agreement (Note
6).
Interest expense decreased from 1994 as a result of lower
average debt levels, partially offset by higher market interest
rates.
Agricultural Minerals Operations - FRP's agricultural minerals
operations, which include its fertilizer and phosphate rock
operations (conducted through IMC-Agrico) and its sulphur
business, reported 1995 operating income of $205.9 million on
revenues of $960 million compared with operating income of $123.8
million on revenues of $730.4 million in 1994. Significant items
impacting operating income are as follows (in millions):
Agricultural minerals operating income -1994 $ 123.8
----------
Increases (decreases):
Sales volumes 81.3
Realizations 147.7
Other 0.6
----------
Revenue variance 229.6
Cost of sales (135.4)a
General and administrative (12.1)b
----------
82.1
----------
Agricultural minerals operating income -1995 $ 205.9
==========
a. Includes a reduction to depreciation and amortization of
$26.3 million and $15.8 million for 1995 and 1994, respectively,
caused by FRP's disproportionate interest in IMC-Agrico cash
distributions.
b. Includes $10.3 million of the stock option charge discussed
above.
FRP's 1995 phosphate fertilizer sales volumes were 7 percent
higher than those in 1994, with IMC-Agrico experiencing continued
excellent export demand and strong domestic sales for diammonium
phosphate (DAP), its principal fertilizer product. The increased
demand resulted in IMC-Agrico phosphate fertilizer facilities
operating near capacity for the majority of 1995. Despite recent
industrywide capacity utilization above 100 percent, domestic
phosphate fertilizer producer inventories remain below normal.
This tight supply/demand situation is reflected in improved
phosphate fertilizer realizations, with FRP's average DAP
realization increasing 17 percent from 1994. FRP's 1995 DAP
realizations included large forward sales to China at prices
which were ultimately below market prices at the time of
shipment. FRP's phosphate fertilizer unit production costs were
increased from 1994, reflecting higher raw material costs for
ammonia and phosphate rock.
Fertilizer prices continued to rise during the fourth
quarter of 1995 and are expected to remain firm for the near
term, as the increased global demand for phosphate fertilizers
comes at a time when essentially no operable idle capacity
exists. Furthermore, worldwide grain stocks are projected to be
at their lowest-ever levels in the upcoming fertilizer season,
strengthening grain prices and improving the outlook for this
spring's fertilizer use. As a result, strong domestic demand is
anticipated to continue into the spring with an expected 13
percent increase in planted corn acreage. Additionally, in late
1995 IMC-Agrico reached an agreement with China providing for
significant shipments of DAP throughout 1996 at market-related
prices at the time of shipment.
FRP's 1995 phosphate rock sales volumes were slightly higher
than in 1994. Increased demand from phosphate fertilizer
producers and the addition of a long-term supply contract in
October 1994 were offset by the expiration of a contract in
October 1995 providing annual sales of 1.5 million tons net to
FRP. Because of the low margin associated with sales under the
expired contract, the impact to FRP's earnings is not
significant.
FRP's increased sulphur production capacity resulting from
the Culberson mine purchase, combined with continued strong
demand from the domestic phosphate fertilizer industry, resulted
in a 46 percent increase in sales volumes. FRP also benefited
from the strengthening in Tampa, Florida sulphur prices during
1995. To the extent U.S. phosphate fertilizer production remains
strong, improved sulphur demand is expected to continue, although
the availability of Canadian sulphur limits the potential for
significant price increases. Main Pass unit production costs for
1995 were virtually unchanged from 1994.
Oil Operation -
1995 1994
---------- ----------
Sales (barrels) 2,217,600 2,533,700
Average realized price $15.82 $13.74
Operating income (in millions) $1.9 $2.8
In 1995, Main Pass oil operating income was impacted by $1.8
million of the previously discussed stock option charge. Net
production for 1996 is estimated to approximate 1995 levels, as
drilling activities are expected to generate production
sufficient to offset declining reservoir production.
1994 Compared With 1993. FRP's 1994 results primarily reflect
the improvement in the phosphate fertilizer market during the
year and the benefits from the formation of IMC-Agrico and other
restructuring activities undertaken in 1993, discussed below.
Partially offsetting these positive factors were increased raw
material prices for ammonia and reduced oil sales volumes.
During 1993, FTX undertook a restructuring of its
administrative organization. This restructuring represented a
major step by FTX to lower the costs of operating and
administering its businesses in response to weak market prices of
commodities produced by its operating units. As part of this
restructuring, FTX significantly reduced the number of employees
engaged in administrative functions, changed its management
information systems environment to achieve efficiencies, reduced
its needs for office space, outsourced a number of administrative
functions and took other actions to lower costs. The
restructuring process resulted in FTX incurring one-time costs,
portions of which were allocated to FRP pursuant to its
management services agreement with FTX (Note 8).
Depreciation and amortization during 1994 declined by $52.3
million compared with 1993, primarily consisting of a $26.6
million decrease relating to the disproportionate interest in
IMC-Agrico cash distributions, a $15.3 million reduction from
Main Pass oil operations caused by the decline in sales volumes
between periods and the $7.6 million in restructuring charges
recorded in 1993. These decreases were partially offset by a $6
million increase in sulphur depreciation because of higher Main
Pass sulphur production.
General and administrative expenses reflect the benefits
from the formation of IMC-Agrico and the other 1993 restructuring
activities. The 1994 amount also benefited from a $2.2 million
reduction in the estimated cost of excess office space FTX
allocated to FRP (originally estimated as part of 1993
restructuring costs), whereas 1993 includes $7.3 million in
restructuring related charges.
Interest expense in 1994 increased as a result of the Main
Pass sulphur project becoming operational for accounting purposes
in July 1993 (previously, related interest costs totaling $11.1
million in 1993 were capitalized), rising interest rates and the
issuance of the 8 3/4% Senior Subordinated Notes due 2004 (Note
5) which was used to reduce lower variable rate bank borrowings.
These increases were partially offset by a reduction in average
debt levels.
FRP's 1993 earnings include a $23.7 million charge for the
cumulative effect of changes in accounting principle for periodic
scheduled maintenance costs, deferred charges and costs of
management information systems (Note 1). These changes were
adopted to improve the measurement of operating results by
recognizing cash expenditures as expense when incurred unless
they directly relate to long-lived additions. These changes did
not have a material impact on operating income.
Agricultural Minerals Operations - FRP's agricultural minerals
operations reported 1994 operating income of $123.8 million on
revenues of $730.4 million compared with an operating loss of
$105 million on revenues of $619.3 million in 1993. Significant
items impacting operating income are as follows (in millions):
Agricultural minerals operating loss -1993 $ (105.0)
----------
Increases (decreases):
Sales volumes 15.8
Realizations 102.7
Other (7.4)
----------
Revenue variance 111.1
Cost of sales 46.8a,b
1993 provision for restructuring charges 33.9
1993 loss on valuation and sale of assets, net 14.8
General and administrative and other 22.2a
----------
228.8
----------
Agricultural minerals operating income-1994 $ 123.8
==========
a. 1993 included $17.5 million in cost of sales and $7.3
million in general and administrative expenses resulting from the
restructuring project.
b. 1994 included a $15.8 million reduction and 1993 included a
$10.8 million increase to depreciation and amortization caused by
FRP's disproportionate interest in IMC-Agrico cash distributions.
FRP's 1994 phosphate fertilizer sales volumes were slightly
below 1993 levels. Producer inventories remained at prior year
levels despite a rise in industrywide production. As a result,
phosphate fertilizer prices rose sharply from the near 20-year
lows experienced during 1993, with FRP's average DAP realization
increasing 32 percent. Unit production costs benefited from
efficiencies at IMC-Agrico, somewhat offset by higher raw
material prices for ammonia.
FRP's phosphate rock sales volumes rose 14 percent during
1994, reflecting increased demand and the advent of a supply
contract in October 1994 adding annual sales of approximately 0.8
million tons net to FRP through 2004.
Main Pass sulphur production increased during 1994, reducing
unit production costs below 1993 levels. With increased Main
Pass production, FRP ceased operating the marginally profitable
Caminada mine in January 1994. Average sulphur realizations for
1994 were lower, reflecting the decline in prices which occurred
throughout 1993. However, improved phosphate fertilizer
operating rates, coupled with reduced imports, resulted in
sulphur price increases during the second half of 1994.
Oil Operation -
1994 1993
---------- ----------
Sales (barrels) 2,533,700 3,443,000
Average realized price $13.74 $14.43
Operating income (in millions) $2.8 $(61.5)
Main Pass oil production was limited during 1994 because of
a redevelopment program which involved drilling two additional
wells and recompleting three existing wells. Oil realizations
recovered somewhat from the significant decline which occurred in
late 1993. The 1993 price decline resulted in a $60 million
charge to FRP's earnings for the excess net book value of its oil
assets over the estimated future net cash flow to be received.
CAPITAL RESOURCES AND LIQUIDITY
Net cash provided by (used in) operating activities was $284.9
million in 1995, $221.4 million in 1994 and $(2.9) million in
1993. Fluctuations in these amounts were primarily caused by the
varying level of FRP's earnings. Also benefiting the 1995 and
1994 periods were working capital reductions achieved by IMC-
Agrico and the sale of receivables (Note 1).
Net cash provided by (used in) investing activities was
$(83.8) million in 1995, $15.6 million in 1994 and $2.5 million
in 1993. Based on current estimates, capital expenditures for
1996 will approximate $45 million. Investing cash flow for 1995
included the Mallinckrodt acquisition, while 1994 and 1993
benefited from the receipt of proceeds from asset sales.
Net cash provided by (used in) financing activities totaled
$(188.5) million in 1995, $(251.6) million in 1994 and $17.8
million in 1993. Distributions to partners rose in 1995, as
higher cash flow from operations resulted in continued
distributions to the public unitholders and an increased level of
distributions paid to FTX. In early 1994, FRP issued $150
million of 8 3/4% Senior Subordinated Notes, using the proceeds
to reduce bank indebtedness, thereby lengthening the maturity and
fixing the interest cost on a portion of FRP's debt. FRP
believes that its short-term cash requirements will be met from
internally generated funds and borrowings under its credit
facility ($183 million of additional borrowings available at
February 6, 1996).
Publicly owned FRP units have cumulative rights to receive
quarterly distributions of 60 cents per unit through the
distribution for the quarter ending December 31, 1996 before any
distributions may be made to FTX. On January 19, 1996, FRP
declared a distribution of 62.5 cents per publicly held unit
($31.3 million) and 67.35 cents per FTX-owned unit ($35.9
million), payable February 15, 1996, reducing the unpaid
distributions to FTX by $2.6 million. The remaining $379.9
million of unpaid distributions to FTX are recoverable from one-
half of any excess of future quarterly FRP distributions over 60
cents per unit for all units. FRP's future distributions will be
dependent on the distributions received from IMC-Agrico and cash
flow from FRP's sulphur and oil operations.
Distributable cash in January 1996 included $64.3 million
from IMC-Agrico. Future distributions from IMC-Agrico will
depend primarily on the phosphate fertilizer market, discussed
earlier, and FRP's share of IMC-Agrico cash distributions
(Current Interest). FRP's Current Interest is presently 53.1
percent through June 30, 1996, changing to 53.5 percent for the
twelve months ended June 30, 1997 and declining to 40.6 percent
thereafter. However, in January 1996 FRP and its joint venture
partner in IMC-Agrico agreed to an increase in FRP's Current
Interest of 0.85 percent and a modification of certain product
pricing between IMC-Agrico and the joint venture partner. This
agreement is subject to the joint venture partner consummating a
merger.
ENVIRONMENTAL
FTX and its affiliates, including FRP, have a history of
commitment to environmental responsibility. Since the 1940s,
long before public attention focused on the importance of
maintaining environmental quality, FTX and its affiliates have
conducted preoperational, bioassay, marine ecological and other
environmental surveys to ensure the environmental compatibility
of its operations. FTX's Environmental Policy commits FTX and
its affiliates' operations to compliance with local, state and
federal laws and regulations, and prescribes the use of periodic
environmental audits of all facilities to evaluate compliance
status and communicate that information to management. FTX has
access to environmental specialists who have developed and
implemented corporatewide environmental programs. FTX's
operating units, including FRP, continue to study methods to
reduce discharges and emissions.
Federal legislation (sometimes referred to as "Superfund")
requires payments for cleanup of certain waste sites, even though
waste management activities were performed in compliance with
regulations applicable at the time. Under the Superfund
legislation, one party may, under certain circumstances, be
required to bear more than its proportional share of cleanup
costs at a site where it has responsibility pursuant to the
legislation, if payments cannot be obtained from other
responsible parties. Other legislation mandates cleanup of
certain wastes at operating sites. States also have regulatory
programs that can mandate waste cleanup. Liability under these
laws involves inherent uncertainties.
FRP has received notices from governmental agencies that it
is one of many potentially responsible parties at certain sites
under relevant federal and state environmental laws. Further,
FRP is aware of additional sites for which it may receive such
notices in the future. Some of these sites involve significant
cleanup costs; however, at each of these sites other large and
viable companies with equal or larger proportionate shares are
among the potentially responsible parties. The ultimate
settlement for such sites usually occurs several years subsequent
to the receipt of notices identifying potentially responsible
parties because of the many complex technical and financial
issues associated with site cleanup. FRP believes that the
aggregation of any costs associated with the potential
liabilities at those sites for which notification has been
received will not exceed amounts accrued and expects that any
costs would be incurred over a period of years. The costs
associated with those sites for which notifications have not been
received are uncertain and cannot be estimated at present.
However, FRP believes that these costs, should they be incurred,
will not have a material adverse effect on its operations or
financial position.
FRP, through FTX, maintains insurance coverage in amounts
deemed prudent for certain types of damages associated with
environmental liabilities which arise from unexpected and
unforeseen events and has an indemnification agreement covering
certain acquired sites (Note 7).
In June 1994, a sinkhole was found at a phosphogypsum
storage area at IMC-Agrico's New Wales, Florida facility. The
Florida Department of Environmental Protection was notified and
IMC-Agrico pumped grout material into the sinkhole, thereby
plugging it and preventing further collapse. Groundwater
monitoring wells indicate that, to date, any impacts from the
sinkhole have been contained on-site. This issue continues to be
monitored. If there were contamination, which IMC-Agrico
considers unlikely, the costs that would be required are
uncertain and cannot be estimated at the present. If significant
costs were incurred it would be necessary to determine the
applicability of insurance coverage maintained by IMC-Agrico, and
separately by FRP, and for the sharing of costs between the joint
venture partners.
FRP has made, and will continue to make, expenditures at its
operations for protection of the environment. Continued
government and public emphasis on environmental issues can be
expected to result in increased future investments for
environmental controls, which will be charged against income from
future operations. Present and future environmental laws and
regulations applicable to FRP's operations may require
substantial capital expenditures and may affect its operations in
other ways that cannot now be accurately predicted.
-----------------------------
The results of operations reported and summarized above are not
necessarily indicative of future operating results.
REPORT OF MANAGEMENT
Freeport-McMoRan Inc., the Administrative Managing General
Partner (the General Partner) of Freeport-McMoRan Resource
Partners, Limited Partnership (the Partnership) is responsible
for the preparation of the financial statements and all other
information contained in this Annual Report. The financial
statements have been prepared in conformity with generally
accepted accounting principles and include amounts that are based
on management's informed judgments and estimates.
The General Partner maintains a system of internal
accounting controls designed to provide reasonable assurance at
reasonable costs that assets are safeguarded against loss or
unauthorized use, that transactions are executed in accordance
with management's authorization and that transactions are
recorded and summarized properly. The system is tested and
evaluated on a regular basis by the General Partner's internal
auditors, Price Waterhouse LLP. In accordance with generally
accepted auditing standards, the Partnership's independent public
accountants, Arthur Andersen LLP, have developed an overall
understanding of our accounting and financial controls and have
conducted other tests as they consider necessary to support their
opinion on the financial statements.
The Board of Directors of the General Partner, through its
Audit Committee composed solely of non-employee directors, is
responsible for overseeing the integrity and reliability of the
Partnership's accounting and financial reporting practices and
the effectiveness of its system of internal controls. Arthur
Andersen LLP and Price Waterhouse LLP meet regularly with, and
have access to, this committee, with and without management
present, to discuss the results of their audit work.
Rene L. Latiolais Charles W. Goodyear
President and Executive Vice President and
Chief Executive Officer Chief Financial Officer
FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP
BALANCE SHEETS
December 31,
------------------------
1995 1994
---------- ----------
(In Thousands)
ASSETS
Current assets:
Cash and short-term investments $ 22,508 $ 9,859
Accounts receivable:
Customers 57,047 42,312
Other 24,054 15,953
Inventories:
Products 83,924 79,377
Materials and supplies 35,086 30,300
Prepaid expenses and other 3,692 1,350
---------- ----------
Total current assets 226,311 179,151
---------- ----------
Property, plant and equipment 1,829,271 1,744,392
Less accumulated depreciation
and amortization 880,140 833,923
---------- ----------
Net property, plant and
equipment 949,131 910,469
---------- ----------
Other assets 53,663 57,311
---------- ----------
Total assets $1,229,105 $1,146,931
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued
liabilities $ 127,020 $ 84,888
Long-term debt, less current
portion 384,241 368,637
Reclamation and mine shutdown
reserves 112,788 96,445
Accrued postretirement
benefits and other liabilities 200,590 149,301
Partners' capital 404,466 447,660
---------- ----------
Total liabilities and
partners' capital $1,229,105 $1,146,931
========== ==========
The accompanying notes are an integral part of these financial
statements.
FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
Years Ended December 31,
--------------------------------------
1995 1994 1993
---------- ---------- ----------
(In Thousands, Except Per Unit Amounts)
Revenues $ 995,112 $ 765,278 $ 669,160
Cost of sales:
Production and delivery 687,541 547,297 556,712
Depreciation and amortization 44,830 52,344 104,686
---------- ---------- ----------
Total cost of sales 732,371 599,641 661,398
Exploration expenses - - 3,092
Provision for restructuring
charges - - 33,947
Loss on valuation and sale of
assets, net - - 114,802
General and administrative
expenses 68,116 45,019 66,769
---------- ---------- ----------
Total costs and expenses 800,487 644,660 880,008
---------- ---------- ----------
Operating income (loss) 194,625 120,618 (210,848)
Interest expense, net (31,518) (33,519) (12,870)
Other income (expense), net (1,699) (3,133) 1,307
---------- ---------- ----------
Income (loss) before changes
in accounting principle 161,408 83,966 (222,411)
Cumulative effect of changes
in accounting principle - - (23,700)
---------- ---------- ----------
Net income (loss) $ 161,408 $ 83,966 $ (246,111)
========== ========== ==========
Net income (loss) per unit:
Before changes in accounting
principle $1.56 $.81 $(2.14)
Cumulative effect of changes in
accounting principle - - (.23)
----- ---- ------
$1.56 $.81 $(2.37)
===== ==== ======
Average units outstanding 103,487 103,683 103,698
Distributions paid per
publicly held unit $2.415 $2.40 $2.40
====== ===== =====
The accompanying notes are an integral part of these financial
statements.
FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOW
Years Ended December 31,
--------------------------------------
1995 1994 1993
---------- ---------- ----------
(In Thousands)
Cash flow from operating activities:
Net income (loss) $ 161,408 $ 83,966 $ (246,111)
Adjustments to reconcile net
income (loss) to net cash
provided by operating activities:
Cumulative effect of changes
in accounting principle - - 23,700
Depreciation and amortization 44,830 52,344 104,686
Loss on valuation and sale
of assets, net - - 114,802
Cash distributions from
IMC-Agrico in excess of
interest in capital 40,835 43,293 -
Reclamation and mine
shutdown expenditures (10,545) (9,837) (9,980)
(Increase) decrease in
working capital, net
of effect of acquisitions and dispositions:
Accounts receivable (13,252) 3,531 710
Inventories 4,471 20,522 20,793
Prepaid expenses and other (2,413) 679 (495)
Accounts payable and accrued
liabilities 39,630 14,688 (31,427)
Other 19,980 12,244 20,376
---------- ---------- ----------
Net cash provided by (used in)
operating activities 284,944 221,430 (2,946)
---------- ---------- ----------
Cash flow from investing activities:
Capital expenditures (39,485) (29,681) (52,170)
Mallinckrodt purchase (46,200) - -
Sale of assets 375 44,774 49,961
Other 1,531 530 4,711
---------- ---------- ----------
Net cash provided by (used in)
investing activities (83,779) 15,623 2,502
---------- ---------- ----------
Cash flow from financing activities:
Distributions to partners (202,541) (127,368) (121,180)
Proceeds from debt 648,343 54,629 468,137
Repayment of debt (632,257) (323,686) (329,164)
Purchase of Partnership units (2,061) (1,342) -
Proceeds from sale of 8 3/4%
Senior Subordinated Notes - 146,125 -
---------- ---------- ----------
Net cash provided by (used in)
financing activities (188,516) (251,642) 17,793
---------- ---------- ----------
Net increase (decrease) in
cash and short-term investments 12,649 (14,589) 17,349
Cash and short-term investments
at beginning of year 9,859 24,448 7,099
---------- ---------- ----------
Cash and short-term investments
at end of year $ 22,508 $ 9,859 $ 24,448
========== ========== ==========
Interest paid $ 28,997 $ 26,349 $ 22,997
========== ========== ==========
The accompanying notes, which include information in Notes 4 and
8 regarding noncash transactions, are an integral part of these
financial statements.
FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
Units Outstanding Partners' Capital
-------------------------- ------------------------------
General Limited Total General Limited Total
------- ------- ------- --------- --------- ---------
(In Thousands)
Balance at
January 1, 1993 53,208 50,490 103,698 $ 441,119 $ 418,576 $ 859,695
Net loss - - - (126,277) (119,834) (246,111)
Partnership
distributions - - - - (121,180) (121,180)
Reallocation
caused by
disproportionate
distributions - - - (62,176) 62,176 -
Other (3) 3 - (23) 23 -
------- ------- ------- -------- --------- ---------
Balance at
December 31,
1993 53,205 50,493 103,698 252,643 239,761 492,404
Net income - - - 43,089 40,877 83,966
Partnership
distributions - - - (6,184) (121,184) (127,368)
Purchase of
Partnership
units - (95) (95) (490) (852) (1,342)
Reallocation
caused by
disproportionate
distributions - - - (59,166) 59,166 -
------- ------- ------- --------- -------- ---------
Balance at December
31, 1994 53,205 50,398 103,603 229,892 217,768 447,660
Net income - - - 83,014 78,394 161,408
Partnership
distributions - - - (81,102) (121,439) (202,541)
Purchase of
Partnership
units - (137) (137) (764) (1,297) (2,061)
FTX purchase
of Partnership
units 117 (117) - 443 (443) -
Reallocation
caused by
disproportionate
distributions - - - (23,038) 23,038 -
------- ------- ------- --------- --------- ---------
Balance at
December 31,
1995 53,322 50,144 103,466 $ 208,445 $ 196,021 $ 404,466
======= ======= ======= ========= ========= =========
The accompanying notes are an integral part of these financial
statements.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Ownership. The financial statements of
Freeport-McMoRan Resource Partners, Limited Partnership (FRP), a
Delaware limited partnership, include all majority-owned
subsidiaries. Investments in joint ventures and partnerships,
including IMC-Agrico Company (IMC-Agrico), are reflected using
the proportionate consolidation method in accordance with
standard industry practice. All significant intercompany
transactions have been eliminated. Certain prior year amounts
have been reclassified to conform to the 1995 presentation.
Freeport-McMoRan Inc. (FTX) owned 51.5 percent of FRP as of
December 31, 1995 and serves as FRP's general partner.
Use of Estimates. The financial statements have been prepared in
conformity with generally accepted accounting principles and
include amounts that are based on management's informed judgments
and estimates.
Cash and Short-Term Investments. Highly liquid investments
purchased with a maturity of three months or less are considered
cash equivalents. IMC-Agrico's cash and short-term investments
are not available to FRP until a distribution is paid by IMC-
Agrico (Note 2).
Accounts Receivable. IMC-Agrico has an agreement whereby it can
sell on an ongoing basis up to $65 million of accounts
receivable. FRP's accounts receivable at December 31, 1995 and
1994 were net of $28.3 million and $17.9 million of receivables
sold, respectively.
Inventories. Inventories are generally stated at the lower of
average cost or market.
Property, Plant and Equipment. Property, plant and equipment are
carried at cost, including capitalized interest during the
construction and development period. Expenditures for
replacements and improvements are capitalized. FRP follows the
successful efforts accounting method for its sole oil property,
Main Pass Block 299. Depreciation for mining and production
assets, including mineral interests, is determined using the
unit-of-production method based on estimated recoverable
reserves. Other assets are depreciated on a straight-line basis
over estimated useful lives of 17 to 30 years for buildings and 5
to 25 years for machinery and equipment.
In March 1995, the Financial Accounting Standards Board
issued Statement No. 121 (FAS 121) which requires a reduction of
the carrying amount of long-lived assets to fair value when
events indicate that their carrying amount may not be
recoverable. FRP adopted FAS 121 effective January 1,1995, the
effect of which was not material.
Environmental Remediation and Compliance. Environmental
expenditures that relate to current operations are expensed or
capitalized as appropriate. Expenditures resulting from the
remediation of an existing condition caused by past operations,
and which do not contribute to current or future revenue
generation, are expensed. Liabilities are recognized for
remedial activities when the efforts are probable and the cost
can be reasonably estimated.
Estimated future expenditures to restore properties and
related facilities to a state required to comply with
environmental and other regulations are accrued over the life of
the properties. The future expenditures are estimated based on
current costs, laws and regulations. As of December 31, 1995,
FRP had accrued $53.9 million for abandonment and restoration of
its non-operating sulphur assets, approximately one-half of which
will be reimbursed by third parties, and $42.7 million for
reclamation of land relating to mining and processing phosphate
rock. FRP estimates that its share of abandonment and
restoration costs for its two operating sulphur mines will total
approximately $50 million, $17.6 million of which had been
accrued at December 31, 1995, with essentially all costs being
incurred after mine closure. These estimates are by their nature
imprecise and can be expected to be revised over time due to
changes in government regulations, operations, technology and
inflation.
Income Taxes. FRP is not a taxable entity; therefore, no income
taxes are reported in its financial statements.
Changes in Accounting Principle. During 1993, FRP adopted the
following changes in accounting principle:
Periodic Scheduled Maintenance - These costs are expensed
when incurred. Previously, costs were capitalized when incurred
and amortized.
Deferred Charges - Costs that directly relate to the
acquisition, construction and development of assets and to the
issuance of debt and related instruments are deferred.
Previously, certain other costs that benefited future periods
were deferred.
Management Information Systems (MIS) - MIS equipment and
software that have a material impact on net income are
capitalized. Other MIS costs, including equipment and purchased
software, that involve immaterial amounts (currently individual
expenditures of less than $0.5 million) and short estimated
productive lives (currently less than three years) are charged to
expense when incurred. Previously, most expenditures for MIS
equipment and purchased software were capitalized.
2. IMC-AGRICO
In July 1993, FRP and IMC Global Inc. (IGL) formed the IMC-Agrico
joint venture, operated by IGL, for their respective phosphate
fertilizer businesses, including phosphate rock. FRP's "Current
Interest", reflecting cash to be distributed from ongoing
operations, initially was 58.6 percent and its "Capital
Interest", reflecting the purchase or sale of long-term assets or
any required capital contributions, was 46.5 percent. These
ownership percentages (53.1 percent and 43.6 percent,
respectively, at December 31, 1995) decline in annual increments
to 40.6 percent for the fiscal year ending June 30, 1998 and
remain constant thereafter. In January 1996, FRP and IGL agreed
to an increase in FRP's Current and Capital Interest of 0.85
percent, subject to IGL consummating a merger. At December 31,
1995, FRP's investment in IMC-Agrico totaled $429.2 million.
IMC-Agrico's assets are not available to FRP until distributions
are paid by the joint venture.
3. DISTRIBUTIONS
Publicly owned FRP units have cumulative rights to receive
quarterly distributions of 60 cents per unit through the
distribution for the quarter ending December 31, 1996 before any
distributions may be made to FTX. On January 19, 1996, FRP
declared a distribution of 62.5 cents per publicly held unit
($31.3 million) and 67.35 cents per FTX-owned unit ($35.9
million), reducing the unpaid distributions to FTX to $379.9
million. Unpaid FTX distributions are recoverable from one-half
of any amount by which future quarterly distributable cash
exceeds a 60 cents per unit distribution.
4. ACQUISITIONS
In January 1995, FRP acquired essentially all of the domestic
assets of Pennzoil Co.'s sulphur division. Pennzoil will receive
quarterly payments from FRP over 20 years based on the prevailing
price of sulphur. The installment payments may be terminated
earlier either by FRP through the exercise of a $65 million call
option or by Pennzoil through a $10 million put option. Neither
option may be exercised prior to 1999. The purchase price
allocation is as follows (in thousands):
Current assets $ 5,635
Property, plant and equipment 48,837
Current liabilities (7,499)
Reclamation and mine shutdown reserves (15,200)
Accrued long-term liabilities (31,773)
----------
Net cash investment $ -
==========
Accrued long-term liabilities include the estimated future
installment payments based on the prevailing sulphur price at the
time of acquisition.
In October 1995, IMC-Agrico acquired the animal feed
ingredients business of Mallinckrodt Group Inc. for $110 million
cash. FRP funded its portion of the purchase price with
borrowings under its credit agreement. The purchase price
allocation is as follows (in thousands):
Current assets $ 19,503
Property, plant and equipment 35,329
Current liabilities (8,632)
----------
Net cash investment $ 46,200
==========
5. LONG-TERM DEBT
December 31,
------------------------
1995 1994
---------- ----------
(In Thousands)
FRP credit agreement,
average rate of 7.1% in
1995 and 5.2% in 1994 $ 196,400 $ 205,000
8 3/4% Senior
Subordinated Notes
due 2004 150,000 150,000
Note payable to FTX 24,740 -
Other 13,440 13,951
---------- ----------
384,580 368,951
Less current portion,
included in accounts payable 339 314
---------- ----------
$ 384,241 $ 368,637
========== ==========
In 1995, FTX obtained a new variable rate revolving credit
facility (the Credit Agreement). The facility provides $400
million of credit, all of which is available to FRP ($213 million
of additional borrowings available at December 31, 1995) and $75
million of which is available to FTX, through July 2000. Under
this facility, FTX is required to retain control of FRP and FRP
is not permitted to enter into any agreement restricting its
ability to make distributions or create liens on its assets. As
security for the banks, FRP has pledged its interest in IMC-
Agrico and Main Pass oil, while FTX has pledged units
representing 50.1 percent of FRP. The Credit Agreement provides
for FRP minimum working capital requirements, specified cash flow
to interest coverage, maximum debt to capitalization ratios and
restrictions on other borrowings.
In February 1994, IMC-Agrico entered into a three-year $75
million variable rate credit facility (the IMC-Agrico Facility).
Borrowings under the IMC-Agrico Facility are unsecured with a
negative pledge on substantially all of IMC-Agrico's assets. The
IMC-Agrico Facility has minimum capital, fixed charge and current
ratio requirements for IMC-Agrico; places limitations on debt at
IMC-Agrico; and restricts the ability of IMC-Agrico to make cash
distributions in excess of distributable cash generated.
In February 1994, FRP sold publicly $150 million of 8 3/4%
Senior Subordinated Notes. Based on the December 31, 1995
closing market price, this debt had a fair value of $151.9
million.
At times FRP has minimized amounts outstanding under the
Credit Agreement by borrowing excess funds from FTX. Interest
was charged based on Credit Agreement rates and totaled $1.8
million in 1995, $0.6 million in 1994 and $6.3 million in 1993.
FRP entered into an interest rate swap in 1988 to manage
exposure to interest rate changes on a portion of its variable
rate debt. FRP pays 10.2 percent on $32.7 million of financing
at December 31, 1995, reducing annually through 1999. FRP
received an average interest rate of 6.2 percent in 1995, 4.3
percent in 1994 and 3.3 percent in 1993, resulting in additional
interest costs of $1.4 million, $2.6 million and $3.5 million,
respectively. Based on market conditions at December 31, 1995,
unwinding this interest swap would require an estimated $3.2
million.
The minimum principal payments scheduled for each of the
five succeeding years based on the amounts and terms outstanding
at December 31, 1995 are $0.3 million, $0.4 million, $0.5
million, $0.5 million and $221.1 million.
Capitalized interest totaled $11.1 million in 1993.
6. PENSION AND OTHER EMPLOYEE BENEFITS
Management Services Agreement. FRP has no employees and a
limited number of officers, each of whom is an employee or
officer of FTX. Through December 31, 1995, FTX furnished certain
management and administrative services to FRP under a management
services agreement. These costs, which include related overhead,
totaled $38.9 million in 1995 (including $15.3 million for stock
option costs resulting from the rise in FTX's common stock price
during the year), $25 million in 1994 and $47.1 million in 1993
(excluding restructuring costs). As of January 1, 1996, FM
Services Company (FMS), a newly formed entity owned 50 percent
each by FTX and FCX, will provide certain administrative,
financial and other services that were previously provided by FTX
on a similar cost-reimbursement basis. FTX operates the Main
Pass oil facilities and charges for specified overhead and other
costs, FRP's share being $1 million in 1995, $0.8 million in 1994
and $0.9 million in 1993.
Pensions. Substantially all employees are covered by FTX's
defined benefit plan. Additionally, for those participants in
the qualified defined benefit plan whose benefits are limited
under federal income tax laws, FTX sponsored an unfunded
nonqualified plan. The accumulated benefits and plan assets are
not separately determined and amounts allocated to FRP under
this plan have not been material. As of December 31, 1995, FTX's
accumulated benefit obligation exceeded the plan assets by $9.8
million. FMS and FCX will establish their own plans which will
assume liabilities equal to the accumulated benefit obligation
for the transferred employees and FTX will transfer assets equal
to the liabilities assumed, while providing essentially the same
benefits to employees.
The operator of IMC-Agrico maintains non-contributory
pension plans that cover substantially all of its employees. As
of July 1, 1995, FRP's share of the actuarial present value of
the vested projected benefit obligation was $10 million, based on
a discount rate of 8.2 percent and a 5 percent annual increase in
future compensation levels, with its share of plan assets
totaling $2.7 million. FRP's share of the expense related to
these plans totaled $4.6 million in 1995, $3.6 million in 1994
and $1.5 million in 1993.
Other Postretirement Benefits. FTX provides certain health care
and life insurance benefits for retired employees. The related
expense allocated from FTX totaled $8.9 million in 1995 ($1.2
million for service cost and $7.7 million in interest for prior
period services), $9.9 million in 1994 ($1.1 million and $8.8
million, respectively) and $9.6 million in 1993 ($1.5 million and
$8.1 million, respectively). These benefits will be provided by
FTX and FMS beginning in 1996. Summary information of the plan
follows:
December 31,
------------------------
1995 1994
---------- ----------
Actuarial present value of (In Thousands)
accumulated postretirement
obligation:
Retirees $ 93,791 $ 92,577
Fully eligible active
plan participants 9,491 7,455
Other active plan participants 14,328 3,903
---------- ----------
Total accumulated
postretirement obligation 117,610 103,935
Unrecognized net gain (loss) (6,327) 3,418
---------- ----------
Accrued postretirement
benefit cost $ 111,283 $ 107,353
========== ==========
The initial health care cost trend rate used was 11.5
percent for 1993, decreasing 0.5 percent per year until reaching
6 percent. A one percent increase in the trend rate would
increase the amounts by approximately 10 percent. The discount
rate used was 7 percent in 1995 and 8.25 percent in 1994. FTX
has the right to modify or terminate these benefits. FRP
anticipates funding these costs, in addition to the annual cash
costs, over the expected life of its mineral reserves.
The operator of IMC-Agrico provides certain health care
benefits for retired employees. At July 1, 1995, FRP's share of
the accumulated postretirement obligation was $4.2 million, which
was unfunded. FRP's share of expense has not been material. The
initial health care cost trend rate used was 9.8 percent,
decreasing gradually to 5.5 percent in 2003. The discount rate
used was 8.2 percent. Employees are not vested and benefits are
subject to change.
7. COMMITMENTS AND CONTINGENCIES
Long-Term Contracts and Operating Leases. FRP has an agreement
through 2009 with a third party that provides and operates a
sulphur tanker for minimum annual payments of $12.8 million.
FRP's minimum annual contractual charges under noncancelable
long-term contracts and operating leases, including the sulphur
tanker, total $197.8 million, with $19.5 million in 1996, $15.8
million in 1997, $15.2 million in 1998, $14.8 million in 1999 and
$14.9 million in 2000.
Environmental. FRP has an indemnification for environmental
remediation costs in excess of an aggregate $5 million on certain
identified sites (FRP has previously accrued the $5 million). In
anticipation of reaching the $5 million indemnity, the third
party has assumed management of response activities for the
indemnified sites. Based on FRP's review of the potential
liabilities and the third party's financial condition, FRP
concluded that it is remote that FRP would have any additional
liability at the indemnified sites. FRP believes its exposure on
other sites for which notification has been received will not
exceed amounts accrued and expects that any costs would be
incurred over a period of years. The costs associated with those
sites for which notifications have not been received are
uncertain and cannot be estimated at present. However, FRP
believes that these costs, should they be incurred, will not have
a material adverse effect on its operations or financial
position.
In June 1994, a sinkhole was found at a phosphogypsum
storage area at IMC-Agrico's New Wales, Florida facility. The
Florida Department of Environmental Protection was notified and
IMC-Agrico pumped grout material into the sinkhole, thereby
plugging it and preventing further collapse. Groundwater
monitoring wells indicate that, to date, any impacts from the
sinkhole have been contained on-site. This issue continues to be
monitored. If there were contamination, which IMC-Agrico
considers unlikely, the costs that would be required are
uncertain and cannot be estimated at the present. If significant
costs were incurred it would be necessary to determine the
applicability of insurance coverage maintained by IMC-Agrico, and
separately by FRP, and for the sharing of costs between the joint
venture partners.
FRP has made, and will continue to make, expenditures at its
operations for protection of the environment. FRP is subject to
contingencies as a result of environmental laws and regulations.
The related future cost is indeterminable because of such factors
as the unknown timing and extent of the corrective actions that
may be required and the application of joint and several
liability.
8. RESTRUCTURING AND VALUATION CHARGES
Restructuring Charges. During 1993, FRP recognized restructuring
expenses totaling $33.9 million, including $22.1 million
allocated from FTX. The charges consisted of $15.5 million for
personnel related costs, $7 million for excess office space and
furniture and fixtures resulting from staff reductions, $1.8
million for downsizing its MIS structure, $8.8 million for IMC-
Agrico formation costs and $0.8 million of deferred charges
relating to FRP's credit facility which was substantially
revised.
In connection with the restructuring project, FRP changed
its accounting systems and undertook a detailed review of its
accounting records and valuation of various assets and
liabilities. As a result of this process, FRP recorded charges
totaling $24.9 million, comprised of (a) $10 million of
production and delivery costs consisting of $6.3 million for
revised estimates of environmental liabilities and $3.7 million
primarily for adjustments in converting accounting systems, (b)
$7.6 million of depreciation and amortization consisting of $6.5
million for estimated future abandonment and reclamation costs
and $1.1 million for the write-down of miscellaneous properties
and (c) $7.3 million of general and administrative expenses
consisting of $4 million to downsize FRP's MIS structure and $3.3
million for the write-off of miscellaneous assets.
Asset Sales/Recoverability. During 1993, FRP sold its remaining
interests in producing geothermal properties for $63.5 million,
consisting of $23 million in cash and $40.5 million of interest-
bearing notes, recognizing a $31 million charge to expense and
recording a $9 million charge for impairment of its undeveloped
geothermal properties. In 1994, FRP received prepayment of
these notes.
In 1993, FRP charged $86.6 million to expense for the
recovery of certain assets, primarily its Main Pass oil ($60
million) and non-Main Pass sulphur assets. FRP also recognized
an $11.8 million gain primarily from the sale of certain
previously mined phosphate rock acreage.
9. SUPPLEMENTARY MINERAL RESERVE INFORMATION (UNAUDITED)
Proved and probable mineral reserves, including proved oil
reserves, follow:
December 31,
-------------------------------------------------------
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
(In Thousands)
Sulphur
- -long tons a 55,185 41,018 38,637 41,570 42,780
Phosphate rock
- -short tons b 186,375 206,661 215,156 208,655 206,183
Oil-barrels 6,638 7,279 9,962 13,861 18,496
a. Main Pass reserves are subject to a 12.5 percent royalty
based on net mine revenues. Culberson reserves totaled 15.4
million tons for 1995 and are subject to a 9 percent royalty
based on net mine revenues.
b. For 1995-1993, represents FRP's share, based on its Capital
Interest ownership, of the IMC-Agrico reserves. Contains an
average of 68 percent bone phosphate of lime.
10. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Revenues Operating Income Net Income
---------- ---------- ---------- ----------
(In Thousands, Except Per Unit Amounts)
1995
1st Quarter $ 254,265 $ 54,315 $ 46,332 $.45
2nd Quarter 233,203 48,956 40,926 .40
3rd Quarter a 242,908 35,085 26,835 .26
4th Quarter b 264,736 56,269 47,315 .46
---------- ---------- ----------
$ 995,112 c $ 194,625 $ 161,408 1.56
========== ========== ==========
1994 d
1st Quarter $ 182,073 $ 23,451 $ 13,413 $.13
2nd Quarter 185,444 28,762 20,536 .20
3rd Quarter 188,479 32,072 23,261 .22
4th Quarter 209,282 36,333 26,756 .26
---------- ---------- ----------
$ 765,278c $ 120,618 $ 83,966 .81
========== ========== ==========
a. Includes a $12.3 million charge ($0.12 per unit) for stock
option costs resulting from the rise in FTX's common stock price
during the period.
b. Includes charges totaling $5.4 million ($0.05 per unit) for
stock option costs and an early retirement program.
c. No customers accounted for ten percent or more of total
revenues. Export sales totaled 41 percent in 1995, 38 percent in
1994 and 32 percent in 1993.
d. Includes charges of $2.9 million ($0.03 per unit), $0.9
million ($0.01 per unit), $3.4 million ($0.03 per unit) and $3.7
million ($0.04 per unit) for the quarterly periods of 1994,
respectively, primarily for certain remediation costs.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE PARTNERS OF FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED
PARTNERSHIP:
We have audited the accompanying balance sheets of Freeport-
McMoRan Resource Partners, Limited Partnership (the Partnership),
a Delaware Limited Partnership, as of December 31, 1995 and 1994,
and the related statements of operations, cash flow and changes
in partners' capital for each of the three years in the period
ended December 31, 1995. These financial statements are the
responsibility of the General Partner's management. Our
responsibility is to express an opinion on these financial
statements based on our audits. We did not audit the financial
statements of IMC-Agrico Company (the Joint Venture). The
Partnership's share of the Joint Venture constitutes 47 percent
of assets as of December 31, 1995 and 1994, and 80 percent, 85
percent and 37 percent of the Partnership's total revenues for
the years ended December 31, 1995, 1994 and 1993, respectively.
Those statements were audited by other auditors whose reports
have been furnished to us, and our opinion, insofar as it relates
to the amounts included for the Partnership's interest in the
Joint Venture, is based solely on the reports of the other
auditors.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits and the reports of other auditors
provide a reasonable basis for our opinion.
In our opinion, based on our audits and the reports of other
auditors, the financial statements referred to above present
fairly, in all material respects, the financial position of the
Partnership as of December 31, 1995 and 1994 and the results of
its operations and its cash flow for each of the three years in
the period ended December 31, 1995 in conformity with generally
accepted accounting principles.
As discussed in Note 1 to the financial statements,
effective January 1, 1993, the Partnership changed its method of
accounting for periodic scheduled maintenance costs, deferred
charges and costs of management information systems.
Arthur Andersen LLP
New Orleans, Louisiana,
January 23, 1996
FRP UNITS. Our units trade on the New York Stock Exchange (NYSE)
under the symbol "FRP." The FRP unit price is reported daily in
the financial press under "FMRP" in most listings of NYSE
securities. At yearend 1995, the number of holders of record of
the partnership's units was 14,050. Under federal law, ownership
of FRP units is limited to United States citizens. A United
States citizen is defined as a person who is eligible to own
interests in federal mineral leases, which generally includes (i)
U.S. citizens, (ii) domestic entities owned by U.S. citizens, and
(iii) domestic corporations owned by U.S. citizens and/or certain
foreign persons.
Unit price ranges on the NYSE composite tape during 1995 and
1994:
1995 1994
------------------ ------------------
High Low High Low
-------- -------- -------- --------
First Quarter $17.13 $14.25 $20.50 $17.88
Second Quarter 17.38 14.88 20.00 17.13
Third Quarter 20.00* 17.13 18.63 16.13
Fourth Quarter 20.38 18.38 17.38 13.38
OWNERSHIP AT DECEMBER 31, 1995.
Units Percent
----------- --------
Public Unitholders 50,143,845 48.46
Freeport-McMoRan Inc. 53,321,933 51.54
----------- --------
103,465,778 100.00
=========== ========
CASH DISTRIBUTIONS. Cash distributions declared and paid to
public unitholders during the past 12 months total $2.44 per
unit. If in any quarter through December 31, 1996, FRP's public
unitholders receive cash distributions of less than 60 cents per
unit, public unitholders are entitled to receive in subsequent
quarters any prior quarter's shortfall below 60 cents per
publicly held unit before any cash distributions may be made to
holders of general partnership interests. Cash distributions
declared and paid per publicly held unit for the quarterly
periods of 1995 and 1994 were:
1995
----------------------------------------
Amount Record Payment
Per Unit Date Date
-------- -------------- --------------
First Quarter $.615 Apr. 28, 1995 May 15, 1995
Second Quarter .60 Jul. 31, 1995 Aug. 15, 1995
Third Quarter .60 Oct. 31, 1995 Nov. 15, 1995
Fourth Quarter .625 Jan. 31, 1996 Feb. 15, 1996
1994
----------------------------------------
Amount Record Payment
Per Unit Date Date
-------- -------------- --------------
First Quarter $.60 Apr. 29, 1994 May 14, 1994
Second Quarter .60 Jul. 29, 1994 Aug. 15, 1994
Third Quarter .60 Oct. 31, 1994 Nov. 15, 1994
Fourth Quarter .60 Jan. 31, 1995 Feb. 15, 1995
Cash distributions in 1995 were a return of capital for
federal income tax purposes and will generally not be taxed,
although the partnership did generate taxable income that is
reportable by some, but not all, unitholders. In March
unitholders receive individualized tax information for the
previous year from the partnership. For additional information,
please contact the Investor Relations Department.
FRP has announced that beginning with the cash distribution
for the fourth quarter of 1993, it no longer intends to
supplement distributable cash with borrowings. FRP's ability to
continue to distribute cash to its public unitholders is
dependent on the cash distributions received from IMC-Agrico
Company, which will primarily be determined by its operating
results, and the future cash flow of FRP's sulphur and oil
operations. As a result, future FRP distributions will be
effected by the cyclical nature of its agricultural minerals
business.
Exhibit 21.1
List of Subsidiaries of
FREEPORT-McMoRan RESOURCE PARTNERS, LIMITED PARTNERSHIP
Name Under Which
Entity Organized It Does Business
----------------------------------- --------- ----------------
IMC-Agrico Company Delaware Same
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference of our reports included herein or
incorporated by reference in this Form 10-K, into Freeport-McMoRan
Resource Partners, Limited Partnership's previously filed Registration
Statement on Form S-3 (File No. 33-37441).
/s/ Arthur Andersen LLP
-----------------------
Arthur Andersen LLP
New Orleans, Louisiana,
March 27, 1996
Exhibit 23.2
CONSENT OF ERNST & YOUNG LLP
We consent to the use of our report dated January 15, 1996, with
respect to the financial statements of IMC-Agrico Company (not
presented separately herein), incorporated by reference in the
Registration Statement (Form S-3 No. 33-37441) and related
Prospectus of Freeport-McMoRan Resource Partners, Limited
Partnership and included in this Annual Report (Form 10-K) for
the year ended December 31, 1995.
/s/ERNST & YOUNG LLP
-----------------------
ERNST & YOUNG LLP
Chicago, Illinois
March 27, 1996
EXHIBIT 24.1
POWER OF ATTORNEY
-----------------
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of Directors
of Freeport-McMoRan Inc., a Delaware corporation and Administrative
Managing General Partner of Freeport-McMoRan Resource Partners,
Limited Partnership ("FRP"), does hereby make, constitute and
appoint JAMES R. MOFFETT, and CHARLES W. GOODYEAR, and each of them
acting individually, his true and lawful attorney-in-fact with
power to act without the others and with full power of
substitution, to execute, deliver and file, for and on behalf of
him, in his name and in his capacity or capacities as aforesaid, an
Annual Report of FRP on Form 10-K for the year ended December 31,
1995, and any amendment or amendments thereto and any other
document in support thereof or supplemental thereto, and the
undersigned hereby grants to said attorneys, and each of them, full
power and authority to do and perform each and every act and thing
whatsoever that said attorney or attorneys may deem necessary or
advisable to carry out fully the intent of the foregoing as the
undersigned might or could do personally or in the capacity or
capacities as aforesaid, hereby ratifying and confirming all acts
and things which said attorney or attorneys may do or cause to be
done by virtue of this Power of Attorney.
EXECUTED this 6th day of February, 1996.
/s/ Rene L. Latiolais
---------------------
Rene L. Latiolais
POWER OF ATTORNEY
-----------------
BE IT KNOWN: That the undersigned, in his capacity as an
officer of Freeport-McMoRan Resource Partners, Limited Partnership
("FRP"), does hereby make, constitute and appoint JAMES R. MOFFETT,
and RENE L. LATIOLAIS, and each of them acting individually, his
true and lawful attorney-in-fact with power to act without the
others and with full power of substitution, to execute, deliver and
file, for and on behalf of him, in his name and in his capacity or
capacities as aforesaid, an Annual Report of FRP on Form 10-K for
the year ended December 31, 1995, and any amendment or amendments
thereto and any other document in support thereof or supplemental
thereto, and the undersigned hereby grants to said attorneys, and
each of them, full power and authority to do and perform each and
every act and thing whatsoever that said attorney or attorneys may
deem necessary or advisable to carry out fully the intent of the
foregoing as the undersigned might or could do personally or in the
capacity or capacities as aforesaid, hereby ratifying and
confirming all acts and things which said attorney or attorneys may
do or cause to be done by virtue of this Power of Attorney.
EXECUTED this 6th day of February, 1996.
/s/ Charles W. Goodyear
-----------------------
Charles W. Goodyear
POWER OF ATTORNEY
-----------------
BE IT KNOWN: That the undersigned, in her capacity as an
officer of Freeport-McMoRan Resource Partners, Limited Partnership
("FRP"), does hereby make, constitute and appoint JAMES R. MOFFETT,
RENE L. LATIOLAIS and CHARLES W. GOODYEAR, and each of them acting
individually, her true and lawful attorney-in-fact with power to
act without the others and with full power of substitution, to
execute, deliver and file, for and on behalf of her, in her name
and in her capacity or capacities as aforesaid, an Annual Report of
FRP on Form 10-K for the year ended December 31, 1995, and any
amendment or amendments thereto and any other document in support
thereof or supplemental thereto, and the undersigned hereby grants
to said attorneys, and each of them, full power and authority to do
and perform each and every act and thing whatsoever that said
attorney or attorneys may deem necessary or advisable to carry out
fully the intent of the foregoing as the undersigned might or could
do personally or in the capacity or capacities as aforesaid, hereby
ratifying and confirming all acts and things which said attorney or
attorneys may do or cause to be done by virtue of this Power of
Attorney.
EXECUTED this 7th day of March, 1996.
/s/ Nancy D. Bonner
-------------------
Nancy D. Bonner
POWER OF ATTORNEY
-----------------
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of Directors
of Freeport-McMoRan Inc., a Delaware corporation and Administrative
Managing General Partner of Freeport-McMoRan Resource Partners,
Limited Partnership ("FRP"), does hereby make, constitute and
appoint JAMES R. MOFFETT, RENE L. LATIOLAIS and CHARLES W.
GOODYEAR, and each of them acting individually, his true and lawful
attorney-in-fact with power to act without the others and with full
power of substitution, to execute, deliver and file, for and on
behalf of him, in his name and in his capacity or capacities as
aforesaid, an Annual Report of FRP on Form 10-K for the year ended
December 31, 1995, and any amendment or amendments thereto and any
other document in support thereof or supplemental thereto, and the
undersigned hereby grants to said attorneys, and each of them, full
power and authority to do and perform each and every act and thing
whatsoever that said attorney or attorneys may deem necessary or
advisable to carry out fully the intent of the foregoing as the
undersigned might or could do personally or in the capacity or
capacities as aforesaid, hereby ratifying and confirming all acts
and things which said attorney or attorneys may do or cause to be
done by virtue of this Power of Attorney.
EXECUTED this 6th day of February, 1996.
/s/ Richard C. Adkerson
-----------------------
Richard C. Adkerson
POWER OF ATTORNEY
-----------------
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of Directors
of Freeport-McMoRan Inc., a Delaware corporation and Administrative
Managing General Partner of Freeport-McMoRan Resource Partners,
Limited Partnership ("FRP"), does hereby make, constitute and
appoint JAMES R. MOFFETT, RENE L. LATIOLAIS and CHARLES W.
GOODYEAR, and each of them acting individually, his true and lawful
attorney-in-fact with power to act without the others and with full
power of substitution, to execute, deliver and file, for and on
behalf of him, in his name and in his capacity or capacities as
aforesaid, an Annual Report of FRP on Form 10-K for the year ended
December 31, 1995, and any amendment or amendments thereto and any
other document in support thereof or supplemental thereto, and the
undersigned hereby grants to said attorneys, and each of them, full
power and authority to do and perform each and every act and thing
whatsoever that said attorney or attorneys may deem necessary or
advisable to carry out fully the intent of the foregoing as the
undersigned might or could do personally or in the capacity or
capacities as aforesaid, hereby ratifying and confirming all acts
and things which said attorney or attorneys may do or cause to be
done by virtue of this Power of Attorney.
EXECUTED this 6th day of February, 1996.
/s/ Robert W. Bruce III
-----------------------
Robert W. Bruce III
POWER OF ATTORNEY
-----------------
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of Directors
of Freeport-McMoRan Inc., a Delaware corporation and Administrative
Managing General Partner of Freeport-McMoRan Resource Partners,
Limited Partnership ("FRP"), does hereby make, constitute and
appoint JAMES R. MOFFETT, RENE L. LATIOLAIS and CHARLES W.
GOODYEAR, and each of them acting individually, his true and lawful
attorney-in-fact with power to act without the others and with full
power of substitution, to execute, deliver and file, for and on
behalf of him, in his name and in his capacity or capacities as
aforesaid, an Annual Report of FRP on Form 10-K for the year ended
December 31, 1995, and any amendment or amendments thereto and any
other document in support thereof or supplemental thereto, and the
undersigned hereby grants to said attorneys, and each of them, full
power and authority to do and perform each and every act and thing
whatsoever that said attorney or attorneys may deem necessary or
advisable to carry out fully the intent of the foregoing as the
undersigned might or could do personally or in the capacity or
capacities as aforesaid, hereby ratifying and confirming all acts
and things which said attorney or attorneys may do or cause to be
done by virtue of this Power of Attorney.
EXECUTED this 6th day of February, 1996.
/s/ Thomas B. Coleman
---------------------
Thomas B. Coleman
POWER OF ATTORNEY
-----------------
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of Directors
of Freeport-McMoRan Inc., a Delaware corporation and Administrative
Managing General Partner of Freeport-McMoRan Resource Partners,
Limited Partnership ("FRP"), does hereby make, constitute and
appoint JAMES R. MOFFETT, RENE L. LATIOLAIS and CHARLES W.
GOODYEAR, and each of them acting individually, his true and lawful
attorney-in-fact with power to act without the others and with full
power of substitution, to execute, deliver and file, for and on
behalf of him, in his name and in his capacity or capacities as
aforesaid, an Annual Report of FRP on Form 10-K for the year ended
December 31, 1995, and any amendment or amendments thereto and any
other document in support thereof or supplemental thereto, and the
undersigned hereby grants to said attorneys, and each of them, full
power and authority to do and perform each and every act and thing
whatsoever that said attorney or attorneys may deem necessary or
advisable to carry out fully the intent of the foregoing as the
undersigned might or could do personally or in the capacity or
capacities as aforesaid, hereby ratifying and confirming all acts
and things which said attorney or attorneys may do or cause to be
done by virtue of this Power of Attorney.
EXECUTED this 6th day of February, 1996.
/s/ Robert A. Day
-----------------
Robert A. Day
POWER OF ATTORNEY
-----------------
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of Directors
of Freeport-McMoRan Inc., a Delaware corporation and Administrative
Managing General Partner of Freeport-McMoRan Resource Partners,
Limited Partnership ("FRP"), does hereby make, constitute and
appoint JAMES R. MOFFETT, RENE L. LATIOLAIS and CHARLES W.
GOODYEAR, and each of them acting individually, his true and lawful
attorney-in-fact with power to act without the others and with full
power of substitution, to execute, deliver and file, for and on
behalf of him, in his name and in his capacity or capacities as
aforesaid, an Annual Report of FRP on Form 10-K for the year ended
December 31, 1995, and any amendment or amendments thereto and any
other document in support thereof or supplemental thereto, and the
undersigned hereby grants to said attorneys, and each of them, full
power and authority to do and perform each and every act and thing
whatsoever that said attorney or attorneys may deem necessary or
advisable to carry out fully the intent of the foregoing as the
undersigned might or could do personally or in the capacity or
capacities as aforesaid, hereby ratifying and confirming all acts
and things which said attorney or attorneys may do or cause to be
done by virtue of this Power of Attorney.
EXECUTED this 6th day of February, 1996.
/s/ William B. Harrison, Jr.
----------------------------
William B. Harrison, Jr.
POWER OF ATTORNEY
-----------------
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of Directors
of Freeport-McMoRan Inc., a Delaware corporation and Administrative
Managing General Partner of Freeport-McMoRan Resource Partners,
Limited Partnership ("FRP"), does hereby make, constitute and
appoint JAMES R. MOFFETT, RENE L. LATIOLAIS and CHARLES W.
GOODYEAR, and each of them acting individually, his true and lawful
attorney-in-fact with power to act without the others and with full
power of substitution, to execute, deliver and file, for and on
behalf of him, in his name and in his capacity or capacities as
aforesaid, an Annual Report of FRP on Form 10-K for the year ended
December 31, 1995, and any amendment or amendments thereto and any
other document in support thereof or supplemental thereto, and the
undersigned hereby grants to said attorneys, and each of them, full
power and authority to do and perform each and every act and thing
whatsoever that said attorney or attorneys may deem necessary or
advisable to carry out fully the intent of the foregoing as the
undersigned might or could do personally or in the capacity or
capacities as aforesaid, hereby ratifying and confirming all acts
and things which said attorney or attorneys may do or cause to be
done by virtue of this Power of Attorney.
EXECUTED this 6th day of February, 1996.
/s/ Henry A. Kissinger
----------------------
Henry A. Kissinger
POWER OF ATTORNEY
-----------------
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of Directors
of Freeport-McMoRan Inc., a Delaware corporation and Administrative
Managing General Partner of Freeport-McMoRan Resource Partners,
Limited Partnership ("FRP"), does hereby make, constitute and
appoint JAMES R. MOFFETT, RENE L. LATIOLAIS and CHARLES W.
GOODYEAR, and each of them acting individually, his true and lawful
attorney-in-fact with power to act without the others and with full
power of substitution, to execute, deliver and file, for and on
behalf of him, in his name and in his capacity or capacities as
aforesaid, an Annual Report of FRP on Form 10-K for the year ended
December 31, 1995, and any amendment or amendments thereto and any
other document in support thereof or supplemental thereto, and the
undersigned hereby grants to said attorneys, and each of them, full
power and authority to do and perform each and every act and thing
whatsoever that said attorney or attorneys may deem necessary or
advisable to carry out fully the intent of the foregoing as the
undersigned might or could do personally or in the capacity or
capacities as aforesaid, hereby ratifying and confirming all acts
and things which said attorney or attorneys may do or cause to be
done by virtue of this Power of Attorney.
EXECUTED this 6th day of February, 1996.
/s/ Bobby Lee Lackey
--------------------
Bobby Lee Lackey
POWER OF ATTORNEY
-----------------
BE IT KNOWN: That the undersigned, in her capacity or
capacities as an officer and/or a member of the Board of Directors
of Freeport-McMoRan Inc., a Delaware corporation and Administrative
Managing General Partner of Freeport-McMoRan Resource Partners,
Limited Partnership ("FRP"), does hereby make, constitute and
appoint JAMES R. MOFFETT, RENE L. LATIOLAIS and CHARLES W.
GOODYEAR, and each of them acting individually, her true and lawful
attorney-in-fact with power to act without the others and with full
power of substitution, to execute, deliver and file, for and on
behalf of her, in her name and in her capacity or capacities as
aforesaid, an Annual Report of FRP on Form 10-K for the year ended
December 31, 1995, and any amendment or amendments thereto and any
other document in support thereof or supplemental thereto, and the
undersigned hereby grants to said attorneys, and each of them, full
power and authority to do and perform each and every act and thing
whatsoever that said attorney or attorneys may deem necessary or
advisable to carry out fully the intent of the foregoing as the
undersigned might or could do personally or in the capacity or
capacities as aforesaid, hereby ratifying and confirming all acts
and things which said attorney or attorneys may do or cause to be
done by virtue of this Power of Attorney.
EXECUTED this 6th day of February, 1996.
/s/ Gabrielle K. McDonald
-------------------------
Gabrielle K. McDonald
POWER OF ATTORNEY
-----------------
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of Directors
of Freeport-McMoRan Inc., a Delaware corporation and Administrative
Managing General Partner of Freeport-McMoRan Resource Partners,
Limited Partnership ("FRP"), does hereby make, constitute and
appoint JAMES R. MOFFETT, RENE L. LATIOLAIS and CHARLES W.
GOODYEAR, and each of them acting individually, his true and lawful
attorney-in-fact with power to act without the others and with full
power of substitution, to execute, deliver and file, for and on
behalf of him, in his name and in his capacity or capacities as
aforesaid, an Annual Report of FRP on Form 10-K for the year ended
December 31, 1995, and any amendment or amendments thereto and any
other document in support thereof or supplemental thereto, and the
undersigned hereby grants to said attorneys, and each of them, full
power and authority to do and perform each and every act and thing
whatsoever that said attorney or attorneys may deem necessary or
advisable to carry out fully the intent of the foregoing as the
undersigned might or could do personally or in the capacity or
capacities as aforesaid, hereby ratifying and confirming all acts
and things which said attorney or attorneys may do or cause to be
done by virtue of this Power of Attorney.
EXECUTED this 6th day of February, 1996.
/s/ George Putnam
-----------------
George Putnam
POWER OF ATTORNEY
-----------------
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of Directors
of Freeport-McMoRan Inc., a Delaware corporation and Administrative
Managing General Partner of Freeport-McMoRan Resource Partners,
Limited Partnership ("FRP"), does hereby make, constitute and
appoint JAMES R. MOFFETT, RENE L. LATIOLAIS and CHARLES W.
GOODYEAR, and each of them acting individually, his true and lawful
attorney-in-fact with power to act without the others and with full
power of substitution, to execute, deliver and file, for and on
behalf of him, in his name and in his capacity or capacities as
aforesaid, an Annual Report of FRP on Form 10-K for the year ended
December 31, 1995, and any amendment or amendments thereto and any
other document in support thereof or supplemental thereto, and the
undersigned hereby grants to said attorneys, and each of them, full
power and authority to do and perform each and every act and thing
whatsoever that said attorney or attorneys may deem necessary or
advisable to carry out fully the intent of the foregoing as the
undersigned might or could do personally or in the capacity or
capacities as aforesaid, hereby ratifying and confirming all acts
and things which said attorney or attorneys may do or cause to be
done by virtue of this Power of Attorney.
EXECUTED this 6th day of February, 1996.
/s/ B. M. Rankin, Jr.
---------------------
B. M. Rankin, Jr.
POWER OF ATTORNEY
-----------------
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of Directors
of Freeport-McMoRan Inc., a Delaware corporation and Administrative
Managing General Partner of Freeport-McMoRan Resource Partners,
Limited Partnership ("FRP"), does hereby make, constitute and
appoint JAMES R. MOFFETT, RENE L. LATIOLAIS and CHARLES W.
GOODYEAR, and each of them acting individually, his true and lawful
attorney-in-fact with power to act without the others and with full
power of substitution, to execute, deliver and file, for and on
behalf of him, in his name and in his capacity or capacities as
aforesaid, an Annual Report of FRP on Form 10-K for the year ended
December 31, 1995, and any amendment or amendments thereto and any
other document in support thereof or supplemental thereto, and the
undersigned hereby grants to said attorneys, and each of them, full
power and authority to do and perform each and every act and thing
whatsoever that said attorney or attorneys may deem necessary or
advisable to carry out fully the intent of the foregoing as the
undersigned might or could do personally or in the capacity or
capacities as aforesaid, hereby ratifying and confirming all acts
and things which said attorney or attorneys may do or cause to be
done by virtue of this Power of Attorney.
EXECUTED this 6th day of February, 1996.
/s/ J. Taylor Wharton
---------------------
J. Taylor Wharton
POWER OF ATTORNEY
-----------------
BE IT KNOWN: That the undersigned, in his capacity or
capacities as an officer and/or a member of the Board of Directors
of Freeport-McMoRan Inc., a Delaware corporation and Administrative
Managing General Partner of Freeport-McMoRan Resource Partners,
Limited Partnership ("FRP"), does hereby make, constitute and
appoint JAMES R. MOFFETT, RENE L. LATIOLAIS and CHARLES W.
GOODYEAR, and each of them acting individually, his true and lawful
attorney-in-fact with power to act without the others and with full
power of substitution, to execute, deliver and file, for and on
behalf of him, in his name and in his capacity or capacities as
aforesaid, an Annual Report of FRP on Form 10-K for the year ended
December 31, 1995, and any amendment or amendments thereto and any
other document in support thereof or supplemental thereto, and the
undersigned hereby grants to said attorneys, and each of them, full
power and authority to do and perform each and every act and thing
whatsoever that said attorney or attorneys may deem necessary or
advisable to carry out fully the intent of the foregoing as the
undersigned might or could do personally or in the capacity or
capacities as aforesaid, hereby ratifying and confirming all acts
and things which said attorney or attorneys may do or cause to be
done by virtue of this Power of Attorney.
EXECUTED this 12th day of February, 1996.
/s/ Ward W. Woods, Jr.
----------------------
Ward W. Woods, Jr.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from Freeport-McMoRan Resource Partners, Limited Partnership
financial statements at December 31, 1995 and for the 12 months
then ended, and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<CIK> 0000793421
<NAME> FREEPORT-MCMORAN RESOURCE PARTNERS, LIMITED PARTNERSHIP
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 22,508
<SECURITIES> 0
<RECEIVABLES> 57,047
<ALLOWANCES> 0
<INVENTORY> 119,010
<CURRENT-ASSETS> 226,311
<PP&E> 1,829,271
<DEPRECIATION> 880,140
<TOTAL-ASSETS> 1,229,105
<CURRENT-LIABILITIES> 127,020
<BONDS> 384,241
<COMMON> 404,466
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,229,105
<SALES> 995,112
<TOTAL-REVENUES> 995,112
<CGS> 732,371
<TOTAL-COSTS> 732,371
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 31,518
<INCOME-PRETAX> 161,408
<INCOME-TAX> 0
<INCOME-CONTINUING> 161,408
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 161,408
<EPS-PRIMARY> 1.56
<EPS-DILUTED> 0
</TABLE>
Exhibit 99.1
Report of Ernst & Young LLP
We have audited the balance sheets of IMC-Agrico Company (a
Partnership) as of December 31, 1995 and 1994, and June 30, 1995
and the related statements of earnings, changes in partners'
capital and cash flows for the six-month periods ended December
31, 1995 and 1994, and the year ended June 30, 1995 (not
presented separately herein). These financial statements are the
responsibility of IMC-Agrico Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of IMC-Agrico Company as of December 31, 1995 and 1994, and June
30, 1995, and the results of its operations and its cash flows
for the six-month periods ended December 31, 1995 and 1994 and
the year ended June 30, 1995 in accordance with generally
accepted accounting principles.
/s/ERNST & YOUNG LLP
--------------------
ERNST & YOUNG LLP
Chicago, Illinois
January 15, 1996
