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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
---
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
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 1-9759
IMC GLOBAL INC.
(Exact name of registrant as specified in its charter)
Delaware 36-3492467
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2100 Sanders Road
Northbrook, Illinois 60062
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (847) 272-9200
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 .
------ ------
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock as of the
latest practicable date: 92,004,975 shares, excluding 5,552,840
treasury shares as of April 30, 1996.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
The accompanying interim condensed consolidated financial
statements of IMC Global Inc. (IMC or the Company) do not include all
disclosures normally provided in annual financial statements and should
be read in conjunction with the supplemental consolidated financial
statements contained in the Company's Current Report on Form 8-K/A
dated April 19, 1996 as of June 30, 1995 and 1994 and for each of the
years in the three-year period ended June 30, 1995. These supplemental
consolidated financial statements become the Company's historical
financial statements upon the filing of this Report on Form 10-Q. On
March 1, 1996, the Company completed the merger (the Merger) with The
Vigoro Corporation (Vigoro) which resulted in Vigoro becoming a
subsidiary of the Company. The following financial statements,
accompanying notes and management's discussion and analysis of
financial condition and results of operations give retroactive effect
to the Merger. These financial statements are unaudited but include all
adjustments which the Company's management considers necessary for a
fair presentation. These adjustments consist of normal recurring
accruals except as discussed in the following Notes to Condensed
Consolidated Financial Statements. Interim results are not necessarily
indicative of the results expected for the fiscal year.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In millions except per share amounts)
Three Months Ended Nine Months Ended
March 31, March 31,
1996 1995 1996 1995
- -----------------------------------------------------------------------
Net sales $ 717.0 $ 729.9 $2,025.9 $1,834.6
Cost of goods sold 533.0 521.8 1,493.7 1,360.7
-------- -------- -------- -------
Gross margins 184.0 208.1 532.2 473.9
Selling, general and
administrative expenses 60.1 49.4 160.4 139.6
Merger and restructuring charges 43.3 43.3
Other operating (income)
and expense, net 3.4 (.5) (2.2) (7.0)
-------- -------- -------- -------
Operating earnings 77.2 159.2 330.7 341.3
Interest earned and other
non-operating (income)
and expense, net (.3) (.3) (5.4)
(4.4)
Interest charges 16.0 18.0 50.0 52.4
-------- -------- -------- -------
Earnings before minority
interest and items noted below 61.5 141.5 286.1 293.3
Minority interest 58.9 45.2 148.6 101.7
-------- -------- -------- -------
Earnings before items noted below 2.6 96.3 137.5 191.6
Provision for income taxes 10.9 36.7 59.6 71.5
-------- -------- -------- -------
Earnings (loss) before cumulative
effect of accounting change and
extraordinary item (8.3) 59.6 77.9 120.1
Cumulative effect of accounting
change
(5.9)
Extraordinary loss-debt
retirement (.7)
(3.7)
-------- -------- -------- -------
Net earnings (loss) $ (8.3) $ 58.9 $ 77.9 $ 110.5
======== ======== ======== =======
Earnings (loss) per share:
Earnings (loss) before
cumulative effect of
accounting change and
extraordinary item $ (.09) $ .66 $ .84 $ 1.32
Cumulative effect of
accounting change
(.06)
Extraordinary loss-
debt retirement (.01)
(.04)
-------- -------- -------- -------
Net earnings (loss)
per share $ (.09) $ .65 $ .84 $ 1.22
======== ======== ======== =======
Weighted average number
of shares and equivalent
shares outstanding 93.3 91.3 92.7 90.9
(See Notes to Condensed Consolidated Financial Statements on Page 6)
CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in millions except per share amounts)
March 31, June 30,
Assets 1996 1995
- -----------------------------------------------------------------
Current assets:
Cash and cash equivalents $ 49.2 $ 203.7
Receivables, net 260.7 236.5
Inventories:
Products (principally finished) 508.7 274.7
Operating materials and supplies 100.5 118.2
-------- --------
609.2 392.9
Deferred income taxes 90.9 79.5
Other current assets 13.9 13.6
-------- --------
Total current assets 1,023.9 926.2
Property, plant and equipment 4,101.5 3,971.3
Accumulated depreciation and depletion (1,756.9) (1,714.1)
-------- --------
Net property, plant and equipment 2,344.6 2,257.2
Other assets 157.7 139.8
-------- --------
Total assets $3,526.2 $3,323.2
======== ========
Liabilities and Stockholders' Equity
- -----------------------------------------------------------------
Current liabilities:
Accounts payable $ 272.8 $ 197.2
Accrued liabilities 268.2 193.4
Short-term debt and current maturities
of long-term debt 67.5 74.1
-------- --------
Total current liabilities 608.5 464.7
Long-term debt, less current maturities 696.1 750.2
Deferred income taxes 315.4 306.2
Other noncurrent liabilities 282.2 284.1
Minority interest 539.8 510.2
Stockholders' equity:
Common stock, $1 par value authorized
250,000,000 shares; issued 97,531,021
shares and 96,408,200 shares at March 31
and June 30, respectively 97.5 96.4
Capital in excess of par value 810.1 782.6
Retained earnings 300.1 246.1
Treasury stock, at cost, 5,552,840
shares at March 31 and June 30 (107.4) (107.4)
Foreign currency translation adjustment (16.1) (9.9)
-------- --------
Total stockholders' equity 1,084.2 1,007.8
-------- --------
Total liabilities and stockholders' equity $3,526.2 $3,323.2
======== ========
(See Notes to Condensed Consolidated Financial Statements on Page 6)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In millions)
Nine months ended
March 31,
1996 1995
- -----------------------------------------------------------------
Cash Flows from Operating Activities
- ------------------------------------
Net earnings $ 77.9 $ 110.5
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Minority interest 136.9 102.2
Depreciation, depletion and amortization 124.5 122.7
Merger and restructuring charges 38.3
Deferred income taxes (28.5) 7.3
Postemployment employee benefits 9.6
Other non-cash charges and credits, net (12.4) (8.3)
Changes in:
Receivables (2.7) 56.2
Inventories (183.3) (114.3)
Prepaid expenses (.2) (11.8)
Accounts payable 59.7 87.0
Accrued liabilities 59.8 (2.8)
------- -------
Net cash provided by operating activities 270.0 358.3
------- -------
Cash Flows from Investing Activities
- ------------------------------------
Acquisitions of businesses, net of
cash acquired (74.6) (142.4)
Capital expenditures (129.3) (75.6)
Sale of investment 11.6
Sales of property, plant and equipment 3.1 14.3
Other (1.2) (1.8)
------- -------
Net cash used in investing activities (190.4) (205.5)
------- -------
Net cash provided before financing
activities 79.6 152.8
------- -------
Cash Flows from Financing Activities
- ------------------------------------
Joint venture cash distributions to FRP (168.8) (181.3)
Payments of long-term debt (92.4) (139.1)
Proceeds from issuance of long-term
debt, net 30.3 131.5
Changes in short-term debt, net 1.3 29.0
Stock options exercised 13.6 1.3
Cash dividends paid (28.1) (17.5)
Other 10.0
------- -------
Net cash used in financing activities (234.1) (176.1)
------- -------
Net decrease in cash and cash equivalents (154.5) (23.3)
Cash and cash equivalents - beginning
of period 203.7 175.6
------- -------
Cash and cash equivalents - end of period $ 49.2 $ 152.3
======= =======
Supplemental cash flow disclosures:
Interest paid $ 44.6 $ 43.3
Income taxes paid $ 79.9 $ 81.8
(See Notes to Condensed Consolidated Financial Statements on Page 6)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(In millions except per share amounts)
Nine months ended
March 31,
1996 1995
- -------------------------------------------------------------------
Common stock:
Balance at June 30 $ 48.2 $ 48.0
2-for-1 stock split 48.4 48.2
Issuance of common stock pursuant
to acquisitions .4
Stock options exercised .5 .1
-------- --------
Balance at March 31 97.5 96.3
Capital in excess of par value:
Balance at June 30 830.8 825.4
2-for-1 stock split (48.4) (48.2)
Issuance of common stock pursuant to
acquisitions 14.5
Stock options exercised and other 13.2 3.7
Restricted stock awards .3
-------- --------
Balance at March 31 810.1 781.2
Retained earnings:
Balance at June 30 246.1 90.2
Net earnings 77.9 110.5
Dividends ($.25 per share and $.19 per share
in 1996 and 1995, respectively) (23.9) (17.9)
-------- --------
Balance at March 31 300.1 182.8
Treasury stock:
Balance at June 30 (107.4) (107.1)
Acquisition of shares (.3)
-------- --------
Balance at March 31 (107.4) (107.4)
Foreign currency translation adjustment:
Balance at June 30 (9.9)
Foreign currency translation adjustment (6.2) (14.0)
-------- --------
Balance at March 31 (16.1) (14.0)
-------- --------
Total stockholders' equity $1,084.2 $ 938.9
======== ========
(See Notes to Condensed Consolidated Financial Statements on Page 6)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Vigoro Merger
-------------
On March 1, 1996, the Company completed a merger with Vigoro which
resulted in Vigoro becoming a subsidiary of the Company. Upon
consummation of the Merger, the Company issued approximately 32.4
million shares of its common stock in exchange for all of the
outstanding shares of Vigoro. The Merger was structured to qualify as
a tax-free reorganization for income tax purposes and was accounted for
as a pooling of interests. Accordingly, the Company's financial
statements have been restated for all periods prior to the Merger to
include the accounts and operations of Vigoro.
2. Merger and Restructuring Charges
-------------------------------
In connection with the Merger, the Company recorded charges
totaling $20.2 million, primarily for consulting, legal and accounting
services. Immediately following the Merger, the Company adopted a plan
to restructure its business operations into a decentralized
organizational structure with five stand-alone business units. As a
result, the Company recorded restructuring charges totaling $23.1
million. The charges consisted of (a) $10.6 million for severance and
related benefits from staff reductions resulting from the termination
of approximately 120 employees, primarily middle management personnel,
by June 30, 1996 (at March 31, 1996, five employees had been terminated
and $.4 million had been charged against this accrual); (b) $6.5
million for lease terminations resulting from office consolidations,
and (c) $6.0 million for other related actions.
In connection with the restructuring plan, the Company undertook a
detailed review of its accounting records and valuation of various
assets and liabilities. As a result, the Company recorded charges
totaling $58.3 million ($55.3 million net of minority interest)
comprised of (a) $26.3 million ($23.3 million net of minority interest)
to cost of goods sold of which $17.5 million was primarily related to
the write-off of certain idle plant facilities and other obsolete
assets, $5.0 million for environmental matters and $3.8 million for
other matters; (b) $2.4 million of general and administrative expenses
for the write-off of miscellaneous assets; (c) $16.6 million to other
operating income and expense to reduce certain long-term assets to net
realizable value and other provisions, and (d) $13.0 million to
minority interest for the transfer of 0.85 percent of IMC-Agrico
Company (IMC-Agrico) Distributable Cash (as defined) interest from the
Company to Freeport-McMoRan Resource Partners, Limited Partnership
(FRP) pursuant to certain amendments to the IMC-Agrico Partnership
Agreement.
3. Acquisitions
------------
In January 1995, the Company acquired substantially all of the
assets of the Central Canada Potash division of Noranda, Inc. (CCP) for
$121.1 million, plus $16.2 million for working capital. The Company
used proceeds borrowed under a credit facility to finance the purchase
price, while using cash on hand to acquire the working capital. The
CCP potash mine, located in Colonsay, Saskatchewan, utilizes shaft
mining technology and has a current annual capacity of 1.5 million tons
and estimated recoverable reserves of 120 years at current production
levels.
In October 1995, the Company acquired the animal feed ingredients
business (Feed Ingredients) of Mallinckrodt Group Inc. and subsequently
contributed the business to IMC-Agrico. The Company's portion of the
purchase price was $67.5 million and was paid out of operating cash.
The CCP and Feed Ingredients acquisitions were accounted for under
the purchase method of accounting. Operating results of CCP and Feed
Ingredients (net of minority interest) have been included in the
Company's Condensed Consolidated Statement of Operations since the
respective dates of acquisition.
4. Sales of Investment Interests
-----------------------------
Other operating income and expense for the three and nine months
ended March 31, 1996 included gains of $12.4 million from the sale of
investments, $11.6 million of which was from the sale of the Company's
50 percent investment in Chinhae Chemical Company.
5. Accounting for Postemployment Benefits
--------------------------------------
Effective July 1, 1994, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 112, "Employers' Accounting for
Postemployment Benefits." Accordingly, results for the nine months
ended March 31, 1995 reflected a charge of $5.9 million, net of taxes,
for the cumulative effect of the adoption.
6. Extraordinary Loss-Debt Retirement
-----------------------------------
In connection with the purchase of portions of the Company's Senior
Notes during the three and nine months ended March 31, 1995, the
Company recorded extraordinary charges, net of taxes, of $.7 million
and $3.7 million, respectively, for redemption premium incurred and
write-off of previously deferred finance charges associated with such
Senior Notes.
7. Stock Split and Authorized Shares
---------------------------------
In October 1995, the Company's Board of Directors declared a 2-for-1
stock split effected in the form of a 100 percent stock dividend which
was distributed on November 30, 1995. After the stock split, the
common stock par value remained unchanged. Accordingly, all issued
share and per share data appearing in these Condensed Consolidated
Financial Statements were restated to give retroactive effect to the
stock split, including the transfer of par value for additional shares
issued from capital in excess of par value to common stock.
On March 1, 1996, the Company's stockholders approved an amendment
to the Restated Certificate of Incorporation increasing the number of
authorized shares of common stock to 250,000,000 shares.
8. Earnings Per Share
------------------
Earnings per share were based on the weighted average number of
shares and equivalent shares outstanding. Fully diluted earnings per
share were not significantly different from primary earnings per share
and, accordingly, are not presented.
Item 2.Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Results of Operations
- ---------------------
Three months ended March 31, 1996 vs. three months ended March 31, 1995
- -----------------------------------------------------------------------
Net earnings for the three months ended March 31, 1996, before
special one-time charges, totaled $61.3 million, or $.66 per share,
compared to $58.9 million, or $.65 per share for the third quarter of
1995. Special one-time charges of $69.6 million, or $.75 per share,
reduced third quarter 1996 results to a net loss of $8.3 million, or
$.09 per share. The charges, totaling $98.6 million before tax
benefits, covered costs related to the Merger, as well as costs
associated with, among other things, a corporate restructuring, other
asset valuations and environmental issues. See Note 2 of Notes to
Condensed Consolidated Financial Statements for further discussion of
these items. For the three months ended March 31, 1995, operating
results included an extraordinary charge of $.7 million, or $.01 per
share, related to the early extinguishment of debt.
Net sales for the three months ended March 31, 1996 were $717.0
million, a decrease of 2 percent over the third quarter of 1995 when
net sales were $729.9 million. Third quarter sales were adversely
impacted by lower North American sales volumes, largely due to the
weather-delayed domestic spring planting season and inventory
carryovers. Also negatively affecting the quarter's sales were lower
potash export volumes, mainly attributable to reduced sales to China.
Gross margins for the three months ended March 31, 1996 totaled
$184.0 million, down from $208.1 million for the third quarter of 1995.
As discussed in Note 2 of Notes to Condensed Consolidated Financial
Statements, the Company recorded special charges of $26.3 million to
cost of goods sold in connection with the restructuring of the Company.
Before special charges, gross margins were $2.2 million higher, an
increase of 1 percent when compared to the third quarter of 1995.
Higher margins for phosphates, a $12 million increase, Consumer &
Professional Products, a $3 million increase, and the addition of Feed
Ingredients margins of $10 million, were almost completely offset by
lower potash margins of $21 million.
Phosphate margins increased primarily as a result of higher prices
($65 million) as average diammonium phosphate (DAP) prices increased 21
percent over year-earlier levels. Other phosphate products showed
similar price improvements. Partially offsetting the increase in
prices were higher production costs ($44 million), primarily due to
higher raw material costs. Sales volume decreased ($9 million) as
domestic and export shipments decreased 11 percent over 1995's third
quarter primarily due to the weather-delayed spring planting season and
inventory carryovers. These adverse conditions necessitated a
reduction in concentrated phosphate production to balance output with
market requirements. Accordingly, IMC-Agrico temporarily suspended
operations at its Taft, Louisiana facility in March 1996, reduced
production at its New Wales, Florida plant in April 1996 and
temporarily suspended operations at its Nichols, Florida plant in May
1996.
Potash margins decreased from 1995 third quarter levels as a result
of lower sales volume ($13 million), mainly attributable to reduced
sales to China and increased production costs ($11 million). In an
effort to balance potash production with market requirements, the
Company announced that it will temporarily reduce output at four of its
potash mining facilities beginning in June 1996. Partially offsetting
the unfavorable sales volumes and production cost increases was a 4
percent increase in sales realizations ($3 million).
Agribusiness & nitrogen (which include crop nutrients and related
products sold through the Company's FARMARKET and Rainbow distribution
networks) margins remained relatively unchanged from the 1995 third
quarter. Lower sales volume due to the weather-delayed domestic spring
planting season was totally offset by higher pricing due to a change in
the mix of products sold.
The following table summarizes the Company's sales (excluding
captive shipments) of crop nutrient products and average selling prices
for the three months ended March 31, 1996 and 1995:
(Tons in millions of short tons)
1996 1995
--------- ---------
Concentrated phosphates
Total dry product sales tons
(primarily DAP) 1.7 1.9
Average DAP price per ton * $206.39 $170.13
Phosphate rock
Sales tons 1.8 3.0
Average price per ton (FOB mine) $ 25.00 $ 20.21
Potash
Sales tons 1.7 2.1
Average price per ton * $ 64.14 $ 61.45
* Average prices represent sales made FOB mine and regional
warehouses.
In connection with the Merger, as described in Note 2 of Notes to
Condensed Consolidated Financial Statements, the Company recorded
charges totaling $20.2 million, primarily for consulting, legal and
accounting services. In addition, in March 1996, the Company adopted a
plan to restructure its business operations into a decentralized
organizational structure with five stand-alone business units. As a
result, the Company recorded restructuring charges totaling $23.1
million. The charges consisted of $10.6 million for severance and
related benefits from staff reductions, $6.5 million for lease
terminations resulting from office consolidations and $6.0 million for
other related actions.
Selling, general and administrative expenses increased $10.7
million over third quarter 1995 primarily due to the acquisition of
several businesses, including Feed Ingredients, and restructuring
charges as discussed in Note 2 of Notes to Condensed Consolidated
Financial Statements.
Other operating income and expense, net, for the three months ended
March 31, 1996 included $16.6 million of restructuring charges, as
described in Note 2 of Notes to Condensed Consolidated Financial
Statements offset by $12.4 million of gains from the sale of
investments.
Interest charges for the three months ended March 31, 1996 were
$2.0 million lower than 1995's third quarter as the Company reduced a
portion of its high-cost long-term indebtedness during the prior fiscal
year. Partially offsetting this decrease were higher interest charges
resulting from long-term debt increases used to fund the acquisition of
CCP and other acquisitions of the Company during the third quarter of
1995.
Nine months ended March 31, 1996 vs. nine months ended March 31, 1995
- ---------------------------------------------------------------------
Net earnings for the nine months ended March 31, 1996, before
special one-time charges, totaled $147.5 million, or $1.59 per share,
compared to the same period in 1995 when the Company reported net
earnings of $110.5 million, or $1.22 per share. Special one-time
charges of $69.6 million, or $.75 per share, reduced earnings for the
nine months ended March 31, 1996 to $77.9 million, or $.84 per share.
The charges, totaling $98.6 million before tax benefits, covered costs
related to the Merger, as well as costs associated with, among other
things, a corporate restructuring, other asset valuations and
environmental issues. See Note 2 of Notes to Condensed Consolidated
Financial Statements for further discussion of these items. For the
nine months ended March 31, 1995, operating results included a one-time
charge of $5.9 million, or $.06 per share, for the cumulative effect on
prior years of a change in accounting for postemployment benefits
resulting from the adoption of SFAS No. 112 on July 1, 1994 and an
extraordinary charge of $3.7 million, or $.04 per share, related to the
early extinguishment of debt.
Net sales for the nine months ended March 31, 1996 were $2,025.9
million, a 10 percent increase over the same period of 1995 when net
sales were $1,834.6 million. The acquisition of CCP in January 1995
and Feed Ingredients in November 1995, as well as a significant
improvement in concentrated phosphate prices contributed to this
increase.
Gross margins for the nine months ended March 31, 1996 totaled
$532.2 million versus $473.9 million for the same period a year ago.
As discussed in Note 2 of Notes to Condensed Consolidated Financial
Statements, the Company recorded special charges of $26.3 million to
cost of goods sold in connection with the Merger and restructuring of
the Company. Before special charges, gross margins increased $84.6
million, or 18 percent, when compared to the nine months ended March
31, 1995. Higher margins for phosphates, a $75 million increase, the
addition of Feed Ingredients margins of $18 million and agribusiness &
nitrogen margins, a $15 million increase, were partially offset by
lower potash margins of $24 million.
Phosphate margins were significantly higher primarily due to higher
prices ($179 million) as average DAP prices increased 18 percent over
the same period a year ago. Other phosphate products showed similar
price improvements. Partially offsetting the price and sales volume
increases were higher production costs ($106 million) primarily due to
higher raw material costs.
Agribusiness & nitrogen margins increased primarily due to higher
fall sales volume and prices ($26 million) due to favorable fall
weather conditions and the anticipation of increased acres being
planted in the spring of 1996. Partially offsetting the sales volume
and price increases were higher production costs ($11 million)
primarily due to higher raw material costs.
Potash margins decreased from 1995 levels primarily as a result of
higher production costs ($24 million) due to lower production rates and
the settlement of a provincial tax matter from prior years. Reduced
sales to China during the third quarter of 1996 offset previous sales
volume increases.
The following table summarizes the Company's sales (excluding
captive shipments) of crop nutrient products and average selling prices
for the nine months ended March 31, 1996 and 1995:
(Tons in millions of short tons)
1996 1995
-------- --------
Concentrated phosphates
Total dry product sales tons
(primarily DAP) 5.7 5.5
Average DAP price per ton * $189.06 $160.19
Phosphate rock
Sales tons 6.1 8.3
Average price per ton (FOB mine) $ 23.23 $ 20.07
Potash
Sales tons 4.8 5.0
Average price per ton * $ 63.81 $ 64.30
* Average prices represent sales made FOB mine and regional
warehouses.
In connection with the Merger, as described in Note 2 of Notes to
Condensed Consolidated Financial Statements, the Company recorded
charges totaling $20.2 million, primarily for consulting, legal and
accounting services. In addition, in March 1996, the Company adopted a
plan to restructure its business operations into a decentralized
organizational structure with five stand-alone business units. As a
result, the Company recorded restructuring charges totaling $23.1
million. The charges consisted of $10.6 million for severance and
related benefits from staff reductions, $6.5 million for lease
terminations resulting from office consolidations and $6.0 million for
other related actions.
Selling, general and administrative expenses increased $20.8
million over 1995 primarily due to the acquisition of several
businesses (including most notably CCP and Feed Ingredients),
restructuring charges as discussed in Note 2 of Notes to Condensed
Consolidated Financial Statements and increased legal expenses. The
nine months ended March 31, 1995 included one-time charges related to
shifting the marketing and administrative functions of Phosphate
Chemicals Export Association, Inc. to its member companies.
Other operating income and expense, net, for the nine months ended
March 31, 1996 included $16.6 million of restructuring charges, as
described in Note 2 of Notes to Condensed Consolidated Financial
Statements offset by $16.2 million of gains from the sale of
investments and properties. In 1995, other operating income and
expense, net, included a gain of $5.0 million from the sale of land in
Florida
Interest charges for the nine months ended March 31, 1996 were $2.4
million lower than the same period a year ago as the Company reduced a
portion of its high-cost long-term indebtedness during the prior fiscal
year. Partially offsetting this decrease were higher interest charges
resulting from long-term debt increases used to fund the acquisition of
CCP and other acquisitions of the Company during the nine months ended
March 31, 1995.
Financial Condition
Since June 30, 1995, cash and cash equivalents have decreased $154.5
million. Cash inflows of $270.0 million generated from operating
activities partially funded $168.8 million of cash sharing
distributions to FRP, $129.3 million of capital expenditures, $67.5
million to purchase Feed Ingredients, $62.1 million of long-term debt
payments net of proceeds received and $28.1 of common stock dividend
payments.
The Company's working capital ratio at March 31, 1996 was 1.7:1
versus 2.0:1 at June 30, 1995. Debt to capitalization improved to 41.3
percent at March 31, 1996 compared to 48.3 percent a year ago and 45.0
percent at June 30, 1995. The decrease was primarily due to a
reduction in indebtedness resulting from management's efforts to reduce
a portion of its high-cost, long-term indebtedness.
On February 28, 1996, the Company entered into an unsecured credit
facility (the Credit Facility) with a group of banks. Under the terms
of the Credit Facility, the Company and certain of its subsidiaries may
borrow up to $450 million under a revolving credit facility which
matures on March 1, 1999 and $50 million under a long-term credit
facility which matures March 2, 2001. At March 31, 1996, the Company
and its subsidiaries had borrowed $66.5 million under the revolving
credit facility, $50 million under the long-term facility and $37.9
million was drawn down under the Credit Facility as letters of credit
principally to support industrial revenue bonds and other debt and
credit risk guarantees.
IMC-Agrico also has an agreement with a group of banks to provide it
with a $75 million unsecured revolving credit facility until February
1997 (the Initial Facility). At May 10, 1996, the Initial Facility was
fully utilized. In addition, in May 1996 IMC-Agrico entered into two
additional unsecured revolving credit facilities under which it may
borrow up to $75 million until February 1997 (collectively with the
Initial Facility, the IMC-Agrico Working Capital Facility). On May 10,
1996, $25 million was borrowed under these additional facilities.
The Credit Facility contains customary negative covenants and
financial ratios and other tests which must be met with respect to
interest coverage, tangible net worth and leverage. The IMC-Agrico
Working Capital Facility contains financial ratios and tests with
respect to fixed charge coverage, current ratio and minimum net
partners' capital requirements. The IMC-Agrico Working Capital
Facility also places limitations on indebtedness of IMC-Agrico and
restricts the ability of IMC-Agrico to make cash distributions in
excess of Distributable Cash. In addition, pursuant to the Partnership
Agreement, IMC-Agrico is required to obtain the approval of the Policy
Committee of IMC-Agrico (which consists of two representatives from
each of the Company and FRP) prior to incurring more than an aggregate
of $5 million (adjusted annually for inflation) in indebtedness
(excluding a total of $125 million of indebtedness under the IMC-Agrico
Working Capital Facility).
Under a current agreement with a financial institution, IMC-Agrico
may sell, on an ongoing basis, an undivided percentage interest in a
designated pool of receivables in an amount not to exceed $65 million.
At March 31, 1996, IMC-Agrico had sold $62.5 million of such receivable
interests.
The Company periodically enters into DAP futures contracts and
options to purchase natural gas to manage its exposure to price
fluctuations. The Company also has periodically entered into forward
exchange contracts to hedge the effect of Canadian dollar exchange rate
changes on a portion of identifiable foreign currency exposures from
operations. Net hedging gains and losses are recognized as a part of
the transactions hedged and were not significant during the nine months
ended March 31, 1996. The Company monitors its market risk on an
ongoing basis and considers its risk to be minimal.
The Company estimates that its capital expenditures for 1996 will
total approximately $197 million (including $66 million by IMC-Agrico).
The Company expects to finance these expenditures (including its
portion of IMC-Agrico's capital expenditures) from operations.
Pursuant to the Partnership Agreement, IMC-Agrico is required to obtain
the approval of the Policy Committee of IMC-Agrico prior to making
capital expenditures in any fiscal year in excess of $5 million
(adjusted annually for inflation) for expansion of its business. In
the event that the Policy Committee fails to approve such future
capital expenditures, IMC-Agrico's ability to expand its business could
be adversely affected.
IMC-Agrico makes cash distributions to each partner based on
formulas and sharing ratios as defined in the Partnership Agreement.
For the nine months ended March 31, 1996, the total amount of
Distributable Cash generated by IMC-Agrico was $358.6 million, of which
$190.3 million was distributed to FRP, including $73.2 million in May
1996.
The Company believes that its current liquidity position and cash
flow from operations should be sufficient to meet its working capital
needs and expansion of its operations.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings.
In the ordinary course of its business, the Company is and will
from time to time be involved in routine litigation.
Sterlington Litigation
- ----------------------
As previously reported, Angus has filed an action in federal court
in Louisiana seeking reimbursement for amounts allegedly expended to
remediate certain environmental sites at the Sterlington plant. In its
pleadings filed with the Louisiana federal court, Angus states that it
is seeking approximately $1.8 million for amounts expended, plus
interest, fees, costs and reimbursement for any future expenses. A
trial has been scheduled in this action for the fall of 1996. The
Company is unable to estimate the magnitude of its exposure at this
time.
Item 4. Submission of Matters to a Vote of Security Holders.
(a) A Special Meeting of Stockholders was held on March 1, 1996.
(b) The meeting did not involve election of directors.
(c) The following matters were voted upon at the Special Meeting
of Stockholders:
1. Approval of the Issuance of Shares Pursuant to Merger
The proposal to approve the issuance of shares of Common Stock,
par value $1.00 per share, of IMC pursuant to the merger
contemplated by, and in accordance with the terms of, the
Agreement and Plan of Merger dated as of November 13, 1995 among
IMC, Bull Merger Company, a Delaware corporation and a wholly
owned subsidiary of IMC and The Vigoro Corporation, a Delaware
corporation, was ratified by the affirmative vote of an
aggregate of 47,063,376 shares of common stock. A total of
18,721 shares of common stock voted against the proposal.
Holders of 49,337 shares of common stock abstained from voting.
2. Approval of Stock Amendment to the Restated Certificate of
Incorporation
The adoption of the amendment to the Restated Certificate of
Incorporation to increase to 250,000,000 the authorized number
of shares of common stock was ratified by the affirmative vote
of an aggregate of 46,915,431 shares of common stock. A total
of 422,779 shares of common stock voted against adoption.
Holders of 46,125 shares of common stock abstained from voting.
3. Approval of Charter Amendment to the Restated Certificate of
Incorporation
The adoption of an amendment to the Restated Certificate of
Incorporation to increase the range of the number of directors
that may from time to time comprise the Board of Directors of
IMC to not less than 5 nor more than 15 was ratified by the
affirmative vote of an aggregate of 47,210,915 shares of common
stock. A total of 115,079 shares of common stock voted against
adoption. Holders of 61,306 shares of common stock abstained
from voting.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Exhibit
No. Description
--------------------------------------------------------
10.68 Fourth Amendment and Waiver Agreement dated as of May
14, 1996 to the Credit Agreement, by and among IMC-Agrico
Company, a Delaware general partnership, the Banks identified
therein, and NationsBank, N.A. (successor in interest to
NationsBank, N.A. and NationsBank of North Carolina, N.A.), as
agent
11.3 Fully diluted earnings per share computation for the
three and nine months ended March 31, 1996
27 Financial Data Schedules
99.6 Registration Rights Agreement dated as of March 1, 1996
among IMC and certain former stockholders of Vigoro
(b) Reports on Form 8-K.
Up to the date of this report, the following report on Form
8-K was filed:
A report under Items 2 and 5 dated March 15,1996, amended on
8-K/A, Items 2 and 7, dated April 19, 1996.
* * * * * * * * * * * * * * * *
SIGNATURES
Pursuant to the requirements 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.
IMC GLOBAL INC.
Anne M. Scavone
----------------------------------
Anne M. Scavone
Corporate Controller
(on behalf of the Registrant and as
Chief Accounting Officer)
Date: May 15, 1996
EXHIBIT 10.68
FOURTH AMENDMENT AND WAIVER AGREEMENT
THIS FOURTH AMENDMENT AND WAIVER AGREEMENT dated as of May
14, 1996 (the "Fourth Amendment") is to that Credit Agreement dated as
of February 9, 1994, as amended by that certain First Amendment to
Credit Agreement dated as of June 15, 1994 (the "First Amendment") as
further amended by that certain Second Amendment to Credit Agreement
dated as of February 24, 1995 (the "Second Amendment") as further
amended by that certain Third Amendment to Credit Agreement dated as of
August 1, 1995 (the "Third Amendment") (as amended and modified hereby
and as the same may be further amended, modified and restated from time
to time hereafter, the "Credit Agreement"; terms used but not otherwise
defined herein shall have the meanings assigned in the Credit
Agreement), by and among IMC-AGRICO COMPANY, a Delaware general
partnership (the "Borrower"), the Banks identified therein, and
NATIONSBANK, N.A. (successor in interest to NationsBank, N.A.
(Carolinas) and NationsBank of North Carolina, N.A.), as Agent (the
"Agent").
W I T N E S S E T H:
WHEREAS, the Banks have, pursuant to the terms of the Credit
Agreement, made available to the Borrower a $75,000,000 credit
facility;
WHEREAS, (i) the Borrower has informed the Agent that an Event of
Default may exist under the terms of the Credit Agreement due to
incorrect calculations with respect to the ownership of the Borrower in
connection with the Change of Control requirements set forth in section
7.01(h) of the Credit Agreement and (ii) the Borrower has requested
certain other modifications to various provisions contained therein;
and
WHEREAS, the Required Banks have agreed and waive such Event of
Default and to approve the requested changes on the terms and
conditions hereinafter set forth;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good
and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
1. The definition of "Change of Control" in Section 1.01 of the
Credit Agreement is hereby amended and modified to read as follows:
"Change of Control" means (i) IMC Global Inc., a Delaware
corporation ("IMC Global"), and Freeport-McMoRan Resource
Partners, Limited Partnership, a Delaware limited partnership,
collectively, shall at any time fail to own, directly or
indirectly,
(A) at least 85% of the capital interests in the
Borrower, or
(B) at least 85% of the capital stock or capital
interests in the corporate managing partner of the Borrower,
(ii) IMC Global Inc., individually, shall at any time fail
to
(A) own, directly or indirectly, at least 50% of the
capital interests in the Borrower,
(B) own, directly or indirectly, at least 50% of the
capital stock or capital interests in the corporate managing
partner of the Borrower,
(C) appoint and control, directly or indirectly, at
least 50% of the members of the Board of Directors (or other
governing body) of the Borrower, or
(iii) Freeport-McMoRan, Inc., shall at any time fail to own,
directly or indirectly, in excess of 50% of the capital interests
in Freeport-McMoRan Resource Partners, Limited Partnership.
2. Subsection (k) of Section 6.01 of the Credit Agreement is
hereby amended and modified to read as follows:
"(k) additional Indebtedness for borrowed money in an
aggregate amount not to exceed $60,000,000."
3. Subsections (i) and (ii) of Section 6.07 of the Credit
Agreement is hereby amended and modified to read as follows:
"(i) after the issuance thereof, amend or modify (or permit
the amendment or modification of, if reasonably adverse to the
interests of the Banks, any of the terms of any subordinated
Indebtedness; (ii) except with respect to Indebtedness permitted
pursuant to Section 6.01(k), make (or give any notice with respect
thereto) any voluntary or optional payment or prepayment or
redemption or acquisition for value of (including without
limitation, by way of depositing money or securities with the
trustee with respect thereto before due for the purpose of paying
when due) or exchange of any other subordinated Indebtedness for
borrowed money or"
4. The Banks hereby confirm and agree to a waiver of any Default
or Event of Default which existed or may have existed prior to the date
of this Fourth Amendment on account of a violation of the Change of
Control requirement contained in Section 7.01(h) of the Credit
Agreement. The Borrower shall, however, hereafter keep and maintain
such requirement in accordance with the terms of Section 7.01(h) of the
Credit Agreement, as amended hereby.
5. In connection with this Fourth Amendment, the Borrower hereby
represents and warrants that as of the date hereof (before (except for
Section 7.01(h) of the Credit Agreement to the extent described in the
first sentence of Section 4 of this Fourth Amendment) and after giving
effect to this Amendment) (a) the representations and warranties set
forth in Section 4 of the Credit Agreement are true and correct in all
material respects (except for those which expressly relate to an
earlier date), and (b) no Default or Event of Default presently exists
under the Credit Agreement.
6. Except as expressly modified hereby, all of the terms and
provisions of the Credit Agreement remain in full force and effect.
7. The Borrower agrees to pay all reasonable costs and expenses
in connection with the preparation, execution and delivery of this
Fourth Amendment, including the reasonable fees and expenses of the
Agent's legal counsel.
8. This Fourth Amendment may be executed in any number of
counterparts, each of which when so executed and delivered shall be
deemed an original. It shall not be necessary in making proof of this
Fourth Amendment to produce or account for more than one such
counterpart.
9. This Fourth Amendment, as the Credit Agreement, shall be
deemed to be a contract under, and shall for all purposes be construed
in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Fourth Amendment to be duly executed and delivered
as of the date first above written.
BORROWER:
IMC-AGRICO COMPANY, a Delaware
general partnership by its Managing
Partner
By: IMC-AGRICO MP, INC., a Delaware
corporation, as Managing Partner
By:___________________
Title:________________
BANKS:
NATIONSBANK, N.A.
individually in its capacity as a
Bank and in its capacity as Agent
By:_______________________
Wallace Harris, Jr.
Vice President
CITIBANK, N.A.
By:_______________________
Title:____________________
COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK,
B.A.
By:___________________
Title:________________
By:___________________
Title:________________
ARAB BANKING CORPORATION
By:___________________
Title:________________
EXHIBIT 11.3
EARNINGS (LOSS) PER SHARE
FULLY DILUTED COMPUTATION
FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 1996 AND 1995
(IN MILLIONS EXCEPT SHARE AND PER SHARE AMOUNTS)
Three Months Ended Nine Months Ended
March 31, March 31,
----------------------- ----------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
Basis for computation of
fully diluted earnings
per share:
Earnings before extra-
ordinary item and
cumulative effect of
accounting change,
as reported $ (8.3) $ 59.6 $ 77.9 $ 120.1
Add interest charges
on convertible debt 1.8 1.8 5.4 5.4
Less provision for taxes (.7) (.7) (2.1) (2.1)
---------- ---------- ---------- ----------
Earnings before cumu-
lative effect of
accounting change and
extraordinary item,
as adjusted (7.2) 60.7 81.2 123.4
Cumulative effect of
accounting change (5.9)
Extraordinary loss
- debt retirement (.7) (3.7)
---------- ---------- ---------- ----------
Net earnings applicable
to common stock $ (7.2) $ 60.0 $ 81.2 $ 113.8
========== ========== ========== ==========
Number of shares:
Weighted average
shares outstanding 93,347,935 91,265,180 92,673,346 90,955,505
Conversion of
convertible sub-
ordinated notes
into common stock 3,620,354 3,622,048 3,621,418 3,622,048
Additional common
stock equivalents 86,906 61,671 271,319
---------- ---------- ---------- ----------
Total common and
common equivalent
shares assuming
full dilution 96,968,289 94,974,134 96,356,435 94,848,872
========== ========== ========== ==========
Fully diluted earnings
per share:
Earnings before
cumulative effect
of accounting
change and extra-
ordinary item $ (.07) $ .64 $ .84 $ 1.30
Cumulative effect of
accounting change (.06)
Extraordinary loss
- debt retirement (.01) (.04)
---------- ---------- ---------- ----------
Net earnings $ (.07) $ .63 $ .84 $ 1.20
========== ========== ========== ==========
This calculation is submitted in accordance with Regulation S-K item
601(b)(11). However, under APB Opinion No. 15, calculation of fully
diluted earnings per share would exclude the conversion of convertible
securities which would have an antidilutive effect on earnings per
share for each period.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> MAR-31-1996
<CASH> 2,100
<SECURITIES> 47,100
<RECEIVABLES> 265,600
<ALLOWANCES> 4,900
<INVENTORY> 609,200
<CURRENT-ASSETS> 1,023,900
<PP&E> 4,101,500
<DEPRECIATION> 1,756,900
<TOTAL-ASSETS> 3,526,200
<CURRENT-LIABILITIES> 608,500
<BONDS> 696,100
<COMMON> 97,500
0
0
<OTHER-SE> 986,700
<TOTAL-LIABILITY-AND-EQUITY> 3,526,200
<SALES> 2,025,900
<TOTAL-REVENUES> 2,041,100
<CGS> 1,493,700
<TOTAL-COSTS> 1,710,400
<OTHER-EXPENSES> 143,200
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 50,000
<INCOME-PRETAX> 137,500
<INCOME-TAX> 59,600
<INCOME-CONTINUING> 77,900
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 77,900
<EPS-PRIMARY> .84
<EPS-DILUTED> .84
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5 5
<RESTATED>
<MULTIPLIER> 1000 1000
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> JUN-30-1995 JUN-30-1994
<PERIOD-END> JUN-30-1995 JUN-30-1994
<CASH> (4,100) (17,700)
<SECURITIES> 207,800 193,300
<RECEIVABLES> 239,200 276,500
<ALLOWANCES> 2,700 2,200
<INVENTORY> 392,900 347,000
<CURRENT-ASSETS> 926,200 855,600
<PP&E> 3,971,300 3,754,600
<DEPRECIATION> 1,714,100 1,575,100
<TOTAL-ASSETS> 3,323,200 3,172,300
<CURRENT-LIABILITIES> 464,700 372,000
<BONDS> 750,200 801,600
<COMMON> 96,400 96,000
0 0
0 0
<OTHER-SE> 911,400 760,300
<TOTAL-LIABILITY-AND-EQUITY> 3,323,200 3,754,600
<SALES> 2,736,100 2,125,300
<TOTAL-REVENUES> 2,746,300 2,154,800
<CGS> 2,046,100 1,742,600
<TOTAL-COSTS> 2,243,200 1,910,200
<OTHER-EXPENSES> 124,100 74,200
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 70,200 91,200
<INCOME-PRETAX> 308,800 79,200
<INCOME-TAX> 115,500 34,800
<INCOME-CONTINUING> 193,300 44,400
<DISCONTINUED> 0 0
<EXTRAORDINARY> (6,500) (25,200)
<CHANGES> (5,900) 0
<NET-INCOME> 180,900 19,200
<EPS-PRIMARY> 1.99 .23
<EPS-DILUTED> 1.95 .27
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5 5 5 5 5
<RESTATED>
<MULTIPLIER> 1000 1000 1000 1000 1000
<S> <C> <C> <C> <C> <C>
<PERIOD-TYPE> 6-MOS 3-MOS 9-MOS 6-MOS 3-MOS
<FISCAL-YEAR-END> JUN-30-1995 JUN-30-1995 JUN-30-1994 JUN-30-1994 JUN-30-1994
<PERIOD-END> DEC-31-1995 SEP-30-1995 MAR-31-1995 DEC-31-1994 SEP-30-1994
<CASH> (9,900) (3,500) (14,900) (7,700) (13,400)
<SECURITIES> 145,500 224,000 167,300 92,400 135,800
<RECEIVABLES> 292,000 226,600 232,600 238,000 231,800
<ALLOWANCES> 4,600 2,400 3,600 2,300 2,200
<INVENTORY> 501,800 416,100 479,500 415,600 365,200
<CURRENT-ASSETS> 1,015,400 964,500 950,900 813,300 801,100
<PP&E> 4,111,400 3,994,300 3,929,400 3,783,100 3,771,800
<DEPRECIATION> 1,769,100 1,732,300 1,675,600 1,638,000 1,612,200
<TOTAL-ASSETS> 3,521,700 3,366,400 3,346,700 3,098,700 3,104,800
<CURRENT-LIABILITIES> 527,700 487,700 524,700 421,900 341,900
<BONDS> 559,400 741,500 784,200 689,100 760,500
<COMMON> 96,900 96,700 96,300 96,000 96,000
0 0 0 0 0
0 0 0 0 0
<OTHER-SE> 993,600 947,400 842,600 787,200 763,300
<TOTAL-LIABILITY-AND-EQUITY> 3,521,700 3,366,400 3,346,700 3,098,700 3,104,800
<SALES> 1,309,000 599,400 1,834,600 1,104,700 517,200
<TOTAL-REVENUES> 1,314,900 601,200 1,842,600 1,112,000 523,400
<CGS> 960,600 450,700 1,360,700 838,900 409,800
<TOTAL-COSTS> 1,061,100 496,900 1,501,300 929,900 450,000
<OTHER-EXPENSES> 84,900 35,800 97,300 52,400 18,900
<LOSS-PROVISION> 0 0 0 0 0
<INTEREST-EXPENSE> 34,000 16,800 52,400 34,400 17,600
<INCOME-PRETAX> 134,900 51,700 191,600 95,300 36,900
<INCOME-TAX> 48,700 19,600 71,500 34,800 13,000
<INCOME-CONTINUING> 86,200 32,100 120,100 60,500 23,900
<DISCONTINUED> 0 0 0 0 0
<EXTRAORDINARY> 0 0 (3,700) (3,000) (1,200)
<CHANGES> 0 0 (5,900) (5,900) (5,900)
<NET-INCOME> 86,200 32,100 110,500 51,600 16,800
<EPS-PRIMARY> .93 .35 1.22 .57 .19
<EPS-DILUTED> .92 .35 1.20 .57 .19
</TABLE>
EXHIBIT 99.6
REGISTRATION RIGHTS AGREEMENT
THIS AGREEMENT (this "Agreement"), dated March 1, 1996, is between
IMC Global Inc., a Delaware corporation (the "Company"), and those
parties listed under the heading "Stockholders" on the signature page
to this Agreement (the "Stockholders").
WHEREAS, concurrently with the execution and delivery of this
Agreement, Bull Merger Company, a Delaware corporation and a wholly-
owned subsidiary of the Company ("Sub"), has been merged (the "Merger")
into The Vigoro Corporation, a Delaware corporation ("Vigoro"), and
each issued and outstanding share of Common Stock, $.01 par value of
Vigoro, not owned directly or indirectly by the Company or Vigoro, has
been converted to shares of Common Stock, $1.00 par value, of the
Company ("Company Common Stock");
WHEREAS, immediately prior to the Merger, the Stockholders were
stockholders of Vigoro;
WHEREAS, upon the effectiveness of the Merger, the Stockholders
will be subject to the restrictions of paragraph (d) of Rule 145 under
the Securities Act with respect to the sale of shares of Company Common
Stock received by them in the Merger;
WHEREAS, the Company and the Stockholders desire to provide a
mechanism for the registration of the shares of Company Common Stock
issued to the Stockholders in the Merger,
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements contained herein and
intending to be legally bound hereby, the parties hereto agree as
follows:
Section 1. Definitions. For purposes of this Agreement, the
following terms shall have the following meanings:
(A) The term "Commission" shall have the meaning assigned thereto
in Section 2(c) of this Agreement.
(B) The term "Demand" shall have the meaning assigned thereto in
Section 2(a) of this Agreement.
(C) The term "Demand Registration" shall have the meaning
assigned thereto in Section 2(a) of this Agreement.
(D) The term "Demanding Sellers" shall have the meaning assigned
thereto in Section 2(e) of this Agreement.
(E) The term "Internal Expenses" shall have the meaning assigned
thereto in Section 7 of this Agreement.
(F) The term "Maximum Demand Number" shall have the meaning
assigned thereto in Section 2(e) of this Agreement.
(G) The term "Maximum Piggyback Number" shall have the meaning
assigned thereto in Section 3(b) of this Agreement.
(H) The term "Merger Shares" means the shares of Company Common
Stock issued to the Stockholders pursuant to the Merger.
(I) The term "Other Demand Rights" shall have the meaning
assigned thereto in Section 3(b) of this Agreement.
(J) The term "Other Demanding Sellers" shall have the meaning
assigned thereto in Section 3(b) of this Agreement.
(K) The term "Person" means any individual, firm, corporation,
partnership, limited liability company or other entity, and shall
include any successor (by merger or otherwise) of such entity.
(L) The term "Piggyback Notice" shall have the meaning assigned
thereto in Section 3(a) of this Agreement.
(M) The term "Piggyback Registration" shall have the meaning
assigned thereto in Section 3(a) of this Agreement.
(N) The term "Piggyback Seller" shall have the meaning assigned
thereto in Section 3(b) of this Agreement.
(O) The term "Primary Offering" shall have the meaning assigned
thereto in Section 3(b) of this Agreement.
(P) The term "Registrable Securities" means (i) the Merger Shares
and (ii) securities issued or issuable with respect to the Merger
Shares or other Registrable Securities by virtue of this clause (ii),
in each case by way of a stock dividend or stock split or in connection
with a combination of shares, recapitalization, reorganization,
reclassification, merger, consolidation, compulsory share exchange or
any other transaction or series of related transactions in which shares
of Company Common Stock or Registrable Securities are changed into,
converted into or exchanged for other securities. As to any particular
Registrable Securities, such securities shall cease to be Registrable
Securities when (i) a registration statement registering such
securities under the Securities Act has been declared effective and
such securities have been sold or otherwise transferred by the holder
thereof pursuant to such effective registration statement, (ii) such
securities are sold in compliance with paragraph (d) of Rule 145 or
(iii) such securities may be sold without regard to the provisions of
paragraph (d) of Rule 145. For purposes of this Agreement, a Person
will be deemed to be a holder of Registrable Securities whenever such
Person has the right to acquire such Registrable Securities (by
conversion, exercise or otherwise) whether or not such acquisition has
actually been effected; provided, however, that if more than one Person
would be deemed to be the holder of Registrable Securities by virtue of
this sentence, then the Person who then owns such Registrable
Securities shall be deemed to be the holder thereof.
(Q) The term "Registration Expenses" shall have the meaning
assigned thereto in Section 6(a) of this Agreement.
(R) The term "Registration Period" means the period commencing as
of the date of this Agreement and expiring on the earlier of (i) the
first date on which all Registrable Securities may be sold by the
holders thereof without regard to the provisions of paragraph (d) of
Rule 145 or (ii) the fifth anniversary of the date of this Agreement.
(S) The term "Requisite Amount" means 50% of the then outstanding
Registerable Securities.
(T) The term "Rule 145" means Rule 145 (or any successor
provisions) promulgated under the Securities Act.
(U) The term "Securities Act" shall have the meaning assigned
thereto in Section 2(a) of this Agreement.
Section 2. Demand Registrations.
(A) Requests for Registration. During the Registration Period,
holders of the Requisite Amount of Registrable Securities shall be
entitled to make written requests of the Company (each such request
being a "Demand") for registration under the Securities Act of 1933, as
amended (the "Securities Act"), of all or part of the Registrable
Securities (a "Demand Registration"). Such Demand shall specify: (i)
the aggregate number and kind of Registrable Securities requested to be
registered; and (ii) the intended method of distribution in connection
with such Demand Registration to the extent then known. No Demand
shall be effective or impose any obligation upon the Company unless
such Demand shall request the registration of not less than the
Requisite Amount of Registrable Securities. Within ten (10) days after
receipt of a Demand, the Company shall give written notice of such
Demand to all other holders of Registrable Securities and shall include
in such registration all Registrable Securities of each holder thereof
with respect to which the Company has received a written request for
inclusion therein within twenty (20) days after the receipt by such
holder of the Company's notice required by this paragraph.
(B) Number of Demand Registrations. The holders of Registrable
Securities shall be entitled to two (2) Demand Registrations.
(C) Satisfaction of Obligations. Subject to Section 4, a
registration shall not be treated as a Demand Registration until (i)
the applicable registration statement under the Securities Act has been
filed with the Securities and Exchange Commission (the "Commission")
with respect to such Demand Registration and (ii) such registration
statement shall have been maintained continuously effective for a
period of at least one hundred twenty (120) days or such shorter period
when all Registrable Securities included therein have been sold
thereunder in accordance with the manner of distribution set forth in
such registration statement.
(D) Restrictions on Demand Registrations. The Company shall not
be obligated to file any Demand Registration within one hundred eighty
(180) days after the effective date of a so-called "firm commitment"
underwritten registration in which all holders of Registrable
Securities were given so-called "piggyback" rights pursuant to Section
3 hereof (provided that, with respect to such a registration in which
such piggyback rights were exercised, each such holder exercising such
piggyback rights was permitted to include in such registration all
Registrable Securities that such holder sought to include therein). In
addition, the Company shall be entitled to postpone (upon written
notice to all holders of Registrable Securities) for up to ninety (90)
days the filing or the effectiveness of a registration statement in
respect of a Demand (but no more than once in any period of nine (9)
consecutive months and no more than two times in total) if the
Company's Board of Directors determines in good faith and in its
reasonable judgment (based upon the written advice of a nationally
recognized investment banking firm selected by the Company and
reasonably acceptable to the holders of a majority of the Registrable
Securities sought to be registered in respect of such Demand) that
effecting the Demand Registration in respect of such Demand would have
a material adverse affect on any proposal or plan by the Company to
engage in any material, public debt or equity financing, acquisition or
disposition of assets (other than in the ordinary course of business)
or any material merger, consolidation, tender offer or other similar
transaction (in each case, authorization for the negotiation of which
has been obtained from the Board of Directors of the Company prior to
the service of such Demand).
(E) Participation in Demand Registrations. Neither the Company
nor any other Person shall include any securities other than
Registerable Securities in a Demand Registration, except with the
written consent of the holders of the majority of the Registrable
Securities sought to be registered pursuant to such Demand
Registration. If, in connection with a Demand Registration, any
managing underwriter (or, if such Demand Registration is not an
underwritten offering, a nationally recognized independent underwriter
selected by the holders of a majority of the Registrable Securities
sought to be registered in such Demand Registration (which such
underwriter shall be reasonably acceptable to the Company and whose
fees and expenses shall be borne solely by the Company)) advises the
Company and the holders of the Registrable Securities sought to be
included in such Demand Registration that, in its opinion, the
inclusion of all the Registrable Securities and, if authorized pursuant
to this paragraph, other securities of the Company, in each case,
sought to be registered in connection with such Demand Registration
would adversely affect the marketability of the Registrable Securities
sought to be sold pursuant thereto, then the Company shall include in
the registration statement applicable to such Demand Registration only
such securities as the Company and the holders of Registrable
Securities sought to be registered therein ("Demanding Sellers") are
advised by such underwriter can be sold without such an effect (the
"Maximum Demand Number"), as follows and in the following order of
priority:
(i) first, the number of Registrable Securities sought to be
registered by each Demanding Seller, pro rata in proportion to the
number of Registrable Securities sought to be registered by all
Demanding Sellers; and
(ii) second, if the number of Registrable Securities to be
included under clause (i) next above is less than the Maximum
Demand Number, the number of securities sought to be included by
each other seller, pro rata in proportion to the number of
securities sought to be sold by all such other sellers, which in
the aggregate, when added to the number of securities to be
included pursuant to clause (i) next above, equals the Maximum
Demand Number.
(F) Selection of Underwriters. If the holders of a majority of
the Registrable Securities sought to be registered in a Demand
Registration request that such Demand Registration be an underwritten
offering, then such holders shall select a nationally recognized
underwriter or underwriters to manage and administer such offering,
such underwriter or underwriters, as the case may be, to be subject to
the approval of the Company's Board of Directors, which such approval
shall not be unreasonably withheld.
(G) Other Registrations. If the Company has received a Demand
pursuant to this Section 2 and if the applicable registration statement
in respect of such Demand has not been withdrawn or abandoned, the
Company will not file or cause to be effected any other registration of
any of its equity securities or securities convertible or exchangeable
into or exercisable for its equity securities under the Securities Act
(except on Form S-4 or S-8 or any successor form), whether on its own
behalf or at the request of any holder or holders of such securities,
until a period of at least one hundred and twenty (120) days has
elapsed from the effective date of a firm commitment underwritten
Demand Registration (or, if later, the date of an underwriting
agreement with respect thereto) or a period of at least ninety (90)
days has elapsed from the effective date of any other Demand
Registration, unless, in each case, a shorter period of time is
approved by the holders of a majority of the Registrable Securities
included in such Demand Registration.
Section 3. Piggyback Registrations.
(A) Right to Piggyback. During the Registration Period, whenever
the Company proposes to register any of its securities under the
Securities Act (other than pursuant to a Demand Registration or on a
Form S-4 or S-8 (or any successor form)) (a "Piggyback Registration"),
the Company shall give all holders of Registrable Securities prompt
written notice thereof (but not less than thirty (30) days prior to the
filing by the Company with the Commission of any registration statement
with respect thereto). Such notice (a "Piggyback Notice") shall
specify, at a minimum, to the extent known, the number and kind of
securities proposed to be registered, the proposed date of filing of
such registration statement with the Commission, the proposed means of
distribution, the proposed managing underwriter or underwriters (if any
and if known), and a good faith estimate by the Company of the proposed
minimum offering price of such securities, as such price is proposed to
appear on the facing page of such registration statement. Upon the
written request of a holder of Registrable Securities given within ten
(10) business days of such holder's receipt of the Piggyback Notice
(which written request shall specify the number and kind of Registrable
Securities intended to be disposed of by such holder and the intended
method of distribution thereof), the Company shall include in such
registration all Registrable Securities with respect to which the
Company has received such written requests for inclusion.
(B) Priority on Piggyback Registrations. If, in connection with
a Piggyback Registration, any managing underwriter (or, if such
Piggyback Registration is not an underwritten offering, a nationally
recognized independent underwriter selected by the Company (reasonably
acceptable to the holders of a majority of the Registrable Securities
sought to be included in such Piggyback Registration and whose fees and
expenses shall be borne by solely by the Company)) advises the Company
and the holders of the Registrable Securities to be included in such
Piggyback Registration, that, in its opinion, the inclusion of all the
securities sought to be included in such Piggyback Registration by the
Company, any Persons who have sought to have shares registered
thereunder pursuant to rights to demand (other than pursuant to so-
called "piggyback" or other incidental or participation registration
rights) such registration (such demand rights being "Other Demand
Rights" and such Persons being "Other Demanding Sellers"), any holders
of Registrable Securities seeking to sell such securities in such
Piggyback Registration ("Piggyback Sellers") and any other proposed
sellers, in each case, if any, would adversely affect the marketability
of the securities sought to be sold pursuant thereto, then the Company
shall include in the registration statement applicable to such
Piggyback Registration only such securities as the Company and the
Piggyback Sellers are so advised by such underwriter can be sold
without such an effect, which may exclude any class of Registrable
Securities if, in the judgment of such underwriter, the inclusion of
such Registrable Securities would adversely affect the marketability of
the securities sought to be sold pursuant thereto, (the "Maximum
Piggyback Number"), as follows and in the following order of priority:
(i) if the Piggyback Registration is an offering on behalf
of the Company and not any Person exercising Other Demand Rights
(whether or not other Persons seek to include securities therein
pursuant to so-called "piggyback" or other incidental or
participatory registration rights) (a "Primary Offering"), then
(A) first, such number of securities to be sold by the Company as
the Company shall have determined, (B) second, if the number of
securities to be included under clause (A) next above is less than
the Maximum Piggyback Number, the number of Registrable Securities
of each Piggyback Seller, pro rata in proportion to the number of
securities sought to be registered by all the Piggyback Sellers,
which in the aggregate, when added to the number of securities to
be registered under clause (A) next above, equals the Maximum
Piggyback Number and (C) third, if the number of securities to be
included under clauses (A) and (B) next above is less than the
Maximum Piggyback Number, the number of securities of each other
proposed seller, pro rata in proportion to the number of
securities sought to be registered by all such other proposed
sellers, which in the aggregate, when added to the number of
securities to be registered under clauses (A) and (B) next above,
equals the Maximum Piggyback Number;
(ii) if the Piggyback Registration is an offering other than
pursuant to a Primary Offering, then (A) first, such number of
securities sought to be registered by each Other Demanding Seller,
pro rata in proportion to the number of securities sought to be
registered by all such Other Demanding Sellers, (B) second, if the
number of securities included under clause (A) next above is less
than the Maximum Piggyback Number, the number of securities sought
to be registered by each Piggyback Seller, pro rata in proportion
to be number of securities sought to be registered by all the
Piggyback Sellers, which in the aggregate, when added to the
number of securities to be registered pursuant to clause (A) next
above, equals the Maximum Piggyback Number of (C) third, if the
number of securities to be included when clauses (A) and (B) next
above is less than the Maximum Piggyback Number, the number of
securities of each other proposed seller, pro rata in proportion
the number of securities sought to be included by all such other
proposed sellers, which in the aggregate, when added to the number
of securities to be registered under clause (A) next above, equals
the Maximum Piggyback Number.
(C) Withdrawal by the Company. If, at any time after giving
written notice of its intention to register any of its securities as
set forth in Section 3(a) and prior to time the registration statement
filed in connection with such registration is declared effective, the
Company shall determine for any reason not to register such securities,
the Company may, at its election, give written notice of such
determination to each holder of Registrable Securities and thereupon
shall be relieved of its obligation to register any Registrable
Securities in connection with such particular withdrawn or abandoned
registration (but not from its obligation to pay the Registration
Expenses in connection therewith as provided herein).
Section 4. Withdrawal Rights. Any holder of Registrable
Securities having notified or directed the Company to include any or
all of its Registrable Securities in a registration statement under the
Securities Act (whether pursuant to Section 2 or 3 hereof) shall have
the right to withdraw any such notice or direction with respect to any
or all of the Registrable Securities designated for registration
thereby by giving written notice to such effect to the Company prior to
the effective date of such registration statement. In the event of any
such withdrawal, the Company shall not include such Registrable
Securities in the applicable registration and such Registrable
Securities shall continue to be Registrable Securities hereunder. No
such withdrawal shall affect the obligations of the Company with
respect to the Registrable Securities not so withdrawn; provided that
in the case of a registration pursuant to Section 2 hereof, if such
withdrawal shall reduce the number of Registrable Securities sought to
be included in such registration below the Requisite Amount, then the
Company shall as promptly as practicable give each holder of
Registrable Securities so to be registered notice to such effect,
referring to this Agreement and summarizing this Section, and within
five (5) business days following the effectiveness of such notice,
either the Company or the holders of a majority of the Registrable
Securities may, by written notice to each holder of Registrable
Securities or the Company, respectively, elect that such registration
statement not be filed or, if theretofore filed, be withdrawn. During
such five (5) business day period, the Company shall not file such
registration statement if not theretofore filed or, if such
registration statement has been theretofore filed, the Company shall
not seek, and shall use its best efforts to prevent, the effectiveness
thereof. Any registration statement not filed or withdrawn in
accordance with an election by the Company shall not be counted as a
Demand for purposes of Section 2 hereof. Any registration statement
not filed or withdrawn in accordance with an election by the holders of
the Registrable Securities (even though, technically, such withdrawal
is effected by the Company) shall be counted as a Demand for purposes
of Section 1 hereof unless holders of Registrable Securities reimburse
the Company for its reasonable out-of-pocket expenses (but, without
implication that the contrary would otherwise be true, not including
any Internal Expenses) related to the preparation and filing of such
registration statement (in which event such registration statement
shall not be counted as a Demand hereunder). Upon the written request
of the holders of a majority of Registrable Securities, the Company
shall promptly prepare a definitive statement of such out-of-pocket
expenses in connection with such registration statement in order to
assist such holders with a determination in accordance with the next
preceding sentence.
Section 5. Holdback Agreements.
(A) Holders. Each holder of Registrable Securities agrees not to
effect any public sale or distribution (including sales pursuant to
Rule 144) of equity securities of the Company, or any securities
convertible into or exchangeable or exercisable for such securities,
during the seven (7) days immediately prior to and the one hundred
eighty (180)-day period beginning on the effective date of any Demand
Registration or any Piggyback Registration (in each case, except as
part of such registration), or, in each case, if later, the date of any
underwriting agreement with respect thereto. The holders of a majority
of the Registrable Securities included in a Demand Registration may
waive the limitation contained in this paragraph with respect to such
Demand Registration.
(B) The Company. The Company agrees (i) not to effect, whether
for itself or for any other Person, any public sale or distribution of
its securities of the same class as any Registrable Securities to be
registered by the Company pursuant to this Agreement, or any securities
convertible into or exchangeable or exercisable for such securities,
during the seven (7) days immediately prior to and the one hundred
twenty (120)-day period beginning on the effective date of any
registration in connection with a Demand Registration or a Piggyback
Registration with respect to such Registrable Securities (except as
part of such registration to the extent permitted pursuant to this
Agreement or pursuant to registrations on Form S-8 or Form S-4 (or any
successor form)) or, in each case, if later, the date of any
underwriting agreement with respect thereto, and (ii) in connection
with a Demand Registration will use reasonable efforts to cause each of
the Company's officers and each holder (other than a holder of
Registrable Securities and a holder eligible to report its holdings on
Schedule 13G pursuant to Section 13(d) of the Securities Exchange Act
of 1934) of at least 5% of its Common Stock, or Common Stock and any
securities convertible into or exchangeable or exercisable for Common
Stock, representing, in the aggregate, at least 5% of the Common Stock
(on a fully diluted basis) to agree not to effect any public sale or
distribution (excluding sales pursuant to Rule 144) of any such
securities during such period (except as part of such registration to
the extent permitted pursuant to the terms of this Agreement). This
Section 4(b) shall not be deemed to limit the exercise of Demands
hereunder by the holders of Registrable Securities and the disposition
of such securities by such holders as permitted by the other terms of
this Agreement.
(C) Registration Procedures. Whenever the holders of Registrable
Securities have requested that any Registrable Securities be registered
pursuant to this Agreement (whether pursuant to Section 2 or Section 3
of this Agreement), the Company shall use its best efforts to effect
the registration and the sale of such Registrable Securities in
accordance with the intended method of disposition thereof and, in
connection therewith, the Company shall as expeditiously as possible:
(i) prepare and file with the Commission a registration
statement with respect to such Registrable Securities, on any form
for which the Company then qualifies and which counsel for the
Company shall deem appropriate for the sale of such Registrable
Securities in accordance with the intended method of distribution
thereof, and use its best efforts to cause such registration
statement to become effective;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used
in connection therewith as may be necessary to keep such
registration statement effective for a continuous period of not
less than one hundred twenty (120) days (or, if earlier, until all
Registrable Securities included in such registration statement
have been sold thereunder in accordance with the manner of
distribution set forth therein) and comply with the provisions of
the Securities Act with respect to the disposition of all
securities covered by such registration statement during such
period in accordance with the intended methods of disposition by
the sellers thereof as set forth in such registration statement
(including, without limitation, by incorporating in a prospectus
supplement or post-effective amendment, at the request of a seller
of Registrable Securities, the terms of the sale of such
Registrable Securities);
(iii) before filing with the Commission any such
registration statement or prospectus or any amendments or
supplements thereto, the Company shall furnish to counsel selected
by the holders of a majority of the Registrable Securities covered
by such registration statement and counsel for the underwriter or
sales or placement agent, if any, in connection therewith, drafts
of all such documents proposed to be filed and provide such
counsel with a reasonable opportunity for review thereof and
comment thereon, such review to conducted and such comments to be
delivered with reasonable promptness;
(iv) promptly (i) notify the selling holders of Registrable
Securities of each of (x) the filing and effectiveness of the
registration statement and prospectus and any amendments or
supplements thereto, (y) the receipt of any comments from the
Commission or any state securities law authorities or any other
governmental authorities with respect to any such registration
statement or prospectus or any amendments or supplements thereto,
and (z) any oral or written stop order with respect to such
registration, any suspension of the registration or qualification
of the sale of such Registrable Securities in any jurisdiction or
any initiation or threatening of any proceedings with respect to
of the foregoing and (ii) use its best efforts to obtain the
withdrawal of any order suspending the registration or
qualification (or the effectiveness thereof) or suspending or
preventing the use of any related prospectus in any jurisdiction
with respect thereto;
(v) furnish to each seller of Registrable Securities, the
underwriters and the sales or placement agent, if any, and counsel
for each of the foregoing, a conformed copy of such registration
statement and each amendment and supplement thereto (in each case,
including all exhibits thereto and documents incorporated by
reference therein) and such additional number of copies of such
registration statement, each amendment and supplement thereto, the
prospectus (including each preliminary prospectus) included in
such registration statement and prospectus supplements and all
exhibits thereto and documents incorporated by reference therein
and such other documents as such seller, underwriter, agent or
counsel may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such seller,
the use of each of which thereby and therefor to which the Company
hereby consents;
(vi) if requested by the managing underwriter or underwriters
of any registration or by the holders of a majority of the
Registrable Securities included in any registration statement,
subject to approval of counsel to the Company in its reasonable
judgment, promptly incorporate in a prospectus, supplement or post-
effective amendment to the registration statement such information
concerning underwriters and the plan of distribution of the
Registrable Securities as such managing underwriter or
underwriters or such holders reasonably shall furnish to the
Company in writing and request be included therein, including,
without limitation, with respect to the number of Registrable
Securities being sold by such holders to such underwriter or
underwriters, the purchase price being paid therefor by such
underwriter or underwriters and with respect to any other terms of
the underwritten offering of the Registrable Securities to be sold
in such offering; and make all required filings of such
prospectus, supplement or post-effective amendment as soon as
reasonably possible after being notified of the matters to be
incorporated in such prospectus, supplement or post-effective
amendment;
(vii) use its best efforts to register or qualify such
Registrable Securities under such securities or "blue sky" laws of
such jurisdictions as any seller reasonably requests and do any
and all other acts and things which may be reasonably necessary or
advisable to enable such seller to consummate the disposition in
such jurisdictions of the Registrable Securities owned by such
seller and keep such registration or qualification in effect for
so long as the registration statement remains effective under the
Securities Act (provided that the Company shall not be required to
(i) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this paragraph,
(ii) subject itself to taxation in any such jurisdiction where it
would not otherwise be subject to taxation but for this paragraph
or (iii) consent to general service of process in any jurisdiction
where it would not otherwise be subject to general service of
process but for this paragraph);
(viii) notify each seller of such Registrable Securities,
at any time when a prospectus relating thereto is required to be
delivered under the Securities Act, upon the discovery that, or of
the happening of any event as a result of which, the registration
statement covering such Registrable Securities, as then in effect,
contains an untrue statement of a material fact or omits to state
any material fact required to be stated therein or any fact
necessary to make the statements therein not misleading, and
promptly prepare and furnish to each such seller a supplement or
amendment to the prospectus contained in such registration
statement so that such Registration Statement shall not, and such
prospectus as thereafter delivered to the purchasers of such
Registrable Securities shall not, contain an untrue statement of a
material fact or omit to state any material fact required to be
stated therein or any fact necessary to make the statements
therein not misleading;
(ix) cause all such Registrable Securities to be listed on
each securities exchange and included in each established over-the-
counter market on which or through which securities of the same
class of the Company are then listed or traded and, if not so
listed or traded, to be listed on the NASD automated quotation
system ("NASDAQ") and if listed on NASDAQ, use its reasonable
efforts to secure designation of all such Registrable Securities
covered by such registration statement as a NASDAQ "national
market system security" within the meaning of Rule 11Aa2-1 under
the Securities Exchange Act of 1934, as amended, or, failing that,
to secure NASDAQ authorization for such Registrable Securities
and, without limiting the generality of the foregoing, to arrange
for at least two (2) market makers to register as such with
respect to such Registrable Securities with the NASD;
(x) provide a transfer agent, registrar and CUSIP number for
all of such Registrable Securities not later than the effective
date of such registration statement;
(xi) make available for inspection by any seller of
Registrable Securities, any underwriter participating in any
disposition pursuant to such registration statement, and any
attorney, accountant or other agent retained by any such seller or
underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's
officers, directors, employees, attorneys and independent
accountants to supply all information, in each case reasonably
requested by any such sellers, underwriters, attorneys,
accountants or agents in connection with such registration
statement, subject to right of the Company to limit access to any
such information (i) to the extent that the Company is restricted
from providing such information pursuant to any bona fide
confidentiality agreement to which the Company or any of its
subsidiaries is a party and (ii) the Company shall have delivered
to each seller of the Registrable Securities a certificate duly
executed by the chief executive or chief financial officer of the
Company stating that such information does not contain any
material information that has not been publicly disclosed and
which would be required to be disclosed in, or which would
materially affect any information required to be disclosed in,
such registration statement;
(xii) use its best efforts to comply with all applicable
laws related to such registration statement and offering and sale
of securities and all applicable rules and regulations of
governmental authorities in connection therewith (including,
without limitation, the Securities Act and the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated
by the Commission) and make generally available to its security
holders as soon as practicable (but in any event not later than
fifteen (15) months after the effectiveness of such registration
statement) an earnings statement of the Company and its
subsidiaries complying with Section 11(a) of the Securities Act;
(xiii) furnish to each seller of Registrable Securities a
signed counterpart of (x) an opinion of counsel for the Company
(which counsel shall be reasonably acceptable to the holders of a
majority of the Registrable Securities being so registered) and
(y) a "comfort" letter signed by the independent public
accountants who have certified the Company's financial statements
included or incorporated by reference in such registration
statement, covering such matters with respect to such registration
statement and, in the case of the accountants' comfort letter,
with respect to events subsequent to the date of such financial
statements, as are customarily covered in opinions of issuer's
counsel and in accountants' comfort letters delivered to the
underwriters in underwritten public offerings of securities for
the account of, or on behalf of, an issuer of common stock, such
opinion and comfort letters to be dated the date such opinions and
comfort letters are customarily dated in such transactions, and
covering, in the case of such legal opinion, such other legal
matters and, in the case of such comfort letter, such other
financial matters, as any seller of such Registrable Securities
may reasonably request; and
(xiv) take all such other actions as the holders of a
majority of the Registrable Securities being sold or the
underwriters, if any, reasonably request in order to expedite or
facilitate the disposition of such Registrable Securities.
Without limiting any of the foregoing, in the event that the
offering of Registrable Securities is to be made by or through an
underwriter, the Company shall enter into an underwriting agreement
with a managing underwriter or underwriters containing representations,
warranties, indemnities and agreements customarily included (but not
inconsistent with the agreements contained herein) by an issuer of
common stock in underwriting agreements with respect to offerings of
common stock for the account of, or on behalf of, selling stockholders.
In connection with the sale of Registrable Securities hereunder, any
seller of such Registrable Securities may, at its option, require that
any and all representations and warranties by, and indemnities and
agreements of, the Company to or for the benefit of such underwriter or
underwriters (or which would be made to or for the benefit of such an
underwriter or underwriter if such sale of Registrable Securities were
pursuant to a customary underwritten offering) be made to and for the
benefit of such seller and that any or all of the conditions precedent
to the obligations of such underwriter or underwriters (or which would
be so for the benefit of such underwriter or underwriters under a
customary underwriting agreement) be conditions precedent to the
obligations of such seller in connection with the disposition of its
securities pursuant to the terms hereof (it being agreed that in
connection with any Demand Registration, without limiting any rights or
remedies of the holders of Registerable Securities, subject to Section
4, in the event any such condition precedent shall not be satisfied
and, if not so satisfied, shall not be waived by the holders of a
majority of the Registerable Securities to be included in such Demand
Registration, such Demand Registration shall not be counted as a
permitted Demand hereunder). No seller of Registrable Securities
pursuant to the terms of this Agreement shall be required to make any
representations or warranties to, or agreements with, the Company or
underwriter or underwriters or any other Person, other than
representations and warranties regarding such seller's ownership of
such Registrable Securities and the intended method of distribution and
other than any agreements contemplated by the terms of this Agreement.
In connection with any offering of Registrable Securities registered
pursuant to this Agreement, the Company shall (x) furnish to the
underwriter, if any (or, if no underwriter, the sellers of such
Registrable Securities), unlegended certificates representing ownership
of the Registrable Securities being sold, in such denominations as
requested for sale pursuant to such registration and (y) instruct any
transfer agent and registrar of the Registrable Securities to release
any stop transfer order with respect thereto.
Each seller of Registrable Securities hereunder agrees that upon
receipt of any notice from the Company of the happening of any event of
the kind described in paragraph (h) of this Section 6, such seller
shall forthwith discontinue such seller's disposition of Registrable
Securities pursuant to the applicable registration statement and
prospectus relating thereto until such seller's receipt of the copies
of the supplemented or amended prospectus contemplated by paragraph (h)
of this Section 6 and, if so directed by the Company, deliver to the
Company (at the Company's sole cost and expense) all copies, other than
permanent file copies, then in such seller's possession of the
prospectus current at the time of receipt of such notice relating to
such Registrable Securities. In the event the Company shall give such
notice, the one hundred twenty (120)-day period during which such
registration statement must remain effective pursuant to this Agreement
shall be extended by the number of days during the period from the date
of giving of a notice regarding the happening of an event of the kind
described in paragraph (h) of this Section to the date when all such
sellers shall receive such a supplemented or amended prospectus and
such prospectus shall have been filed with the Commission.
(D) Registration Expenses. All expenses incident to the
Company's performance of, or compliance with, its obligations under
this Agreement (without implication that the contrary would otherwise
be true, whether or not a registration statement under the Securities
Act is filed with the Commission or becomes effective under the
Securities Act) including, without limitation, all registration and
filing fees, all fees and expenses of compliance with securities and
"blue sky" laws (including, without limitation, the fees and expenses
of counsel for underwriters or placement or sales agents in connection
therewith to the extent provided for in the underwriting agreement),
all printing and copying expenses, all messenger and delivery expenses,
all fees and expenses of underwriters and sales and placement agents in
connection therewith (excluding discounts and commissions), all fees
and expenses of the Company's independent certified public accountants
and counsel (including, without limitation, with respect to "comfort"
letters and opinions) and other Persons retained by the Company in
connection therewith, and the reasonable fees and expenses of no more
than one counsel for the holders (as a group) of Registrable Securities
to be registered hereunder (collectively, the "Registration Expenses")
shall be borne by the Company unless otherwise provided in this
Agreement except that the Company will, in any event (and without
implication that the contrary would otherwise be true), pay its
internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting
duties, the expense of any annual audit) (collectively, "Internal
Expenses") and the expenses and fees for listing the securities to be
registered on each securities exchange and included in each established
over-the-counter market on which securities of the same class issued by
the Company are then listed or traded or for listing on the NASDAQ
pursuant to paragraph (i) of Section 6 of this Agreement.
(E) Indemnification.
1. By the Company. The Company agrees to indemnify, to the
fullest extent permitted by law, each holder of Registrable
Securities, its officers, directors, employees and agents and each
Person who controls (within the meaning of the Securities Act)
such holder or such an other indemnified Person against all
losses, claims, damages, liabilities and expenses caused by any
untrue or alleged untrue statement of material fact contained in
any registration statement, prospectus or preliminary prospectus
or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein
or a fact necessary to make the statements therein not misleading,
except insofar as the same are caused by and contained in any
information furnished in writing to the Company by such holder
expressly for use therein. In connection with an underwritten
offering and without limiting any of the Company's other
obligations under this Agreement, the Company shall indemnify such
underwriters, their officers, directors, employees and agents and
each Person who controls (within the meaning of the Securities
Act) such underwriters or such an other indemnified Person to the
same extent as provided above with respect to the indemnification
of the holders of Registrable Securities.
2. By Holders. In connection with any registration
statement in which a holder of Registrable Securities is
participating, each such holder will furnish to the Company in
writing information regarding such holder's ownership of
Registrable Securities and its intended method of distribution
thereof and, to the extent permitted by law, shall indemnify the
Company, its directors, officers, employees and agents and each
Person who controls (within the meaning of the Securities Act) the
Company or such an other indemnified Person against any losses,
claims, damages, liabilities and expenses (including with respect
to any claim for indemnification hereunder asserted by any other
indemnified Person) resulting from any untrue or alleged untrue
statement of material fact contained in the registration
statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission
of a material fact required to be stated therein or necessary to
make the statements therein not misleading, but only to the extent
that such untrue statement or omission is caused by and contained
in such information so furnished in writing by such holder;
provided that the obligation to indemnify will be several, not
joint and several, among holders of Registrable Securities and the
liability of each such holder of Registrable Securities will be in
proportion to and limited to the net amount received by such
holder from the sale of Registrable Securities pursuant to such
registration statement.
3. Notice. Any Person entitled to indemnification
hereunder shall give prompt written notice to the indemnifying
party of any claim with respect to which its seeks
indemnification; provided, however, the failure to give such
notice shall not release the indemnifying party from its
obligation under this Section 8, except to the extent that the
indemnifying party has been materially prejudiced by such failure
to provide such notice.
4. Defense of Actions. In any case in which any such
action is brought against any indemnified party, and it notifies
an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and,
to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense
thereof, the indemnifying party will not (so long as it shall
continue to have the right to defend, contest, litigate and settle
the matter in question in accordance with this paragraph) be
liable to such indemnified party hereunder for any legal or other
expense subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation, supervision and monitoring (unless such indemnified
party reasonably objects to such assumption on the grounds that
there may be defenses available to it which are different from or
in addition to the defenses available to such indemnifying party,
in which event the indemnified party shall be reimbursed by the
indemnifying party for the expenses incurred in connection with
retaining separate legal counsel; provided that the indemnifying
party shall not be obligated to reimburse the indemnified parties
for the fees and expenses of more than one counsel for all
indemnified parties who do not have different or additional
defenses among themselves). An indemnifying party shall not be
liable for any settlement of an action or claim effected without
its consent. The indemnifying party shall lose its right to
defend, contest, litigate and settle a matter if it shall fail to
diligently contest such matter (except to the extent settled in
accordance with the next following sentence). No matter shall be
settled by an indemnifying party without the consent of the
indemnified party (which consent shall not be unreasonably
withheld).
5. Survival. The indemnification provided for under this
Agreement shall remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified Person and
will survive the transfer of the Registrable Securities.
6. Contribution. If recovery is not available under the
foregoing indemnification provisions for any reason or reasons
other than as specified therein, any Person who would otherwise be
entitled to indemnification by the terms thereof shall
nevertheless be entitled to contribution with respect to any
losses, claims, damages, liabilities or expenses with respect to
which such Person would be entitled to such indemnification but
for such reason or reasons. In determining the amount of
contribution to which the respective Persons are entitled, there
shall be considered the Persons' relative knowledge and access to
information concerning the matter with respect to which the claim
was asserted, the opportunity to correct and prevent any statement
or omission, and other equitable considerations appropriate under
the circumstances. It is hereby agreed that it would not
necessarily be equitable if the amount of such contribution were
determined by pro rata or per capita allocation.
(F) Participation in Underwritten Registrations. No Person may
participate in any underwritten registration hereunder unless such
Person (a) agrees to sell such Person's securities on the basis
provided in any underwriting arrangements and (b) completes and
executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of
such underwriting arrangements.
(G) Miscellaneous.
1. Existing Registration Rights; No Inconsistent
Agreements. The Company represents and warrants that there are no
existing rights to require or request the Company to register any
equity securities of the Company, or any securities convertible or
exchangeable into or exercisable for such securities. The Company
shall not grant to any Person the right to require or request the
Company to register any equity securities of the Company, or any
securities convertible or exchangeable into or exercisable for
such securities which is inconsistent with the rights granted to
the holders of Registrable Securities in this Agreement without
the prior written consent of the holders of a majority of the
Registrable Securities.
2. Rule 144. The Company shall timely file the reports
required to be filed by it under the Securities Act or the
Exchange Act (including, without limitation, the reports under
Sections 13 and 15(d) of the Exchange Act referred to in
subparagraph (c)(1) of Rule 144 promulgated under the Securities
Act). Upon the request of the holder of Registrable Securities,
the Company shall: (i) deliver to such holder a written statement
as to its compliance with the reporting requirements of Rule 144,
as such rule may be amended from time to time, and (ii) take such
further action, including, without limitation, supply and make
publicly available any other information in the possession of or
reasonably obtainable by the Company, with the purpose of allowing
such holder to avail itself of Rule 144 or any other rule or
regulation of the SEC allowing it to sell securities without
registration under the Securities Act.
3. Remedies. Any Person having rights under any provision
of this Agreement will be entitled to enforce such rights
specifically, to recover damages caused by reason of any breach of
any provision of this Agreement and to exercise all other rights
granted by law.
4. Amendments and Waivers. Except as otherwise provided
herein, the provisions of this Agreement may be amended or waived
and the Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, only if the
Company has obtained the written consent holders of at least a
majority of the Registrable Securities; provided that no such
amendment or waiver may be made and the Company may not take any
such action or fail to perform any such act if such amendment,
action or failure to perform adversely affects any holder or group
of holders of Registrable Securities in a manner that does not
adversely affect the holders of Registrable Securities in general,
without the written consent of such holder or members of such
group of holders holding a majority of the Registrable Securities
held by such group. Notwithstanding the foregoing, holders of
Registrable Securities outstanding from time to time shall not be
entitled to adversely affect the rights of former holders of
Registrable Securities under this Agreement without the consent of
a majority in interest of such former holders so affected.
5. Successors and Assigns. All covenants and agreements in
this Agreement by or on behalf of any of the parties hereto will
bind and inure to the benefit of the respective successors and
assigns of the parties hereto whether so expressed or not. In
addition, whether or not any express assignment has been made, the
provisions of this Agreement which are for the benefit of
purchasers or holders of Registrable Securities are also for the
benefit of, and enforceable by, any subsequent holder of
Registrable Securities.
6. Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this
Agreement is held to be prohibited by or invalid under applicable
law, such provision will be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of
this Agreement.
7. Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, any one of which need
not contain the signatures of more than one party, but all such
counterparts taken together will constitute one and the same
Agreement.
8. Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute
a part of this Agreement.
9. Governing Law. All questions concerning the
construction, validity and interpretation of this Agreement and
the exhibits and schedules hereto will be governed by the internal
law, and not the law of conflicts, of Illinois.
10. GAMI Directorship. If the ownership, direct or
indirect, of Company Common Stock by Great American Management and
Investment, Inc. ("GAMI"), whether or not Merger Shares, is
reduced below 3.5% of the outstanding Company Common Stock, GAMI
will cause any affiliate or associate of GAMI, within the meaning
of Rule 405 under the Securities Act, who is then serving as a
director of the Company to resign as such a director.
11. Notices. All notices, demands or other communications
to be given or delivered under or by reason of the provisions of
this Agreement will be in writing and will be deemed to have been
given (i) when delivered personally or transmitted by a recognized
overnight courier service, or (ii) five days after they are mailed
by certified or registered mail, return receipt requested and
postage prepaid, to the recipient. Such notices, demands and
other communications will be sent to each holder of Registrable
Securities at the address set forth in the records of the Company
with respect to such holder and to the Company at its principal
executive office or, in each case, to such other address or to the
attention of such other person as the recipient party has
specified by prior written notice to the sending party.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
IMC GLOBAL INC.
By:/s/ Marschall I. Smith
Marschall I. Smith
Senior Vice President
STOCKHOLDERS:
/s/ Rod F. Dammeyer
Rod F. Dammeyer
/s/ Robert E. Fowler, Jr.
Robert E. Fowler, Jr.
/s/ Ray A. Goldberg
Ray A. Goldberg
GREAT AMERICAN MANAGEMENT
AND INVESTMENT, INC.
By: /s/ Rod Dammeyer
Name: Rod Dammeyer
Title: President & CEO
/s/ Arthur A. Greenberg
Arthur A. Greenberg
/s/ Kenneth W. Holbrook, Jr.
Kenneth W. Holbrook, Jr.
/s/ John U. Huber
John U. Huber
/s/ Karen N. Latham
Karen N. Latham
/s/ Harold H. MacKay
Harold H. MacKay
/s/ Donald F. Mazankowski
Donald F. Mazankowski
/s/ James J. Patterson
James J. Patterson
/s/ Jay D. Proops
Jay D. Proops
/s/ Sheli Z. Rosenberg
Sheli Z. Rosenberg
/s/ Andrew Sarlos
Andrew Sarlos
/s/ Joseph P. Sullivan
Joseph P. Sullivan
/s/ Robert L. Thompson
Robert L. Thompson
/s/ Robert M. Van Patten
Robert M. Van Patten
/s/ Clayton K. Yeutter
Clayton K. Yeutter
/s/ Samuel Zell
Samuel Zell
