- -----------------------------------------------------------------------
-------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
-----
THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended June 30, 1997
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
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- ---------------------
Common Stock, par value $1 per share New York Stock Exchange
Preferred Share Purchase Rights Chicago Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the Registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X . No .
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
Aggregate market value of the voting stock held by non-affiliates of
the Registrant: $2,921,709,929 as of August 29, 1997. Market value is
based on the August 29, 1997 closing price of Registrant's common stock
as reported on the New York Stock Exchange Composite Transactions for
such date.
APPLICABLE ONLY TO CORPORATE REGISTRANTS: Indicate the number of
shares outstanding of each of the registrant's classes of common stock:
92,109,557 shares, excluding 9,798,620 treasury shares as of August 29,
1997.
- -------------------------------------------------------------------
- -----------------------------------------------------------------------
<PAGE>
1997 FORM 10-K CONTENTS
Item Page
- ------------------------------------------------------------------
Part I:
1. Business 1
Company Profile 1
Subsequent Event 2
Business Unit Information 2
Factors Affecting Demand 12
Other Matters 12
2. Properties 15
3. Legal Proceedings 16
4. Submission of Matters to a Vote of Security Holders 16
Part II:
5. Market for the Registrant's Common Stock and
Related Stockholder Matters 17
6. Selected Financial Data 18
7. Management's Discussion and Analysis of Results
of Operations and Financial Condition 19
8. Financial Statements and Supplementary Data 30
9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 55
Part III:
10. Directors and Executive Officers of the Registrant 56
11. Executive Compensation 59
12. Security Ownership of Certain Beneficial Owners
and Management 68
13. Certain Relationships and Related Transactions 70
Part IV:
14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K 70
Signatures 81
- ----------------------------------------------------------------
<PAGE>
PART I.
Item 1. Business.(1)
COMPANY PROFILE
IMC Global Inc. (the Company) is one of the world's leading
producers of crop nutrients for the international agricultural
community and is one of the foremost distributors in the United States
of crop nutrients and related products through its retail and wholesale
distribution networks. The Company mines, processes and distributes
potash in the United States and Canada and is a joint venture partner
in IMC-Agrico Company (IMC-Agrico), a leading producer, marketer and
distributor of phosphate crop nutrients and animal feed ingredients.
The Company has a 56.5 percent economic interest in IMC-Agrico over the
term of the partnership; the remaining interest is held by
Freeport-McMoRan Resource Partners, Limited Partnership (FRP). (See
"Subsequent Event," in Part I, Item 1, "Business," of this Annual
Report on Form 10-K.) The Company believes that it is one of the most
efficient North American producers of concentrated phosphates and
potash. The Company's retail distribution network, which extends
principally to corn and soybean farmers in the eastern Midwest and to
cotton, peanut and vegetable farmers in the southeastern United States,
is one of the preeminent distributors of crop nutrients and related
products. The Company also manufactures nitrogen-based and other high-
value crop nutrients which are marketed on a dealer basis, principally
in the midwestern and southeastern United States. In addition, the
Company sells specialty lawn and garden, turf and nursery products on a
national basis and ice-melter products in the Midwest, the eastern
snowbelt states and Canada.
The three major nutrients required for plant growth are phosphorus,
contained in phosphate rock; potassium, contained in potash; and
nitrogen. Phosphorus plays a key role in the photosynthesis process.
Potassium is an important regulator of plants' physiological functions.
- ---------------------------------------------------------------------
(1) Except for statements of historical fact contained herein, the
statements appearing under Part I, Item 1, "Business;" Part I, Item 3,
"Legal Proceedings;" and Part II, Item 7, "Management's Discussion and
Analysis of Results of Operations and Financial Condition," presented
herein constitute "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995.
Factors that could cause actual results to differ materially from those
expressed or implied by the forward-looking statements include, but are
not limited to, the following: the effect of general business and
economic conditions; conditions in and policies of the agriculture
industry; risks associated with investments and operations in foreign
jurisdictions and any future international expansion, including those
related to economic, political and regulatory policies of local
governments and laws or policies of the United States and Canada;
changes in governmental laws and regulations affecting environmental
compliance, taxes and other matters impacting the Company; the risks
attendant with mining operations; the potential impacts of increased
competition in the markets the Company operates within; and the risk
factors reported from time to time in the reports filed by the Company
with the SEC.
<PAGE>
Nitrogen is an essential element for most organic compounds and plants.
These elements are naturally present in the soil but need to be
replaced through the use of crop nutrients as crops exhaust them.
Currently, no viable crop nutrient substitutes exist to replace the
role of phosphate, potash and nitrogen in the development and
maintenance of high-yield crops.
The Company's business strategy focuses on maintaining and growing
its leading position as a crop nutrient producer and distributor
through extensive customer service, efficient distribution and
transportation and supplying products worldwide at competitive prices
by taking advantage of economies of scale and state-of-the-art
technology to reduce costs. The Company intends to continue to expand
its product distribution and marketing throughout the world through
export associations and its international sales force.
On March 1, 1996, the Company completed a merger (Merger) with The
Vigoro Corporation (Vigoro), which resulted in Vigoro becoming a
subsidiary of the Company. The Merger enabled the Company to, among
other things, broaden its business mix and reduce the relative
importance of generally more price-volatile phosphate-based crop
nutrients to the Company's consolidated results. In addition, the
Merger expanded the Company's potash customer base to include
industrial customers, whereas shipments of potash were previously made
primarily to agricultural users. Vigoro also had a significant retail
distribution network, giving it direct contact with farmers, the
principal consumers of crop nutrient products. Prior to the Merger, a
limited amount of products were sold directly to farmers. Following
the Merger, the Company restructured its operations into five business
units corresponding to its major product lines as follows: IMC-Agrico
Crop Nutrients (phosphates), IMC Kalium (potash), IMC AgriBusiness
(wholesale and retail distribution), IMC-Agrico Feed Ingredients
(animal feed) and IMC Vigoro (specialty products). All information in
this Annual Report on Form 10-K has been adjusted to give effect to the
Merger.
SUBSEQUENT EVENT
In August 1997, the Company signed a definitive agreement with
Freeport-McMoRan Inc. (FTX), which holds a 51.6 percent interest in
FRP, providing for the merger of FTX into the Company. The Company
will be the surviving entity and the transaction will be accounted for
as a purchase. In the proposed merger (FTX Merger), each share of
common stock of FTX would be exchanged for 0.90 shares of the Company's
common stock plus one-third of a warrant, with each whole warrant
entitling the holder to purchase one share of the Company's common
stock at a price equal to $44.50 per share. Immediately prior to the
FTX Merger, the sulphur businesses of FRP and the Company (see
"Business Unit Information - IMC-Agrico Crop Nutrients - Sulphur," in
Part I, Item 1, "Business," of this Annual Report on Form 10-K) will be
transferred to Freeport Sulphur Company, a newly-formed subsidiary of
FRP. Shares of Freeport Sulphur Company will be distributed to all FRP
unitholders, including FTX. As of June 30, 1997, the net carrying
value of the Company's sulphur investment was approximately $200.0
million. The Company expects to record a significant non-cash charge
on the disposition of this investment in connection with the FTX
<PAGE>
Merger. The FTX Merger is subject to various closing conditions,
including approval by stockholders of FTX and the Company.
BUSINESS UNIT INFORMATION
The amounts and relative proportions of net sales and operating
earnings contributed by the business units of the Company have varied
from year to year and may continue to do so in the future as a result
of changing business, economic and competitive conditions as well as
technological developments.
The following business unit discussion should be read in
conjunction with the information contained in Part II, Item 7,
"Management's Discussion and Analysis of Results of Operations and
Financial Condition," of this Annual Report on Form 10-K.
IMC-Agrico Crop Nutrients
- -------------------------
Net sales for the IMC-Agrico Crop Nutrients (Crop Nutrients)
business unit were $1,562.2 million, $1,747.7 million and $1,559.0
million for the years ended June 30, 1997, 1996 and 1995, respectively.
Crop Nutrients is a leading United States miner of phosphate rock
with 25 million tons of annual capacity. Crop Nutrients' central
Florida phosphate mining operations and plants produce phosphate rock,
which is one of the primary raw materials used in the production of
concentrated phosphates.
Crop Nutrients is also a leading United States producer of
concentrated phosphates with an annual capacity of approximately four
million tons of phosphoric acid (P2O5 equivalent). P2O5 is an
industry term indicating a product's phosphate content measured
chemically in units of phosphorous pentoxide. Crop Nutrients'
concentrated phosphate products are marketed worldwide to crop nutrient
manufacturers, distributors and retailers.
Crop Nutrients' concentrated phosphate production facilities are
located in central Florida and Louisiana. Its annual capacity
represents approximately 31 percent of total United States concentrated
phosphate production capacity and ten percent of world capacity. The
Florida concentrated phosphate facilities consist of three plants: New
Wales, Nichols and South Pierce. The New Wales complex is the largest
concentrated phosphate plant in the world with an estimated annual
capacity of 1.8 million tons of phosphoric acid (P2O5 equivalent). New
Wales primarily produces four forms of concentrated phosphates:
diammonium phosphate (DAP), monoammonium phosphate (MAP), granular
triple superphosphate (GTSP) and merchant grade phosphoric acid. The
Nichols facility manufactures phosphoric acid, DAP and granular MAP.
The South Pierce plant produces phosphoric acid and GTSP. The
Louisiana concentrated phosphate facilities consist of three plants:
Uncle Sam, Faustina and Taft. The Uncle Sam plant produces phosphoric
acid which is then shipped to the Faustina and Taft plants where it is
used to produce DAP and granular MAP. The Faustina plant manufactures
phosphoric acid, DAP, granular MAP, urea and ammonia. The Taft
facility manufactures only DAP. Concentrated phosphate operations are
managed to balance Crop Nutrients' output with customer needs. The
Nichols and Taft complexes were temporarily idled during fiscal 1997.
<PAGE>
Subsequent to June 30, 1997, Crop Nutrients resumed production at the
Nichols facility; Taft remains closed subject to improvement of market
conditions.
Phosphate rock, sulphur and ammonia are the three principal raw
materials used in the production of concentrated phosphates:
Phosphate Rock
Crop Nutrients' phosphate mining operations and beneficiation
plants are located in central Florida. Crop Nutrients extracts
phosphate ore through surface mining after removal of a ten to 50 foot
layer of sandy overburden and then processes the ore at one of its five
currently operating beneficiation plants where the ore goes through
washing, screening, sizing and flotation procedures designed to
separate it from sands, clays and other foreign materials. Crop
Nutrients has two additional beneficiation plants, one of which has
been idle since 1986 and one of which was idled in June 1997. Crop
Nutrients' phosphate rock production volume for the years ended
June 30, 1997, 1996 and 1995 totaled 22.5 million, 23.7 million and
24.4 million tons, respectively. Although Crop Nutrients sells
phosphate rock to other crop nutrient and animal feed ingredient
manufacturers, it primarily uses phosphate rock internally in the
production of concentrated phosphates. Tons used captively, primarily
in the manufacture of concentrated phosphates, totaled 14.2 million,
14.7 million and 14.3 million for the years ended June 30, 1997, 1996
and 1995, respectively, representing 63 percent, 62 percent and 59
percent, respectively, of total tons produced. Product shipments to
customers totaled 5.8 million, 7.6 million and 10.7 million tons for
the years ended June 30, 1997, 1996 and 1995, respectively. Customer
shipments have been reduced in order to maximize relative values of
rock and concentrated phosphates by utilizing high-quality reserves for
internal upgrading.
Crop Nutrients estimates its reserves to be 579 million tons of
phosphate rock as of June 30, 1997. These reserves are controlled by
Crop Nutrients through ownership, long-term lease, royalty or purchase
option agreements. Reserve grades range from 58.0 percent to 78.0
percent bone phosphate of lime (BPL), with an average grade of 66.6
percent BPL. BPL is the standard industry term used to grade the
quality of phosphate rock. The phosphate rock mined by Crop Nutrients
in the last three years averaged 65.8 percent BPL, which is typical for
phosphate rock mined in Florida during this period. Crop Nutrients
estimates its reserves based upon the performance of exploration core
drilling and technical and economic analyses to determine that reserves
so classified can be economically mined at market prices estimated to
prevail during the next five years.
During 1997, approximately 100 million tons were added to reserves
as a result of the agreement to purchase Pine Level. (See
"Contingencies - Pine Level Property Reserves," in Part II, Item 7, "
Management's Discussion and Analysis of Results of Operations and
Financial Condition," in this Annual Report on Form 10-K for further
detail.) In addition, approximately 100 million tons of mineralized
deposits (as described below) were moved to reserves during the year as
the necessary prospect data and analyses were completed.
<PAGE>
Crop Nutrients also owns or controls phosphate rock resources in
the southern extension of the central Florida phosphate district.
Resources are mineralized deposits which may be economically
recoverable; however, additional prospect data and analyses, including
further geological work, drilling, permitting and mining feasibility
studies, are required before they may be classified as reserves. Based
upon its preliminary analyses of these resources, Crop Nutrients
believes that these mineralized deposits differ in physical and
chemical characteristics from those historically mined by Crop
Nutrients but are similar to some of the reserves being mined by
current operations. These resources contain estimated recoverable
phosphate rock of approximately 232 million tons with an average grade
of approximately 64.0 percent BPL. Some of these resources are located
in what may be classified as preservational wetland areas under
standards set forth in current county, state and federal environmental
protection laws and regulations.
Sulphur
The Company owns a 25 percent interest in a joint venture which
began mining sulphur reserves at Main Pass 299 (Main Pass) offshore
Louisiana in April 1992. In fiscal 1997, FRP, the operator of Main
Pass, produced 1.9 million long tons of sulphur. Using a hot-water
injection process, Main Pass is one of the most thermally efficient
sulphur mines in the industry. The Company and FRP have an agreement
to supply a significant portion of Crop Nutrients' sulphur
requirements. FRP supplies its portion of the requirements through its
sulphur division, and the Company supplies its portion of the
requirements through its share of Main Pass production and purchases
from FRP and third parties. (See "Subsequent Event," in Part I, Item
1, "Business," of this Annual Report on Form 10-K for further detail.)
Ammonia
Crop Nutrients' ammonia needs are supplied by its Faustina ammonia
production facility and by world suppliers, primarily under long-term
contracts. Production from the Faustina plant, which has an estimated
annual capacity of 560,000 tons of anhydrous ammonia, is primarily used
internally to produce DAP, granular MAP and urea.
Sales and Marketing
Domestically, Crop Nutrients sells its concentrated phosphates to
crop nutrient manufacturers, distributors and retailers in the spot
market. The Company also uses concentrated phosphates internally for
the production of animal feed ingredients (see IMC-Agrico Feed
Ingredients), high-value crop nutrients (see IMC AgriBusiness) and
consumer lawn and garden as well as professional turf and nursery
products (see IMC Vigoro). Virtually all of Crop Nutrients' export
sales of phosphate crop nutrients are marketed through the Phosphate
Chemicals Export Association (PhosChem), a Webb-Pomerene Act
organization. Outside of the United States, the countries which
account for the largest amount of Crop Nutrients' sales of concentrated
phosphates include China, Japan, Australia and Thailand. The table
below shows Crop Nutrients' shipments in thousands of tons of P2O5
equivalent:
<PAGE>
<TABLE>
<CAPTION>
1997 1996 1995
----------- ---------- ------------
Tons % Tons % Tons %
------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Domestic
Customers 1,164 30% 1,383 34% 1,319 33%
Captive, to other
business units 587 15 487 12 504 13
----- --- ----- --- ----- ---
1,751 45 1,870 46 1,823 46
Export 2,113 55 2,187 54 2,138 54
----- --- ----- --- ----- ---
Total shipments 3,864 100% 4,057 100% 3,961 100%
===== === ===== === ===== ===
</TABLE>
Crop Nutrients has contractual commitments from outside customers
for the shipment of concentrated phosphates amounting to approximately
800,000 tons (P2O5 equivalent) and phosphate rock amounting to
approximately five million tons in fiscal 1998.
Other
Crop Nutrients also manufactures and markets uranium oxide.
Phosphate rock is the source of uranium oxide, with the uranium content
varying from deposit to deposit. Uranium oxide production facilities
are located in Louisiana and Florida. In Louisiana, Crop Nutrients
owns and operates uranium oxide recovery and processing facilities
which are located adjacent to its Uncle Sam and Faustina concentrated
phosphate plants. In 1997, these facilities recovered 1.0 million
pounds of uranium oxide from phosphoric acid produced at these
facilities. Crop Nutrients also owns two uranium oxide recovery and
processing facilities in central Florida, one located adjacent to its
New Wales concentrated phosphate plant and another located adjacent to
a concentrated phosphate plant owned and operated by a subsidiary of CF
Industries, Inc. (CF). The New Wales and CF facilities have been
temporarily idled pending improvement of uranium market conditions.
Competition
Crop Nutrients operates in a highly competitive global market.
Among the competitors in the global phosphate crop nutrient market are
domestic and foreign companies, as well as foreign government-supported
producers. Phosphate crop nutrient producers compete primarily based
on price, and to a lesser extent based on product quality and
innovation.
IMC Kalium
- ----------
Net sales for the IMC Kalium business unit were $524.3 million,
$455.6 million and $472.0 million for the years ended June 30, 1997,
1996 and 1995, respectively.
<PAGE>
IMC Kalium mines, processes and distributes potash in the United
States and Canada. IMC Kalium's products are marketed worldwide to
crop nutrient manufacturers, distributors and retailers and are also
used internally in the manufacture of mixed crop nutrients and, to a
lesser extent, animal feed ingredients (see IMC AgriBusiness and
IMC-Agrico Feed Ingredients, respectively). IMC Kalium's potash
products are also used by IMC Vigoro for consumer and professional lawn
and garden products as well as ice-melter (see IMC Vigoro). IMC Kalium
also sells potash to customers for industrial use. IMC Kalium operates
four potash mines in Canada and two potash mines in the United States.
With a total capacity in excess of nine million tons of product per
year, IMC Kalium is one of the leading private enterprise potash
producers in the world. In 1997, these operations accounted for
approximately 13 percent of world capacity.
The term "potash" applies generally to the common salts of
potassium. Since the amount of potassium in these salts varies, the
industry has established a common standard of measurement by defining a
product's potassium content in terms of equivalent percentages of
potassium oxide (K2O). A K2O equivalent of 60.0 percent is the
customary minimum standard for muriate of potash products.
Canadian Operations
IMC Kalium's four potash mines in Canada are located in the
province of Saskatchewan, Canada. Two potash mines are interconnected
at Esterhazy, one is located at Belle Plaine and one is located at
Colonsay. The combined annual capacity of these four mines is
approximately eight million tons. Esterhazy and Colonsay utilize shaft
mining while Belle Plaine utilizes solution mining technology. Potash
shaft mining takes place underground at depths of over 3,000 feet where
continuous mining machines cut out the ore face and move jagged chunks
of ore to conveyor belts. The ore is then crushed and moved to storage
bins where it awaits hoisting to refineries above ground. In contrast,
IMC Kalium's solution mining process involves heated water which is
pumped through a "cluster" to dissolve the potash in the ore bed. A
cluster consists of a series of boreholes drilled into the potash ore
by a portable, all-weather electric drilling rig. A separate
distribution center at each cluster controls the brine flow. The
solution containing dissolved potash and salt is pumped to a refinery
where sodium chloride, a co-product of this process, is separated from
the potash through the use of evaporation and crystallization
techniques. Concurrently, solution is pumped into a 130-acre cooling
pond where additional crystallization occurs and the resulting product
is recovered via a floating dredge. Refined potash is dewatered, dried
and sized. The Canadian operations produce 26 different potash
products, including industrial grades, many through patented processes.
Potash Corporation of Saskatchewan Inc. (PCS) controls several
potash-producing properties in the province, including a property which
consists of reserves located in the vicinity of IMC Kalium's Esterhazy
mines. Under a long-term contract with PCS, the Company is obligated
to mine and refine these reserves for a fee plus a pro rata share of
production costs. The specified quantities of potash to be produced
for PCS may, at the option of PCS, amount to an annual maximum of
approximately one-fourth of the tons produced by Esterhazy but no more
than approximately 1.1 million tons. The current contract extends
<PAGE>
through June 30, 2001 and is renewable at the option of PCS for five
additional five-year periods.
IMC Kalium controls the rights to mine 331,660 acres of
potash-bearing land in Saskatchewan. This land, of which 69,748 acres
have already been mined or abandoned, contains over 4.6 billion tons of
potash mineralization (calculated after estimated extraction losses) at
an average grade of about 21.0 percent. This ore is sufficient to
support current operations for more than a century and will yield more
than 1.4 billion tons of finished product with a K2O content of
approximately 61.0 percent.
IMC Kalium's mineral rights in Saskatchewan consist of 133,102
acres owned in fee, 175,241 acres leased from the province of
Saskatchewan and 23,317 acres leased from other parties. All leases
are renewable by the Company for successive terms of 21 years.
Royalties, established by regulation of the province of Saskatchewan,
amounted to approximately $6.4 million, $6.8 million and $6.0 million
in 1997, 1996 and 1995, respectively.
In August 1995, the Company was chosen by the Minister of State for
Mines and Energy for the Canadian province of New Brunswick to explore
the potash deposit near the town of Sussex. IMC Kalium is currently
performing a geological reassessment of the property and feasibility
study to determine whether to develop the deposit.
Since December 1985, IMC Kalium has experienced an inflow of water
into one of its two interconnected potash mines at Esterhazy. As a
result, IMC Kalium has incurred expenditures, certain of which due to
their nature were capitalized while others were charged to expense, to
control the inflow. Since the initial discovery of the inflow, IMC
Kalium has been able to meet all sales obligations from production at
the mines. IMC Kalium has considered, and continues to evaluate,
alternatives to the operational methods employed at Esterhazy.
However, recent changes in the procedures utilized to control the water
inflow have proven successful to date and IMC Kalium currently intends
to continue conventional shaft mining. Despite the relative success of
these modified measures, there can be no assurance that the amounts
required for remedial efforts will not increase in future years or that
the water inflow or remediation costs will not increase to a level
which would cause IMC Kalium to change its mining process or abandon
the mines.
Like other potash producers' shaft mines, IMC Kalium's Colonsay
mine is also subject to the risks of inflow of water as a result of its
shaft mining operations.
The Saskatchewan potash mining industry generally has been unable
to secure insurance to cover other risks associated with underground
operations. Therefore, IMC Kalium's underground mine operations are
not presently insured against, and are not insurable against, business
interruption or risk from catastrophic perils, including collapse,
floods and other water inflow.
In January 1988, the U. S. Department of Commerce (Commerce) signed
an agreement with all of the potash producers in Canada, suspending an
investigation by Commerce to determine whether Canadian potash was, or
was likely to be, sold in the United States at less than "fair
<PAGE>
value." The agreement stipulated that each such producer's minimum
price for potash sold in the United States, compared with its potash
prices in Canada, would be based upon a formula to assure that such
product was sold in the United States at a price no less than "fair
value." In January 1993, this agreement was extended by Commerce for
an indefinite period.
The Saskatchewan Department of Environmental and Resource
Management (Saskatchewan Department) published regulations requiring
all potash mine operators to submit facility decommissioning and
reclamation plans for approval by the Saskatchewan Department and to
provide assurances that the plans will be carried out when the facility
is closed. The Company believes the expected life of its facilities in
Saskatchewan to be more than 100 years. On April 18, 1997, IMC Kalium
filed decommissioning and reclamation plans with the Saskatchewan
Department pursuant to the regulations. IMC Kalium is currently in
discussions regarding the decommissioning and reclamation plans.
Pending completion of these discussions, the Company is unable to
estimate with certainty the financial impact of any required
decommissioning and reclamation.
United States Operations
IMC Kalium's two United States potash mines are located in
Carlsbad, New Mexico, and Hersey, Michigan.
The Carlsbad mine has an annual production capacity of over one
million tons of finished product. The ore reserves are of three types:
(1) sylvinite, a mixture of potassium chloride and sodium chloride, the
same as the ore mined in Saskatchewan; (2) langbeinite, a double
sulphate of potassium and magnesium; and (3) a mixed ore, containing
both potassium chloride and langbeinite. At this time only the
sylvinite and langbeinite ores are mined.
Continuous and conventional underground mining methods are utilized
for ore extraction at Carlsbad. In the continuous mining sections,
drum type mining machines are used to cut sylvinite ore from the face.
Mining heights are as low as four feet. In the conventional areas, a
wide ore face is undercut and holes drilled to accept explosive
charges. Ore from both continuous and conventional sections is loaded
onto conveyors, transported to storage areas and then hoisted above
ground for further processing at the refinery.
Three types of potash are produced at the Carlsbad refinery:
muriate of potash, which is the primary source of potassium for the
crop nutrient industry; double sulphate of potash magnesia, marketed
under the brand name Sul-Po-Mag (registered trademark), containing
significant amounts of sulphur, potassium and magnesium, with low
levels of chlorine; and sulphate of potash, supplying sulphur and a
high concentration of potassium with low levels of chlorine. IMC
Kalium believes it is the leading United States producer of double
sulphate of potash magnesia and a leading United States producer of
sulphate of potash.
At Carlsbad, IMC Kalium mines and refines potash from 46,434 acres
of reserves which are controlled under long-term leases. These
reserves contain an estimated total of 161 million tons of potash
mineralization (calculated after estimated extraction losses) in four
<PAGE>
mining beds evaluated at thicknesses ranging from four to 12 feet. At
average refinery rates, these ore reserves are estimated to be
sufficient to yield 10.8 million tons of concentrate from sylvinite
with an average grade of 60.0 percent K2O and 26.3 million tons of
langbeinite concentrate with an average grade of approximately 22.0
percent K2O. At current rates of production, IMC Kalium's reserves of
sylvinite and langbeinite are estimated to be sufficient to support
operations for approximately ten years and for more than 22 years,
respectively.
IMC Kalium is currently constructing a 240,000 ton per year
Sul-Po-Mag granulation facility at Carlsbad. This facility will convert
standard grade Sul-Po-Mag into premium granular grade which has
expanded sales opportunities. The $20.0 million project is scheduled to
commence production in January 1998.
In May 1997, the Company announced that it had reached a definitive
agreement to acquire Western Ag-Minerals Company (Western Ag), a
subsidiary of Toronto-based Rayrock Yellowknife Resources Inc., for
$53.0 million. Western Ag, located in Carlsbad, New Mexico, has annual
capacity of 400,000 tons of potash and had calendar-year 1996 gross
revenues of approximately $41.0 million. On September 5, 1997, the
acquisition of Western Ag was consummated.
Since October 1989, IMC Kalium has mined a small amount of potash
at Hersey, Michigan, using solution mining technology. The objective
of this pilot plant was to test the feasibility of solution mining in
the Hersey area and to test new technologies which could be applied to
improve efficiencies at both the Belle Plaine and Hersey facilities.
IMC Kalium has completed the construction phase of its $60.0 million
expansion of this facility and operation has commenced. The plant's
current annual potash production capacity is approximately 160,000
tons, and salt capacity is approximately 300,000 tons per year. The
Company believes that the commencement of operations at the Hersey
plant is an important step forward in its strategy to increase sales
and earnings in multiple markets with multiple products.
Sales and Marketing
Potash is sold throughout the world, with IMC Kalium's largest
amount of sales outside of the United States made to China, Japan,
Malaysia, Korea, Australia, New Zealand and Latin America. Potash is
also used internally in the manufacture of high-value crop nutrients by
IMC AgriBusiness and by IMC Vigoro as a major ingredient in its
ice-melter product as well as one of the primary nutrients in the
consumer lawn and garden and professional turf and nursery products.
IMC Kalium's exports from Canada, except to the United States, are made
through Canpotex Limited (Canpotex), an export association of
Saskatchewan potash producers. Exports from Carlsbad are sold through
the Sulphate of Potash Magnesia Association, formed by the Company
under the Webb-Pomerene Act. In 1997, 83 percent of the potash
produced by IMC Kalium was sold as crop nutrients, while 17 percent was
sold for non-agricultural uses. The table below shows IMC Kalium's
shipments of potash in thousands of tons:
<PAGE>
<TABLE>
<CAPTION>
1997 1996 1995
------------ ------------ ------------
Tons % Tons % Tons %
-------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Domestic (includes Canada)
Wholesale 4,471 56% 4,112 57% 4,014 55%
Captive, to other
business units 1,178 15 1,239 17 1,058 14
----- --- ----- --- ----- ---
5,649 71 5,351 74 5,072 69
Export 2,357 29 1,864 26 2,281 31
----- --- ----- --- ----- ---
Total shipments 8,006 100% 7,215 100% 7,353 100%
===== === ===== === ===== ===
</TABLE>
IMC Kalium has contractual commitments from outside customers for
the shipment of potash amounting to approximately 1.8 million tons in
fiscal 1998.
Competition
Potash is a commodity available from many sources and the market is
highly competitive. In addition to IMC Kalium, there are six North
American producers -- three in the United States and three in Canada,
some of which may have greater production capacity than IMC Kalium.
Through its participation in Canpotex, IMC Kalium competes outside of
North America with various independent potash producers and consortia
and other export organizations, including state-owned organizations.
IMC Kalium's principal methods of competition, with respect to the sale
of potash, include pricing; offering consistent, high-quality products
and superior service; as well as developing new industrial and consumer
uses for potash.
IMC AgriBusiness
- ----------------
Net sales for the IMC AgriBusiness business unit were $860.7
million, $802.9 million and $760.8 million for the years ended June 30,
1997, 1996 and 1995, respectively. IMC AgriBusiness operates
approximately 260 facilities consisting of retail distribution centers,
manufacturing plants and terminals and warehouses. For the year ended
June 30, 1997, approximately 52 percent, 46 percent and two percent of
IMC AgriBusiness' net sales were from agricultural retail, agricultural
wholesale and industrial operations, respectively.
Retail Operations
IMC AgriBusiness believes it is one of the largest retail crop
nutrients distributors in the United States. It operates a network of
approximately 215 FARMARKET (registered trademark)s, each of which
offers a broad array of IMC AgriBusiness' crop nutrients and related
products and services. Approximately 70 percent of the FARMARKETs are
located in the eastern Midwest and the remaining in the southeastern
regions of the United States, and are generally located in rural areas,
<PAGE>
primarily serving farmers located within a 15-20 mile radius. The
FARMARKETs are clustered near and are partially supplied by IMC
AgriBusiness' production plants and terminals, many of which are
located on major rivers and have storage facilities for liquid or dry
crop nutrient materials.
Each FARMARKET custom blends and bulk blends crop nutrients to meet
the needs of individual farmers for the specific crops grown in their
areas. Crop protection products and seed are also purchased by IMC
AgriBusiness and sold through its FARMARKETs. One of the most
successful FARMARKET programs is the Balanced Fertility Program which
is designed to improve crop production through increased yields per
acre. Key elements of this program include soil testing and programs
to correct soil deficiencies. FARMARKETs also offer farmers the option
of having IMC AgriBusiness' employees apply crop nutrient and crop
protection chemicals, thereby saving time, labor costs and the cost of
investment in specialized equipment required for such applications.
FARMARKETs are generally staffed by a manager, one or two
salespeople and two to three hourly employees, some of whom are
seasonal employees. IMC AgriBusiness extensively trains its full-time
FARMARKET employees in crop nutrient application and agronomics,
business management and environmental compliance. This training is
deemed to be essential to customer service. The majority of IMC
AgriBusiness' salaried FARMARKET employees have obtained certification
from the Certified Crop Advisors Program as Certified Crop Advisors.
Approximately ten percent of IMC AgriBusiness' FARMARKETs are owned
and operated by independent dealers who purchase IMC AgriBusiness'
products on consignment. Blending and storage are performed at the
dealer's place of business, and the dealer is paid a commission
determined by a sliding scale based on the volume and profit margin of
the products sold. IMC AgriBusiness recommends prices, approves credit
extended by these dealers, owns the FARMARKETs' working capital and
often owns its blending equipment.
FARMARKET sales, as well as wholesale sales discussed below, are
largely concentrated in the spring planting season. Weather has a
significant impact on the timing and length of the planting season and,
therefore, can have a significant effect on crop nutrient sales prices
and volumes.
IMC AgriBusiness also offers high technology agricultural advisory
services to its retail customers through its Top Soil Precision Ag (Top
Soil) operations. Top Soil offers soil sampling via global
positioning; crop scouting; yield monitor mapping and interpretation;
statistical analysis for yield variation and other crop management
services.
Wholesale Operations
IMC AgriBusiness sells agricultural crop nutrient and crop
protection products on a wholesale basis to independent dealers and
distributors, including those that perform services similar to those
offered by FARMARKETs.
The wholesale sales in the southeastern region of the United States
include products sold under the brand names RAINBOW (registered
<PAGE>
trademark) and SUPER RAINBOW (registered trademark) which are produced
from granulation plants in Americus, Georgia; Florence, Alabama;
Winston Salem, North Carolina and Hartsville, South Carolina. The
combined annual production from these plants approximates 650,000 tons.
IMC AgriBusiness sells nitrogen-based products, which include
anhydrous ammonia, nitrogen solutions and urea, on a wholesale basis in
the eastern Midwest region of the United States. A portion of these
sales are produced from IMC AgriBusiness' nitrogen plant in East
Dubuque, Illinois, which annually produces approximately 290,000 tons
of anhydrous ammonia and 220,000 tons of nitrogen solutions.
In addition, IMC AgriBusiness markets potash and concentrated
phosphates produced by the Company's IMC Kalium and IMC-Agrico Crop
Nutrients business units, respectively, on a wholesale basis to
independent dealers and distributors in the eastern Midwest and
southeastern regions of the United States.
Seed, Industrial and Other Operations
IMC AgriBusiness sells corn, soybean and wheat planting seed
through its FARMARKET system and through its Ohio-based Farmer-Dealer
system. The FARMARKETs sell Vigoro (registered trademark) brand seeds
as well as most national brands, and the Farmer-Dealer system sells
Green Land (registered trademark) brand seeds. IMC AgriBusiness is
also actively involved in the breeding and production of
identity-preserved crops and is a supplier of proprietary soybeans to
Japanese food producers through a partnership with Honda Trading
America Corporation.
IMC AgriBusiness' primary products sold in the industrial market
include nitric acid, liquid ammonium nitrate and food-grade carbon
dioxide produced from a nitric acid plant in Cincinnati, Ohio, and the
nitrogen plant in East Dubuque, Illinois. The nitric acid plant
produces approximately 90,000 tons of nitric acid and 50,000 tons of
liquid ammonium nitrate, while the nitrogen plant produces
approximately 160,000 tons of food-grade carbon dioxide.
IMC AgriBusiness operates a granulation plant in Columbus, Ohio,
and several liquid and dry terminal facilities in southern Illinois,
southern Indiana and Kentucky along with numerous smaller facilities,
which are used for bulk-blending and/or warehousing in connection with
its retail and wholesale operations.
Raw Materials
Substantially all of the potash and phosphate raw materials used by
IMC AgriBusiness are supplied by the Company's IMC Kalium and
IMC-Agrico Crop Nutrients business units, respectively. IMC
AgriBusiness' nitrogen-based products are produced at its plants in
East Dubuque and/or purchased from domestic suppliers under long-term
contracts based on current market prices.
Other Products
IMC AgriBusiness produces a broad range of nitrogen-based crop
nutrients and related products, including anhydrous ammonia, ammonium
nitrate solutions, liquid urea, urea granules and other nitrogen-based
<PAGE>
solutions. These products are sold alone or mixed with phosphates,
potash, micronutrients, non-liquid ammonium nitrate and other materials
to produce a variety of bulk-blend crop nutrients in either dry or
liquid form. Certain of these products are marketed under the CERTIFIED
HARVEST KING (registered trademark) brand. Liquid and dry products are
blended according to the specific needs of the farmer. IMC
AgriBusiness also mixes dicyandiamide (DCD) with nitrogen solutions
under the name N TECH SR (trademark), providing farmers with a more
efficient and environmentally-sensitive nitrogen source. The slow
release DCD increases absorption of nitrogen by crops, thereby reducing
the amount of nitrogen released into the environment. IMC AgriBusiness
has a year-to-year renewable purchase agreement with the world's
largest producer of DCD.
IMC AgriBusiness also produces nitric acid, aqua ammonia and
refrigerant-grade ammonia. Nitric acid is sold in various formulations
to a wide variety of industrial users for use in metal platings,
coatings and water treatment. IMC AgriBusiness also produces
food-grade carbon dioxide as a by-product of its ammonia production
process. Food-grade carbon dioxide is used in carbonated beverages and
as a refrigerant in food processing.
Competition
The marketing of crop nutrients to farmers on a national basis is
highly fragmented. Since crop nutrients are a basic commodity, the
principal means of differentiating competing products is through
competitive pricing coupled with offering personal services and
agronomically-efficient products which allow maximum yields while being
sensitive to environmental concerns. IMC AgriBusiness' FARMARKETs were
developed to enhance the personal service concept and thereby
differentiate IMC AgriBusiness' products from those of competitors.
Most of IMC AgriBusiness' FARMARKETs are leaders in their respective
area of operation. IMC AgriBusiness believes its nitrogen-based crop
nutrients and related products are well positioned in both the retail
and wholesale agricultural market sectors and in the industrial market
sector. IMC AgriBusiness' principal competitors in the agricultural
crop nutrients market include cooperatives, which have the largest
market share in a majority of the locations served by the Company,
national producers, major grain companies and independent distributors
and brokers.
IMC-Agrico Feed Ingredients
- ----------------------------
In October 1995, the Company acquired the animal feed ingredients
business of Mallinckrodt Group Inc. and subsequently contributed it to
IMC-Agrico. Net sales for the IMC-Agrico Feed Ingredients business
unit were $159.2 million for 1997 and $113.6 million for the partial
year 1996. IMC-Agrico Feed Ingredients is one of the world's foremost
producers and marketers of phosphate-based animal feed ingredients with
an annual capacity in excess of 700,000 tons. IMC-Agrico Feed
Ingredients supplies phosphate and potassium based feed ingredients for
poultry and livestock to markets in North America, Latin America and
Asia. The principal production facilities of IMC-Agrico Feed
Ingredients are located adjacent to, and utilize raw materials from,
IMC-Agrico's concentrated phosphate complex at New Wales in central
Florida. IMC-Agrico Feed Ingredients also markets potassium-based feed
<PAGE>
products produced at the Company's potash facilities. IMC-Agrico Feed
Ingredients has a strong brand position in the $1 billion global market
with products such as Biofos (registered trademark), Dynafos
(registered trademark), Multifos (registered trademark), Dyna-K
(registered trademark) and Dynamate (registered trademark).
IMC-Agrico Feed Ingredients operates in a competitive global
market. Major integrated producers of feed phosphates and feed grade
potassium are located in the United States and Europe. Many smaller
producers are located in emerging markets around the world. These
producers are not manufacturers of P2O5 and are required to purchase
this raw material on the open market. Competition in this global
market is driven by quality, service and price.
IMC Vigoro
- ----------
Net sales for the IMC Vigoro business unit were $102.8 million,
$95.1 million and $96.8 million for the years ended June 30, 1997, 1996
and 1995.
IMC Vigoro manufactures and sells specialty crop nutrient products
consisting of lawn and garden and turf and nursery products as well as
packages and sells potassium-based ice melter products. The lawn and
garden products are sold throughout the United States primarily to
major national retail chains under private label and Vigoro brands, and
the turf and nursery products are sold to golf courses, nurseries,
landscape contractors and institutions directly and through independent
distributors. The environmentally-sensitive, potassium-based ice
melter products are sold under various brands throughout the Midwest,
the eastern snowbelt states and Canada.
FACTORS AFFECTING DEMAND
The Company's results of operations historically have reflected the
effects of several external factors which are beyond the Company's
control and have in the past produced significant downward and upward
swings in the Company's operating results. The Company's revenues,
approximately 69 percent of which have come from North American sales
over the past five years, are highly dependent upon conditions in the
North American agriculture industry and can be affected by crop
failure, changes in agricultural production practices, government
policies and weather. Furthermore, because of the high percentage of
its revenues coming from North American sales, the Company's crop
nutrients business is seasonal to the extent United States farmers and
agricultural enterprises purchase more crop nutrient products during
the spring and fall.
Approximately 31 percent of the Company's revenues has come from
sales outside North America over the past five years. The Company's
foreign operations and investments and any future international
expansion by the Company are subject to numerous risks, including
fluctuations in foreign currency exchange rates and controls,
expropriation and other economic, political and regulatory policies of
local governments and laws and policies of the United States and Canada
affecting foreign trade and investment. Due to economic and political
factors, customer needs can change dramatically from year to year. See
<PAGE>
also Note 21, "Operations by Geographic Area," of Notes to Consolidated
Financial Statements in Part II, Item 8, "Financial Statements and
Supplementary Data," of this Annual Report on Form 10-K for further
detail.
In 1997, sales of concentrated phosphates and potash to China
accounted for approximately 13 percent of the Company's net sales. No
single customer or group of affiliated customers accounted for more
than ten percent of the Company's net sales.
OTHER MATTERS
Environmental Matters
- ---------------------
General
In the normal course of its business, the Company mines phosphate
and potash, manufactures and blends crop nutrients, and blends crop
nutrients with pesticide products. These operations are subject to
federal, state, provincial and local environmental, health and safety
laws in the United States and Canada, including laws related to air and
water quality; management of hazardous and solid wastes; management and
handling of raw materials and products; and land reclamation. The
Company has expended, and anticipates that it will continue to expend,
substantial resources, both financial and managerial, to comply with
environmental regulations, permitting and reclamation requirements, and
health and safety standards. Additionally, although the Company
believes that its operations generally satisfy environmental standards,
there can be no assurance that unexpected or additional costs,
penalties or liabilities will not be incurred. The Company believes
that its expenditures for environmental, health or safety compliance
have been significant and expects that these costs will continue to be
significant.
For fiscal year 1997, environmental capital expenditures were
approximately $24 million and were primarily related to air emissions
permitting and control; ground and surface water protection; wastewater
treatment and control; and solid waste management. Additional
expenditures for land reclamation activities totaled approximately $25
million. For fiscal year 1998, the Company expects environmental
capital expenditures to be approximately $46 million and expenditures
for land reclamation activities to be approximately $24 million.
Environmental capital is expected to increase in 1998 as a result of
phosphogypsum stack and settling area expansion projects as well as
spending for air emissions control and storage tank containment
projects. No assurance can be given that greater environmental
expenditures will not be required for fiscal year 1998 or that
environmental expenditures in future years will not increase.
Environmental, health and safety laws and regulations in the United
States and Canada relating to the manufacture and application of crop
nutrients and to mining activities have changed substantially and
rapidly in recent years, and the Company anticipates that these changes
will continue. It is the Company's policy to comply with all
applicable environmental, health and safety laws and regulations. It
is difficult to estimate future compliance costs, however, since
certain implementing regulations have not yet been finalized or are
<PAGE>
subject to varying and conflicting interpretations. Nevertheless,
because new environmental standards generally are more restrictive than
current requirements, the costs of complying with such regulations
could increase substantially.
Permitting
The Company holds numerous environmental and other permits
authorizing operations at each of its facilities. A decision by a
government agency to deny an application for a new or renewed permit,
or to revoke or substantially modify an existing permit, could have a
material adverse effect on the Company's ability to continue operations
at the affected facility. Expansion of Company operations also is
predicated upon securing the necessary environmental and other permits.
IMC-Agrico signed an agreement with Consolidated Minerals, Inc. (CMI)
for the purchase of real property (Pine Level) containing approximately
100 million tons of phosphate rock reserves in Florida. In connection
with the purchase, IMC-Agrico has agreed to obtain all environmental,
regulatory and related permits necessary to commence mining on the
property. Successful achievement of such permitting remains to be
accomplished in the next five to eight years. Although the Company has
successfully permitted mining properties in Florida, if permits were
denied or if compliance with permit conditions became cost prohibitive,
a complete or substantial inability to mine this property would
adversely impact the Company. (See "Contingencies - Pine Level
Property Reserves," in Part II, Item 7, "Management's Discussion and
Analysis of Results of Operations and Financial Condition," in this
Annual Report on Form 10-K for further detail.)
Air Quality
The 1990 Amendments to the Clean Air Act require certain sources to
increase controls on emissions of conventional and hazardous air
pollutants. During 1997, several of the Company's facilities have
applied for, or will apply for, such operating permits. In addition,
by the year 2000, the United States Environmental Protection Agency is
scheduled to promulgate control standards for hazardous air pollutants
applicable to certain of the Company's operations. Capital
expenditures, which could be significant, might be necessary to meet
the regulatory or permit requirements. Because the operating permits
have not been issued and the regulatory requirements have not been
finalized, the Company cannot estimate the extent of these
expenditures.
Process Safety Management and Risk Management Planning
Several of the Company's facilities are subject to Process Safety
Management (PSM) standards under the Occupational Safety and Health Act
and to the Risk Management Planning (RMP) requirements under the Clean
Air Act. PSM standards require covered facilities with processes that
utilize certain chemicals to implement written safety management plans,
procedures and employee training. RMP rules require covered facilities
to establish comprehensive plans for preventing and responding to
accidental releases. Under RMP, facilities also must release to the
public information about regulated processes and release prevention
programs, the potential for accidental releases and the facility's
"worst case" release scenarios and their potential effects on nearby
populations. The Company continues to implement the required programs.
<PAGE>
As process safety and risk management efforts proceed, the Company will
incur costs to complete projects, planning processes and related
measures and these costs could be substantial.
Management of Residual Materials
Phosphate and potash mining and processing produce residual
materials that must be managed. Phosphate residuals, consisting
primarily of phosphogypsum, typically are stored in phosphogypsum stack
systems. Other phosphate mining residuals, clay and other tailings,
are used in reclamation. Potash producers generally store tailings,
which contain primarily salt, iron compounds and clay, in surface
disposal sites. The Company has incurred and will continue to incur
significant costs to manage its phosphate and potash residual materials
in accordance with environmental laws, regulations and permit
requirements.
To address concerns about potash tailings management, the
Saskatchewan Department published regulations in 1994 requiring all
potash mine operators: (i) to submit facility decommissioning and
reclamation plans for approval and (ii) to provide assurances that the
plans will be carried out. The decommissioning and reclamation plans
and related assurances cover all facilities at a mine, including
surface disposal sites for potash tailings. In 1997, the Company has
filed its decommissioning plans for its three Saskatchewan potash
mines. Implementation of the plans will be deferred until an affected
facility is permanently closed which the Company does not anticipate in
the foreseeable future at any of the locations. Based on potash
reserves, each of the mine sites could continue to operate for more
than 100 years. Each plan will be renewed every five years until
anticipated closure or as requirements of the regulations change. The
Company, like all members of the Saskatchewan potash industry, is
unable to predict with certainty the financial impact of the
regulations on the Company due to the anticipated life of each mine,
prospective advances in tailings management technology, and changes
from time to time in rules and regulations. The plans are currently
under consideration and have been neither approved nor disapproved by
the Provincial agency. The mechanism for required financial assurances
has not yet been determined by the Province. Costs for decommissioning
are likely to be significant although funds are not anticipated to be
expended in the foreseeable future.
With regard to phosphate processing, Florida law may require IMC-
Agrico to close one or more of its unlined phosphogypsum stacks and/or
associated cooling ponds after March 25, 2001, if the stack system is
demonstrated to cause a violation of Florida's water quality standards.
IMC-Agrico has already filed an application with Florida's Department
of Environmental Protection to close the unlined gypsum stack at its
New Wales facility in central Florida. Closure activities would begin
on July 1, 1998 if the plan is accepted and would cost approximately
$2.5 million, net of recorded accruals, for construction activities
over a period of five years. IMC-Agrico cannot predict at this time
whether Florida will require closure of any of its other stack systems.
The costs of any such closures could be significant.
IMC-Agrico continues to address elevated levels of sulphate and
sodium indicators in groundwater at its New Wales facility. In 1992,
elevated sulphate levels were detected in groundwater beneath the
<PAGE>
cooling pond. In response, the Central Florida Regional Planning
Council required IMC-Agrico to plug former recharge wells and either
show that groundwater indicator levels have returned to acceptable
levels or line or relocate the cooling pond. Recent monitoring data
have evidenced an improving trend in the sulphate and sodium indicator
levels. If the trend continues, IMC-Agrico is expected to obtain an
operating permit which will expire in July 1998. If indicators do not
reach acceptable levels, options will be pursued to meet the operating
needs of the facility. The estimated cost to line or relocate the
cooling pond is estimated to be approximately $50.0 million.
Remedial Activities
The historical use and handling of regulated chemical substances
and crop nutrient products in the normal course of the Company's
business has resulted in contamination at facilities presently or
previously owned or operated by the Company. The Company has also
purchased facilities that were contaminated by previous owners through
their use and handling of regulated chemical substances. Spills or
other unintended releases of regulated substances have occurred in the
past, and potentially could occur in the future, possibly requiring the
Company to undertake or fund cleanup efforts. The Company cannot
estimate the level of expenditures that may be required in the future
to clean up contamination from the handling of regulated chemical
substances or crop nutrients.
At some locations, the Company has agreed, pursuant to consent
orders with the appropriate governmental agencies, to undertake certain
investigations (which currently are in progress) to determine whether
remedial action may be required to address contamination. The cost of
any remedial actions that ultimately may be required at these sites
currently cannot be determined.
The Company believes that it is entitled to at least partial
indemnification for a portion of the costs that may be expended by the
Company to remedy environmental issues at certain facilities and
operations pursuant to indemnification agreements. These agreements
address contamination that is attributable to activities occurring
prior to the Company's acquisition of facilities from parties including
PPG Industries, Inc.; Kaiser Aluminum & Chemical Corporation; BFEL,
Ltd.; Estech, Inc. and certain other parties. The Company has already
received and anticipates receiving amounts pursuant to certain
indemnification agreements for all or some of its expenses incurred to
date.
Superfund
The Comprehensive Environmental Response Compensation Liability Act
(CERCLA), also known as "Superfund," imposes liability without regard
to fault or to the legality of a party's conduct on certain categories
of persons that are considered to have contributed to the release of
"hazardous substances" into the environment. Currently, the Company is
involved in, or concluding involvement at, a number of Superfund sites.
At none of these sites alone, nor in the aggregate, is the Company's
liability currently expected to be material. As more information is
obtained regarding the sites and the potentially responsible parties
involved, this expectation could change.
<PAGE>
Employees
- ---------
The Company had approximately 9,200 employees at June 30, 1997.
The work force consisted of
3,603 salaried, 5,520 hourly and 50 temporary or part-time employees.
Labor Relations
- ---------------
The Company has 18 collective bargaining agreements with eight
international unions or their affiliated local chapters. Three
agreements covering two percent of the hourly work force were
negotiated during calendar 1996, and five agreements covering 50
percent of the hourly work force have been negotiated to date in
calendar 1997. Resulting wage and benefit increases were consistent
with competitive industry and community standards. One agreement
covering less than two percent of the hourly work force will expire
during the remainder of calendar 1997. The Company has not experienced
a significant work stoppage in recent years and considers its employee
relations to be good.
Item 2. Properties.
Information regarding the plant and properties of the Company is
included in Part I, Item 1, "Business," of this Annual Report on Form
10-K.
Item 3. Legal Proceedings.
Environmental Proceedings
- -------------------------
Reference is made to "Other Matters - Environmental Matters," in
Part I, Item 1, "Business," of this Annual Report on Form 10-K.
Sterlington Litigation
- ----------------------
ANGUS Chemical Company (ANGUS), numerous third parties alleging
personal injury and the Company are involved in various litigation
arising out of a May 1991 explosion at a nitroparaffins plant located
in Sterlington, Louisiana. The Company continues to litigate each of
the matters arising out of the Sterlington explosion. Approximately
1,300 class action plaintiffs seek damages for personal injuries, "fear
and fright," and punitive damages against ANGUS, the Company and other
defendants arising from the explosion. Discovery is still not
complete, and the trial date has been postponed indefinitely. The
Company is unable to estimate the magnitude of its exposure at this
time.
The Company has settled actions filed by ANGUS with respect to
claims for amounts ANGUS paid for settled claims in connection with the
explosion and has settled actions filed by ANGUS for claimed rights of
direct action against the Company's insurers. In addition, ANGUS'
claims for certain environmental claims were dismissed by the trial
court and are on appeal.
Potash Antitrust Litigation
- ---------------------------
<PAGE>
The Company was a defendant, along with other Canadian and United
States potash producers, in a class action antitrust lawsuit filed in
federal court in 1993. The plaintiffs alleged a price-fixing
conspiracy among North American potash producers beginning in 1987 and
continuing until the filing of the complaint. The class action
complaint against all defendants, including the Company, was dismissed
by summary judgment in January 1997. The summary judgment dismissing
the case is currently on appeal by the plaintiffs to the United States
Court of Appeals for the Eighth Circuit. The Court of Appeals is
expected to rule during calendar 1998.
In addition, in 1993 and 1994, class action antitrust lawsuits with
allegations similar to those made in the federal case were filed
against the Company and other Canadian and United States potash
producers in state courts in Illinois and California. The Illinois
case was dismissed for failure to state a claim. In the California
case, merits discovery has been stayed and the case is currently
inactive.
Other
- -----
In the ordinary course of its business, the Company is involved in
routine litigation.
Item 4. Submission of Matters to a Vote of Security Holders.
There were no matters submitted to a vote of security holders,
through the solicitation of proxies or otherwise, during the three
months ended June 30, 1997.
PART II.
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters.
COMMON STOCK PRICES AND DIVIDENDS
<TABLE>
<CAPTION>
Quarter
----------------------------------------
Fiscal 1997 First Second Third Fourth
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Dividends per common share $ 0.08 $ 0.08 $ 0.08 $ 0.08
Common stock prices:
High $44.500 $41.000 $42.500 $39.375
Low 35.125 33.875 33.125 33.125
Quarter
----------------------------------------
Fiscal 1996 First Second Third Fourth
- ----------------------------------------------------------------------
Dividends per common share $ 0.05 $ 0.08 $ 0.08 $ 0.08
Common stock prices:
High $33.313 $40.875 $43.250 $39.875
Low 27.000 30.313 33.625 32.250
</TABLE>
<PAGE>
The Company's common stock is traded on the New York and Chicago
Stock Exchanges under the symbol IGL. As of August 29, 1997, the
Company had 92,109,557 shares of common stock outstanding, excluding
treasury shares. Common stock prices are from the composite tape for
New York Stock Exchange issues as reported in The Wall Street Journal.
Data in the table above have been restated to reflect a 2-for-1 stock
split, effected in the form of a 100 percent stock dividend distributed
on November 30, 1995.
As of August 29, 1997, the number of registered holders of common
stock as reported by the Company's registrar was 451. However, an
indeterminable number of stockholders beneficially own shares of the
Company's common stock through investment funds and brokers.
For the year ended June 30, 1997, the Company paid $30.1 million of
cash dividends. The Company's debt instruments contain provisions
which limit the Company's ability to pay dividends on its common stock.
See "Capital Resources and Liquidity - Financing," in Part II, Item 7,
"Management's Discussion and Analysis of Results of Operations and
Financial Condition," of this Annual Report on Form 10-K for further
detail.
<PAGE>
Item 6. Selected Financial Data.
<TABLE>
FIVE YEAR COMPARISON
(Dollars in millions except per share amounts)
<CAPTION>
Years ended June 30,
1997 1996(1)(2) 1995(1)(2)
1994(1)(2) 1993(1)(3)
- ----------------------------------------------------------------------
Statement of Operations
Data:
<S> <C> <C> <C> <C> <C>
Net sales $2,982.0 $2,981.0 $2,736.1 $2,125.3 $1,438.1
Sterlington litigation
settlement, net - - - - (169.1)
Earnings (loss) before
income taxes, extra-
ordinary item and cumu-
lative effect of
accounting changes 322.0 238.4 308.8 79.2 (117.0)
Provision (credit) for
income taxes 117.5 94.1 115.5 34.8 (39.1)
-------- -------- -------- -------- -------
Earnings (loss) before
extraordinary item and
cumulative effect of
accounting changes 204.5 144.3 193.3 44.4 (77.9)
Extraordinary charge -
debt retirement (11.4) - (6.5) (25.2) (2.0)
Cumulative effect of
accounting changes - - (5.9) - (47.1)
-------- -------- -------- -------- -------
Net earnings (loss) $ 193.1 $ 144.3 $ 180.9 $ 19.2 $ (127.0)
Earnings (loss) per share:
Earnings (loss) before
extraordinary item and
cumulative effect of
accounting changes $ 2.15 $ 1.56 $ 2.12 $ .54$
(1.02)
Extraordinary charge -
debt retirement (.12) - (.07) (.31)
(.03)
Cumulative effect of
accounting changes - - (.06) -
(.62)
-------- -------- -------- -------- -------
Net earnings (loss) $ 2.03 $ 1.56 $ 1.99 $ .23$
(1.67)
======== ======== ======== ======== =======
Balance Sheet Data (at end of period):
Total assets $3,611.6 $3,436.8 $3,323.2 $3,172.3 $2,343.3
Working capital 592.6 551.8 484.2 499.3 322.7
Working capital ratio 2.4:1 2.5:1 2.1:1 2.4:1 1.9:1
Long-term debt, less
current maturities $ 694.8 $ 736.7 $ 750.2 $ 801.6 $ 994.6
Total debt, net of cash
on hand 692.1 754.9 620.6 672.1 946.9
Stockholders' equity 1,339.9 1,156.3 1,007.8 856.3 602.3
Total capitalization 2,032.0 1,911.2 1,628.4 1,528.4 1,549.2
Debt/total capitalization 34.1% 39.5% 38.1% 44.0% 61.1%
<PAGE>
Other Financial Data:
Cash provided by
operating activities $ 573.0 $ 342.0 $ 554.5 $ 165.5 $ 73.4
Capital expenditures 223.4 172.7 114.9 76.0 137.1
Cash dividends paid 30.1 35.5 24.6 14.2 30.7
Dividends per share .32 .33 .26 .15 .32
Book value per share 14.32 12.52 11.09 9.46 7.91
(1) Restated to reflect the Merger which was accounted for as a pooling
of interests.
(2) See Notes to Consolidated Financial Statements for a description
of acquisitions, accounting change and non-recurring items. Beginning
in 1994, operating results reflect the consolidation of the joint
venture partnership formed on July 1, 1993 with FRP.
(3) Includes charges of $32.4 million from the settlement of a claim
relating to losses arising out of a water inflow at one of the
Company's potash mines in Canada, partially offset by a gain of $8.1
million from the resolution of a contract dispute with a major uranium
customer. Also includes charges of $169.1 million, net of insurance
recoveries and legal fees, resulting from the settlement of a lawsuit
for damages arising out of an explosion at a nitroparaffins plant in
Sterlington, Louisiana, and $47.1 million for the cumulative effect on
prior years of adopting Statement of Financial Accounting Standard
(SFAS) No. 106, "Employers Accounting for Postretirement Benefits Other
Than Pensions," on July 1, 1992.
</TABLE>
Item 7. Management's Discussion and Analysis of Results of Operations
and Financial Condition.
INTRODUCTION
The Company is one of the world's leading producers of crop
nutrients for the international agricultural community and is one of
the foremost domestic distributors of crop nutrients and related
products through its retail and wholesale distribution networks.
Through its IMC-Agrico joint venture with FRP, the Company is one of
the world's leading producers and marketers of phosphate crop nutrients
(IMC-Agrico Crop Nutrients) and animal feed ingredients (IMC-Agrico
Feed Ingredients). The Company is also a world leading producer and
marketer of potash crop nutrients and industrial grade potash through
various operations in the United States and Canada (collectively, IMC
Kalium). In addition, IMC is one of the nation's leading distributors
of crop nutrients and related products, including nitrogen, through its
FARMARKET (registered trademark) and Rainbow (registered trademark)
distribution networks (collectively, IMC AgriBusiness). The Company
also manufactures and distributes consumer lawn and garden products;
produces and markets professional products for turf, nursery and
horticulture markets; and produces and distributes potassium-based ice
melter products (collectively, IMC Vigoro). Through other joint
venture operations, the Company produces sulphur and oil and gas. (See
"Subsequent Event," in Part I, Item 1, "Business," of this Annual
Report on Form 10-K.)
The Company's fiscal year ends June 30 and all yearly references
herein refer to fiscal years unless otherwise noted. Shares and per
share amounts have been restated to reflect a 2-for-1 stock split,
<PAGE>
effected in the form of a 100 percent stock dividend distributed on
November 30, 1995.
Change in Fiscal Year
Effective with the calendar year ending December 31, 1997, the
Company will change from a fiscal year end of June 30 to December 31 in
order to permit more effective business planning, including annual
budgeting, government reporting and audit functions, as well as align
statistical and financial reporting with competitors. The Company will
file a transition report on Form 10-K for the calendar year ended
December 31, 1997.
Merger
The Company completed the Merger with Vigoro on March 1, 1996,
which resulted in Vigoro becoming a subsidiary of the Company. In
connection with the Merger, the Company issued approximately 32.4
million shares of common stock in exchange for all of the outstanding
common stock of Vigoro. The Merger has been accounted for as a pooling
of interests. Accordingly, the Company's results of operations for all
appropriate prior periods presented reflect the Merger.
Acquisitions
The Company's results of operations have been impacted by several
acquisitions consummated during 1995, 1996 and 1997:
In January 1995, the Company acquired substantially all of the
assets of the Central Canada Potash division (CCP) of Noranda, Inc. for
$121.1 million, plus $16.2 million for working capital.
In October 1995, the Company acquired Feed Ingredients and
subsequently contributed the business to IMC-Agrico. The Company's
portion of the purchase price was $67.5 million. In addition, during
fiscal 1996 the Company completed several smaller acquisitions,
including several retail distribution operations (Agri-Supply) and seed
operations (Madison Seed).
The Company completed several acquisitions during 1997, including a
precision farming operation (Top-Soil); several retail distribution
operations (Crop-Maker, Frankfort Supply, Sanderlin and Hutson Ag
Services, Inc.); a storage terminal company (Hutson Company, Inc.); and
the remaining interest in a subsidiary. Total cash payments for
acquisitions during fiscal 1997 were $48.6 million and approximately
200,000 shares of common stock were issued.
These acquisitions were accounted for under the purchase method of
accounting, and accordingly, results of operations for the acquired
companies have been included in the Company's results of operations
from their respective dates of acquisition.
RESULTS OF OPERATIONS
Overview
- --------
<PAGE>
[CHART]
Net Sales
- ---------
(in millions)
1997 1996 1995
-------- -------- --------
$2,982.0 $2,981.0 $2,736.1
[CHART]
Gross Margins
- -------------
(in millions)
1997 1996(1) 1995
------ ------ ------
$770.0 $783.5 $694.6
(1) Before special one-time charges
[CHART]
Net Earnings
- ------------
(in millions)
1997 1996(1) 1995
------ ------ ------
$193.1 $213.9 $180.9
(1) Before special one-time charges
1997 Compared to 1996
Net sales of $2,982.0 million were essentially unchanged from
$2,981.0 million reported in 1996. Gross margins for 1997 were $770.0
million, a decrease of two percent from comparable 1996 margins of
$783.5 million, excluding special one-time charges of $26.3 million as
discussed below.
Net earnings, before an extraordinary charge, of $204.5 million, or
$2.15 per share, decreased four percent compared with 1996 net
earnings, excluding special one-time charges, of $213.9 million, or
$2.31 per share. An extraordinary charge of $11.4 million, or $0.12
per share, related to the early extinguishment of debt, reduced 1997
net earnings to $193.1 million, or $2.03 per share. In 1996, special
one-time charges of $69.6 million, or $0.75 per share, reduced net
earnings to $144.3 million, or $1.56 per share. These 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.
<PAGE>
In connection with the Merger in 1996, 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: (i) $6.5 million for lease
terminations resulting from office consolidations and (ii) $16.6
million for severance and related benefits from staff reductions
resulting from the termination of approximately 120 employees,
primarily middle management personnel, and other related actions. As
of June 30, 1997, the following amounts were paid: (a) $20.2 million
for charges relating to the Merger; (b) $5.6 million for lease
terminations resulting from office consolidations and (c) $13.4 million
relating to the termination of approximately 120 employees and other
actions.
In connection with the 1996 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: (i) $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; (ii) $2.4 million of general and
administrative expenses for the write-off of miscellaneous assets;
(iii) $16.6 million to other income and expense, net, to reduce certain
long-term assets to net realizable value and other provisions and (iv)
$13.0 million to minority interest for the transfer of 0.85 percent
interest of IMC-Agrico Distributable Cash (as defined in the IMC-Agrico
Partnership Agreement (Partnership Agreement)) from the Company to FRP.
As of June 30, 1997, $29.5 million of non-cash write-offs were charged
against the reserve.
Fiscal 1997 sales and earnings were driven by Crop Nutrients'
results which essentially offset sales and earnings growth in the other
business units. Crop Nutrients' sales realizations and volumes
declined primarily due to a more competitive marketplace characterized
by additional supply made available by other producers which resulted
in an 11 percent decline in sales and an 18 percent decline in margins
for that business unit when compared to the prior year.
1996 Compared to 1995
Net sales increased nine percent to $2,981.0 million from $2,736.1
million in 1995. Gross margins for 1996 of $783.5 million, excluding
special one-time charges, increased 13 percent over 1995 margins of
$694.6 million.
Net earnings, excluding special one-time charges, of $213.9
million, or $2.31 per share, increased 11 percent over comparable 1995
net earnings of $193.3 million, or $2.12 per share, excluding
extraordinary charges and the cumulative effect of an accounting
change. As discussed above, special one-time charges of $69.6 million,
or $0.75 per share, reduced net earnings for 1996 to $144.3 million, or
$1.56 per share. In 1995, a charge of $5.9 million, or $0.06 per
share, for the cumulative effect on prior years of a change in
accounting for postemployment benefits resulting from the adoption of
<PAGE>
SFAS No. 112 , "Employers' Accounting for Postemployment Benefits," on
July 1, 1994 and an extraordinary charge of $6.5 million, or $0.07 per
share, related to the early extinguishment of debt, reduced net
earnings to $180.9 million, or $1.99 per share.
The increases in 1996 net sales, gross margins and net earnings
compared to 1995 reflected improved operating results from the
Company's three largest business units and the net impact of various
other operating and non-operating factors.
IMC-Agrico Crop Nutrients
- -------------------------
<TABLE>
<CAPTION>
% Increase
Years ended June 30, (Decrease)
------------------------------ -----------
1997 1996 1995 1997 1996
------ ------ ------ ----- -----
<S> <C> <C> <C> <C>
<C>
Net sales (in $1,562.2 $1,747.7 $1,559.0 (11%) 12%
millions)
Gross margins (in $ 357.8 $ 435.3(c) $ 335.4 (18%) 30%
millions)
As a percentage 23% 25% 22%
of net sales
Sales volumes (000 7,281 7,723 7,389 (6%) 5%
tons)(a)
Average DAP price $ 179 $ 186 $ 162 (4%) 15%
per short ton(b)
(a)Sales volumes include tons sold captively and
represent dry product tons, primarily DAP.
(b)FOB plant/mine.
(c)Before special one-time charges of $6.9 million.
</TABLE>
1997 Compared to 1996
Crop Nutrients' net sales in 1997 decreased 11 percent to $1,562.2
million from $1,747.7 million in 1996. Overall sales volumes of
concentrated phosphates, primarily DAP, declined six percent, mainly
due to lower domestic shipments of concentrated phosphates resulting
from a more competitive marketplace characterized by additional supply
made available by other producers, which unfavorably impacted net sales
by $52.7 million. International concentrates volumes declined by $29.7
million primarily due to lower GTSP shipments, mainly to Pakistan,
Bangladesh and Chile, coupled with management's decision to terminate a
long-term tolling agreement in order to pursue more profitable
business. In addition, Crop Nutrients, through PhosChem, successfully
negotiated, for the first time ever, a two-year concentrated phosphate
sales contract with China. In addition, overall sales realizations for
concentrated phosphates, particularly DAP, declined four percent as
<PAGE>
compared to stronger prices in the prior year, which unfavorably
impacted net sales by $47.8 million. Net sales were also affected by
lower phosphate rock revenues of $47.1 million, resulting primarily
from Crop Nutrients' strategic decision to phase out export sales of
rock. This action is being taken to maximize relative values of rock
and concentrated phosphates by utilizing high-quality reserves for
internal upgrading.
Gross margins declined 18 percent to $357.8 million in the current
year compared to $435.3 million, excluding special one-time charges of
$6.9 million, in the prior year, primarily due to the lower volumes and
prices discussed above.
1996 Compared to 1995
Crop Nutrients' net sales in 1996 increased 12 percent to $1,747.7
million as compared to $1,559.0 million for 1995. Higher concentrated
phosphate prices in 1996, primarily due to increased world demand
compared to 1995, favorably impacted sales by $185.0 million.
Concentrated phosphate volumes increased, mainly as a result of strong
sales to India, Australia, Japan, New Zealand, Pakistan and Brazil. In
addition, Crop Nutrients, through PhosChem, successfully negotiated a
first-ever calendar year concentrated phosphate sales contract with
China. These increases were partially offset by lower phosphate rock
shipments due to the Company's strategic decision to phase out export
sales of rock as discussed above.
Gross margins, before special one-time charges of $6.9 million,
increased $99.9 million, or 30 percent, to $435.3 million for 1996 as
compared to $335.4 million in 1995. This increase was primarily due to
the higher sales realizations for concentrated phosphates discussed
above, as well as improvements in phosphate rock sales prices. The
favorable impact of price improvements, however, was partially offset
by higher phosphate rock production costs, due in large part to higher
electricity and maintenance costs, as well as higher fuel costs.
<PAGE>
IMC Kalium
<TABLE>
<CAPTION>
% Increase
Years ended June 30 (Decrease)
------------------------------- ------------
1997 1996 1995 1997 1996
------- ------- ------- ---- ----
<S> <C> <C> <C> <C> <C>
Net sales (in $ 524.3 $ 455.6 $ 472.0 15%
millions) (3%)
Gross margins (in $ 197.0 $ 160.3(c) $ 209.0 23% (23%)
millions)
As a percentage 38% 35% 44%
of net sales
Sale volumes 8,006 7,215 7,353 11%
(000 tons)(a) (2%)
Average potash $ 66 $ 64 $ 65 3% (2%)
price per short
ton(b)
(a) Sales volumes include
tons sold captively.
(b) FOB plant/mine.
(c) Before special one-time charges of $7.9 million.
</TABLE>
1997 Compared to 1996
IMC Kalium's net sales increased 15 percent to $524.3 million in
1997 from $455.6 million in 1996. Sales increased in 1997 due to
higher volumes and sales realizations when compared to the prior year.
Overall potash sales volumes increased 11 percent, primarily due to
higher international sales volumes, which favorably impacted net sales
by $36.2 million, mainly resulting from increased sales to China. In
addition, higher domestic sales volumes favorably impacted net sales by
$19.6 million, primarily as a result of greater potash demand in North
America because of improved weather conditions and additional corn
acreage planted in 1997, as well as higher sales of industrial-grade
potash. Average sales realizations improved nearly three percent as a
result of price increases in September and March, as well as
management's decision to eliminate low-margin business, increasing net
sales by $12.9 million.
Gross margins increased $36.7 million, or 23 percent, to $197.0
million for 1997 as compared to $160.3 million in 1996, excluding
special one-time charges of $7.9 million. In addition to the price and
volume impacts discussed above, reduced Canadian provincial resource
taxes and benefits realized from the renegotiation of transportation
terms favorably impacted margins.
1996 Compared to 1995
IMC Kalium's net sales decreased three percent to $455.6 million
in 1996 from $472.0 million in 1995. The decline in net sales in 1996
was primarily the result of lower potash export sales volumes due to
<PAGE>
reduced sales to China, the largest potash export customer, which
impacted net sales $27.0 million, coupled with lower average domestic
potash sales prices due to excess producer inventories, which impacted
revenues by $13.1 million. These decreases were partially offset by
the impact of higher potash export sales prices as well as increased
domestic shipments, which collectively improved net sales by $23.7
million. Results for 1996 reflected the impact of the inclusion of a
full year of net sales for CCP, which was acquired in January 1995.
Gross margins, before special one-time charges of $7.9 million,
decreased $48.7 million, or 23 percent, to $160.3 million for 1996 as
compared to $209.0 million in 1995. This decrease reflected the impact
of lower export sales volumes and lower domestic sales prices discussed
above. The decrease in domestic prices reflected the intense pressure
to lower inventory levels that had risen due to unusually wet spring
weather in the midwestern United States. These adverse conditions
ultimately necessitated a reduction in potash production to balance
output with market requirements. Accordingly, the Company temporarily
reduced potash output at four of its six mines by accelerating
maintenance schedules and summer vacation shutdowns, beginning in early
June 1996 and concluding in mid-August 1996.
IMC AgriBusiness
- ----------------
<TABLE>
<CAPTION>
(In millions)
% Increase
Years ended June 30, (Decrease)
------------------------------ ------------
1997 1996 1995 1997 1996
------ ------ ------ ---- ----
<S> <C> <C> <C> <C> <C>
Net sales $ 860.7 $ 802.9 $ 760.8 7% 6%
Gross margins $ 167.3 $ 146.6(a) $ 134.8 14% 9%
As a percentage 19% 18% 18%
of net sales
(a) Before special one-time charges of $5.5 million.
</TABLE>
1997 Compared to 1996
IMC AgriBusiness' net sales increased seven percent to $860.7
million in 1997 from $802.9 million in 1996. Higher sales volumes were
primarily due to the inclusion of sales from businesses acquired during
1997 in the current year results of operations, coupled with increased
sales of ammonia, nitrogen solutions and crop protection products which
favorably impacted net sales by $93.1 million in the aggregate. Higher
average sales realizations also favorably impacted net sales by $5.1
million, mainly due to management's allocation of business between the
various channels of distribution to maximize profits. These increases
were partially offset by lower sales volumes of DAP, potash and mixed
goods, which unfavorably impacted net sales by $40.4 million.
<PAGE>
Gross margins of $167.3 million in 1997 increased 14 percent from
comparable margins of $146.6 million in 1996, excluding special one-
time charges of $5.5 million, mainly due to the impact of volumes and
prices discussed above.
1996 Compared to 1995
IMC AgriBusiness' net sales increased six percent to $802.9 million
in 1996 as compared to $760.8 million in 1995. The increase in net
sales in 1996 reflected the impact of a four percent increase in
average sales prices, which favorably impacted revenues by $27.7
million. The increase in sales realizations was the result of improved
pricing on select products as well as a change in the mix of products
sold. Increased sales volumes, which favorably impacted 1996 net sales
by $14.4 million, were primarily the result of the inclusion of sales
from the Agri-Supply and Madison Seed operations which were acquired
during 1996.
Gross margins, before special one-time charges of $5.5 million,
increased $11.8 million, or nine percent, to $146.6 million for 1996 as
compared to $134.8 million in 1995. The increase in gross margins was
primarily the result of increases in sales prices and sales volumes due
to the factors discussed above. These increases were partially offset
by the impact of higher purchased product and raw material costs.
Other
- -----
1997 Compared to 1996
The remaining increases in net sales and gross margins for the year
ended June 30, 1997, as compared to the prior year, were primarily the
result of the inclusion in fiscal 1997 of a full year of results
related to the Feed Ingredients acquisition and higher sales
realizations on IMC-Agrico Feed Ingredients' products.
1996 Compared to 1995
The remaining increases in sales and gross margins were primarily
the result of the inclusion in fiscal 1996 of a partial year of results
related to the Feed Ingredients acquisition in October 1995.
Selling, General and Administrative Expenses
- --------------------------------------------
<TABLE>
<CAPTION>
(In millions)
% Increase
Years ended June 30, (Decrease)
------------------------------- ----------
1997 1996 1995 1997 1996
------ ------ ------ ---- ----
<S> <C> <C> <C> <C> <C>
Selling, general
and administra- $ 247.2 $ 227.3(a) $ 200.6 9% 13%
tive expenses
(a)Before special one-time charges of $2.4 million.
</TABLE>
<PAGE>
In 1997, selling, general and administrative expenses increased
primarily as a result of: (i) the inclusion of a full year of
operations of the Feed Ingredients, Agri-Supply and Madison Seed
acquisitions during 1996; (ii) the inclusion of a partial year of the
operations of the businesses acquired through the Top-Soil, Crop-Maker,
Frankfort Supply, Sanderlin, Hutson Ag Services, Inc. and Hutson
Company, Inc. acquisitions during 1997; (iii) costs associated with
increased sales volumes to The Home Depotr and (iv) Company-wide
strategic sourcing and systems projects. Selling, general and
administrative expenses increased in 1996 primarily due to higher
expenses associated with the inclusion of a full year of operations of
CCP, which was acquired during 1995, and a partial year of operations
of the businesses acquired through the Feed Ingredients, Agri-Supply
and Madison Seed acquisitions during 1996.
Merger and Restructuring Charges
- --------------------------------
See "Results of Operations - Overview," in Part I, Item 7,
"Management's Discussion and Analysis of Results of Operations and
Financial Condition," of this Annual Report on Form 10-K.
Other (Income) and Expense, Net
- --------------------------------
<TABLE>
<CAPTION>
(In millions)
% Increase
Years ended June 30, (Decrease)
------------------------------- -----------
1997 1996 1995 1997 1996
------ ------ ------ ---- ----
<S> <C> <C> <C>
<C> <C>
Other (income) and $ (5.7) $ (10.5) $ (15.4) (46%) (32%)
expense, net
</TABLE>
A reduction in average cash invested during 1997 resulted in lower
interest income of $5.2 million compared to 1996. Results for 1996
included gains on the sale of investments and properties of $14.1
million offset by merger and restructuring charges of $16.6 million.
(See "Results of Operations - Overview," in Part I, Item 7,
"Management's Discussion and Analysis of Results of Operations and
Financial Condition," of this Annual Report on Form 10-K.) In 1995,
other income and expense, net included a gain of $5.0 million from the
sale of land in Florida.
<PAGE>
Interest Expense
- ----------------
<TABLE>
<CAPTION>
(In millions)
% Increase
Years ended June 30, (Decrease)
----------------------------
1997 1996 1995 1997 1996
------ ------ ------ ---- ----
<S> <C> <C> <C> <C>
<C>
Interest expense $ 51.1 $ 64.8 $ 70.2 (21%) (8%)
</TABLE>
In 1997, the decrease in interest expense was a direct result of:
(i) lower average overall credit line and short-term borrowings as
compared to the prior year; (ii) the refinancing of higher cost, long-
term indebtedness at lower interest rates and (iii) the redemption of
convertible subordinated notes in November 1996. Interest charges in
1996 were lower than the prior year as the Company reduced a portion of
its higher cost, long-term indebtedness during the prior fiscal year.
Partially offsetting this decrease were interest charges resulting from
increases in long-term debt used to fund the acquisition of CCP and
other acquisitions during 1995.
Income Taxes
- ------------
The effective tax rate of 36.5 percent for 1997, while the same as
the 1996 rate before special one-time charges, decreased from the 1995
rate of 37.4 percent. The lower effective rate is the result of post-
merger planning and restructuring efforts.
CAPITAL RESOURCES AND LIQUIDITY
Liquidity and Operating Cash Flow
- ---------------------------------
[CHART]
Debt to Total Capitalization
- ----------------------------
1997 1996 1995
---- ---- ----
34.1% 39.5% 38.1%
<PAGE>
[CHART]
EBITDA (in millions)
- -------
Earnings before minority interest, interest
charges, taxes, depreciation and amortization,
and net of FRP distributions
1997 1996 1995
------ ------ ------
$491.7 $509.9 $447.7
[CHART]
Cash Provided by Operations
- ---------------------------
(in millions)
1997 1996 1995
------ ------ ------
$573.0 $342.0 $554.5
Cash and cash equivalents as of June 30, 1997 were $43.2 million as
compared to $9.6 million at June 30, 1996. Cash inflows in 1997 of
$573.0 million generated from operating activities coupled with $79.8
million net proceeds from borrowings under available credit facilities
were used to fund capital expenditures of $223.4 million, distributions
to FRP of $221.2 million, open market purchase of outstanding common
stock of $105.1 million, acquisitions of businesses for aggregate
consideration of $48.6 million and common stock dividend payments of
$30.1 million. The Company generates significant cash from operations
and has substantial borrowing capacity to meet its operating and
discretionary spending requirements.
Net cash provided by operating activities was $573.0 million,
$342.0 million and $554.5 million in 1997, 1996 and 1995, respectively.
In 1997, working capital increased slightly, mainly due to increased
inventory levels, primarily phosphate rock. The decrease in operating
cash flow in 1996 reflected the impact of increased working capital
levels, largely related to higher receivables and inventories as a
result of prolonged wet weather in the spring of 1996. The Company's
working capital ratio at June 30, 1997 was 2.4:1 versus 2.5:1 at June
30, 1996.
Net cash used in investing activities was $269.9 million, $234.5
million, and $242.7 million in 1997, 1996 and 1995, respectively.
These results reflect increased capital spending over the three years.
Results for 1997 reflected the Top-Soil, Crop-Maker, Frankfort Supply,
Sanderlin, and Hutson acquisitions during the year. The impact of the
Feed Ingredients and Madison Seed acquisitions are reflected in the
1996 results, and the CCP acquisition impacted 1995 results. (See
"Introduction - Acquisitions," in Part II, Item 7, "Management's
Discussion and Analysis of Results of Operations and Financial
Condition," of this Annual Report on Form 10-K for further detail.)
<PAGE>
Net cash used in financing activities was $269.5 million, $301.6
million and $283.7 million for 1997, 1996 and 1995, respectively. Net
debt proceeds for 1997 were $79.8 million while net repayments in 1996
and 1995 were $60.1 million and $33.0 million, respectively. Debt to
total capitalization improved to 34.1 percent at June 30, 1997 compared
to 39.5 percent one year ago, primarily due to a reduction in higher
cost, long-term indebtedness. Distributions to FRP reflect the
earnings of IMC-Agrico, which increased in 1996, but declined in 1997.
Distributions to FRP included in net cash used in financing activities
were $221.2 million, $242.0 million and $228.1 million for 1997, 1996
and 1995, respectively. The Company's share of cash distributions from
IMC-Agrico increased by 13 percentage points to 58.6 percent effective
July 1, 1997. (See "Subsequent Event," in Part I, Item 1, "Business,"
of this Annual Report on Form 10-K.) Dividends paid for 1997, 1996 and
1995 were $30.1 million, $35.5 million and $24.6 million, respectively.
Also, during 1997, $105.1 million was used to finance the repurchase of
approximately 2.9 million shares of outstanding common stock. On
August 26, 1997, the Board of Directors of the Company authorized the
repurchase from time to time in open market transactions of up to an
additional five million shares. The Company received cash of $7.1
million, $25.8 million and $2.0 million related to the exercise of
stock options in 1997, 1996 and 1995, respectively.
Capital Spending
- ----------------
[CHART]
Capital Expenditures
- --------------------
(in millions)
1997 1996 1995
------ ------ ------
$223.4 $172.7 $114.9
Capital expenditures for 1997 were $223.4 million, an increase of
$50.7 million over 1996 expenditures of $172.7 million, due largely to
spending related to a salt plant expansion at the Company's Hersey,
Michigan facility and the acquisition of the Pine Level property. (See
"Contingencies - Pine Level Property Reserves," in Part II, Item 7,
"Management's Discussion and Analysis of Results of Operations and
Financial Condition," of this Annual Report on Form 10-K for further
detail.) The Company estimates that its capital expenditures for
fiscal 1998 will approximate $300.0 million. The Company expects to
finance these expenditures primarily from operations. (See "Other
Matters - Environmental Matters," in Part I, Item 1, "Business," of
this Annual report on Form 10-K for a discussion of environmental
capital expenditures which are included in the foregoing estimate.)
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 each from the Company and FRP) prior to making
capital expenditures for expansion of its business in any fiscal year
in excess of $5.0 million (adjusted annually for inflation). In the
event that the Policy Committee fails to approve future capital
<PAGE>
expenditures, IMC-Agrico's ability to expand its business could be
adversely affected. (See "Subsequent Event," in Part I, Item 1,
"Business," of this Annual Report on Form 10-K.)
Financing
- ---------
[CHART]
Total Debt
- ----------
(in millions)
1997 1996 1995
------ ------ ------
$735.3 $764.5 $824.3
In February 1996, the Company entered into an unsecured credit
facility (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 $450.0 million under a revolving credit facility which
matures on March 1, 1999 and $50.0 million under a long-term credit
facility which matures on March 2, 2001. In addition, the Company has
a maximum availability of approximately $283.0 million under
uncommitted money market lines. On August 29, 1997, the Company and
its subsidiaries had borrowed $10.0 million under the revolving credit
facility, $46.9 million under the long-term credit facility and $84.2
million under the money market lines. The Company has classified
borrowings under revolving credit facilities and money market lines as
long-term debt since the Company has the ability and the intent to
maintain these obligations for longer than one year. Additionally, as
of August 29, 1997, $33.3 million was drawn under the Credit Facility
as letters of credit principally to support industrial revenue bonds
and other debt and credit risk guarantees.
Simultaneously with the execution of the Credit Facility, the
Company and one of its subsidiaries refinanced certain of its unsecured
term loans. The new $120.0 million unsecured term loans (Term Loans)
bear interest at rates between 7.12 percent and 7.18 percent and mature
at various times between 2000 and 2005.
The Credit Facility, Term Loans and Senior Notes (as defined
hereinafter) contain provisions which: (i) restrict the Company's
ability to make capital expenditures and dispose of assets; (ii) limit
the payment of dividends or other distributions to stockholders and
(iii) limit the incurrence of additional indebtedness. These debt
instruments also contain various financial ratio requirements and other
covenants.
IMC-Agrico has several agreements with a group of banks to provide
it with an aggregate revolving credit facility of $125.0 million
(collectively, IMC-Agrico Revolving Credit Facility or Agreements)
maturing September 1997, December 1997 and February 1998. The
IMC-Agrico Revolving Credit Facility has a letter of credit subfacility
for up to $25.0 million. Borrowings under the IMC-Agrico Revolving
Credit facility are unsecured with a negative pledge on substantially
<PAGE>
all of IMC-Agrico's assets and bear interest at rates based on a base
rate or an adjusted Eurodollar rate. On August 29, 1997, IMC-Agrico
had drawn $8.4 million under the letter of credit subfacility and had
borrowings of $88.6 million under the remainder of the IMC-Agrico
Revolving Credit Facility. IMC-Agrico has classified borrowings under
the IMC-Agrico Revolving Credit Facility as long-term debt since
IMC-Agrico has the ability and the intent to maintain these obligations
for longer than one year.
The Agreements have restrictive covenants including minimum net
partners' capital, fixed charge and current ratio requirements; place
limitations on indebtedness of IMC-Agrico; and restrict the ability of
IMC-Agrico to make cash distributions in excess of Distributable Cash.
The Agreements require IMC-Agrico to repay all revolving loans for a
minimum of 30 consecutive days within each calendar year. In addition,
pursuant to the Partnership Agreement, IMC-Agrico is required to obtain
the approval of the Policy Committee of IMC-Agrico prior to incurring
more than an aggregate of $5.0 million (adjusted annually for
inflation) in indebtedness (excluding a total of $125.0 million of
indebtedness under the IMC-Agrico Revolving Credit Facility). (See
"Subsequent Event," in Part I, Item 1, "Business," of this Annual
Report on Form 10-K.)
The net residual interest included in the receivables shown on the
Consolidated Balance Sheet are owned by IMC-Agrico Receivables Company
L.L.C. (IMC-Agrico L.L.C.), a special-purpose limited liability company
of which IMC-Agrico is the sole equity owner. Under an agreement with
a financial institution, IMC-Agrico L.L.C. may sell, on an ongoing
basis, an undivided percentage interest in a designated pool of
receivables, subject to limited recourse provisions related to the
international receivables, in an amount not to exceed $65.0 million.
At June 30, 1997, IMC-Agrico L.L.C. had sold a total of $49.3 million
of such receivable interests, $32.5 million of which are classified as
short-term debt in the Consolidated Balance Sheet. Costs, primarily
from discount fees and other administrative costs, totaled $3.4
million, $3.6 million and $2.5 million in 1997, 1996 and 1995,
respectively.
In fiscal 1997, the Company purchased a total of $166.4 million
principal amount of its 9.25 percent senior notes due 2000, 10.125
percent senior notes due 2001 and 10.75 percent senior notes due 2003
(collectively, Senior Notes) prior to maturity in an effort to reduce
higher cost indebtedness. As a result, the Company recorded an
extraordinary charge, net of taxes, of $10.8 million for the redemption
premium and write-off of previously deferred finance charges. In
addition, in fiscal 1997, the Company completed the redemption of its
outstanding $114.9 million, 6.25 percent convertible subordinated notes
due 2001 (Subordinated Notes). In connection with the conversion of
the Subordinated Notes, the Company recorded an extraordinary charge,
net of taxes, of $0.6 million for write-off of previously deferred
finance charges. The Company issued approximately 3.6 million shares
of common stock to holders of $114.4 million principal amount of the
Subordinated Notes who converted the Subordinated Notes prior to the
redemption date. The balance of $0.5 million principal amount was
redeemed by the Company for cash.
In May 1997, the Company filed a registration statement on Form S-3
to increase debt and equity securities from $140.0 million to $300.0
<PAGE>
million. In July 1997, the Company issued $150.0 million of 6.875
percent senior debentures due 2007. The proceeds were used to reduce
higher cost indebtedness.
DERIVATIVES
The Company periodically enters into options to purchase natural
gas and entered into DAP futures contracts to manage its exposure to
price fluctuations. Net hedging gains and losses are recognized as
part of the transactions hedged and were not material during 1997, 1996
or 1995. The Company monitors its market risk on an ongoing basis and
currently considers such risk to be minimal.
CONTINGENCIES
Reference is made to "Sterlington Litigation" and "Potash
Antitrust Litigation," in Part I, Item 3, "Legal Proceedings," of this
Annual Report on Form 10-K.
Pine Level Property Reserves
- ----------------------------
In October 1996, IMC-Agrico signed an agreement with CMI for the
purchase of real property, Pine Level, containing approximately 100
million tons of phosphate rock reserves. In connection with the
purchase, IMC-Agrico has agreed to obtain all environmental, regulatory
and related permits necessary to commence mining on the property.
Within five years from the date of this agreement, IMC-Agrico is
required to provide notice to CMI regarding one of the following: (i)
whether they have obtained the permits necessary to commence mining any
part of the property; (ii) whether they wish to extend the permitting
period for an additional three years or (iii) whether they wish to
decline to extend the permitting period. If the permits necessary to
commence mining the property have been obtained, IMC-Agrico is
obligated to pay CMI an Initial Royalty payment of $28.9 million. In
addition to the Initial Royalty payment described above, IMC-Agrico is
required to pay CMI a mining royalty on phosphate rock mined from the
property to the extent the permits are obtained.
Mississippi Chemical Corporation Property Reserves
- --------------------------------------------------
In July 1994, IMC-Agrico entered into an option agreement with
Mississippi Chemical Corporation (MCC) to purchase land in Florida.
The property, along with land previously purchased from MCC, contains
approximately 87.5 million tons of phosphate rock reserves. Prior to
January 16, 1998, IMC-Agrico may exercise its option to purchase the
property for $57.0 million. If IMC-Agrico fails to exercise its option
by that date, MCC has the right to sell the property to IMC-Agrico and
IMC-Agrico will be obligated to purchase the property for $50.0
million.
Other
- -----
Reference is made to "IMC Kalium - United States Operations,"
regarding the Western Ag acquisition, in Part I, Item 1, "Business," of
this Annual Report on Form 10-K.
<PAGE>
Reference is made to "IMC Kalium - Canadian Operations," regarding
mining risks, in Part I, Item 1, "Business," of this Annual Report on
Form 10-K.
The Company does not consider the impact of inflation to be
significant in the business in which it operates.
ENVIRONMENTAL MATTERS
Reference is made to "Other Matters - Environmental Matters," in
Part I, Item 1, "Business," of this Annual Report on Form 10-K.
SUBSEQUENT EVENT
Reference is made to "Subsequent Event," in Part I, Item 1,
"Business," of this Annual Report on Form 10-K.
Item 8. Financial Statements and Supplementary Data.
Page
----
Report of Independent Auditors 31
Consolidated Statement of Earnings 32
Consolidated Balance Sheet 33
Consolidated Statement of Cash Flows 34
Consolidated Statement of Changes in Stockholders' Equity 35
Notes to Consolidated Financial Statements 36
Supplementary Financial Information -
Quarterly Results (Unaudited) 55
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Stockholders of IMC Global Inc.
We have audited the accompanying consolidated balance sheet of IMC
Global Inc. (formed as a result of the consolidation of IMC Global Inc.
and The Vigoro Corporation) as of June 30, 1997 and 1996 and the
related consolidated statements of earnings, cash flows and changes in
stockholders' equity for each of the three years in the period ended
June 30, 1997. The consolidated financial statements give retroactive
effect to the merger of IMC Global Inc. and The Vigoro Corporation on
March 1,1996, which has been accounted for using the pooling of
interests method as described in the notes to the consolidated
financial statements. These consolidated financial statements are the
responsibility of the management of IMC Global Inc. Our responsibility
is to express an opinion on these consolidated financial statements
based on our audits. We did not audit the 1995 financial statements of
The Vigoro Corporation which statements reflect net sales of
approximately 34 percent of the consolidated financial statement total
for the year ended June 30, 1995. Those statements were audited by
other auditors whose report has been furnished to us, and our opinion,
insofar as it relates to data included for The Vigoro Corporation, is
based solely on the report of the other auditors.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits and the report of other
auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the report of other
auditors, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of IMC Global Inc. at June 30, 1997 and 1996, and the
consolidated results of its operations and its cash flows for each of
the three years in the period ended June 30, 1997, after giving
retroactive effect to the merger of The Vigoro Corporation, as
described in notes to the consolidated financial statements, in
conformity with generally accepted accounting principles.
As discussed in the notes to consolidated financial statements,
the Company changed its method of accounting for postemployment
benefits in 1995.
Ernst & Young LLP
Chicago, Illinois
July 23, 1997, except for Note 22, as to which the date is September 5,
1997
<PAGE>
<TABLE>
CONSOLIDATED STATEMENT OF EARNINGS
(In millions except per share amounts)
<CAPTION>
Years ended June 30,
1997 1996 1995
- -----------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $2,982.0 $2,981.0 $2,736.1
Cost of goods sold 2,212.0 2,223.8 2,041.5
Gross margins 770.0 757.2 694.6
Selling, general and administrative
expenses 247.2 229.7 200.6
Merger and restructuring charges - 43.3 -
-------- -------- --------
Operating earnings 522.8 484.2 494.0
Other (income) expense, net (5.7) (10.5) (15.4)
Interest expense 51.1 64.8 70.2
-------- -------- --------
Earnings before minority interest 477.4 429.9 439.2
Minority interest 155.4 191.5 130.4
-------- -------- --------
Earnings before taxes 322.0 238.4 308.8
Provision for income taxes 117.5 94.1 115.5
-------- -------- --------
Earnings before extraordinary item and
cumulative effect of accounting change 204.5 144.3 193.3
Extraordinary charge - debt retirement (11.4) - (6.5)
Cumulative effect on prior years of
change in accounting for postemployment
benefits - - (5.9)
-------- -------- --------
Net earnings $ 193.1 $ 144.3 $ 180.9
======== ======== ========
Earnings per share:
Earnings before extraordinary item
and cumulative effect of accounting
change $ 2.15 $ 1.56 $ 2.12
Extraordinary charge - debt retirement (.12) - (.07)
Cumulative effect of accounting change - - (.06)
-------- -------- --------
Net earnings $ 2.03 $ 1.56 $ 1.99
======== ======== ========
Weighted average number of shares and
equivalent shares outstanding 95.0 92.7 91.0
(See Notes to Consolidated Financial Statements)
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEET
(Dollars in millions except per share amounts)
<CAPTION>
At June 30,
Assets 1997 1996
- -----------------------------------------------------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 43.2 $ 9.6
Receivables, net 362.5 350.2
Inventories 534.2 476.7
Deferred income taxes 54.2 61.4
Other current assets 20.3 20.3
-------- --------
Total current assets 1,014.4 918.2
Property, plant and equipment, net 2,409.2 2,351.3
Other assets 188.0 167.3
-------- --------
Total assets $3,611.6 $3,436.8
======== ========
Liabilities and Stockholders' Equity
- -----------------------------------------------------------------
Current liabilities:
Accounts payable $ 243.0 $ 193.5
Accrued liabilities 138.3 145.1
Short-term debt and current maturities
of long-term debt 40.5 27.8
-------- --------
Total current liabilities 421.8 366.4
Long-term debt, less current maturities 694.8 736.7
Deferred income taxes 373.3 315.7
Other noncurrent liabilities 344.5 352.0
Minority interest 437.3 509.7
Stockholders' equity:
Common stock, $1 par value, authorized
250,000,000 shares; issued 101,819,151
and 97,863,784 shares in 1997 and 1996,
respectively 101.8 97.9
Capital in excess of par value 947.0 821.7
Retained earnings 522.1 359.1
Treasury stock, at cost, 8,256,620
and 5,545,884 shares in 1997 and
1996, respectively (212.2) (107.3)
Foreign currency translation adjustment (18.8) (15.1)
-------- --------
Total stockholders' equity 1,339.9 1,156.3
-------- --------
Total liabilities and stockholders'
equity $3,611.6 $3,436.8
======== ========
(See Notes to Consolidated Financial Statements)
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
(In millions)
<CAPTION>
Years ended June 30,
1997 1996 1995
- -------------------------------------------------------------------
Cash Flows from Operating Activities
- ------------------------------------
<S> <C> <C> <C>
Net earnings $ 193.1 $ 144.3 $ 180.9
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation, depletion and amortization 184.4 168.6 166.4
Minority interest 155.4 181.5 130.4
Merger and restructuring charges - 67.3 -
Deferred income taxes 63.5 0.3 16.9
Postemployment employee benefits - - 9.5
Other charges and credits, net (11.1) (5.8) (11.2)
Changes in:
Receivables 9.5 (96.0) 49.3
Inventories (35.3) (55.4) (27.7)
Other current assets 0.5 (7.2) 0.3
Accounts payable 19.3 (20.2) 14.1
Accrued liabilities (6.3) (35.4) 25.6
------- ------- -------
Net cash provided by operating
activities 573.0 342.0 554.5
------- ------- -------
Cash Flows from Investing Activities
- ------------------------------------
Capital expenditures (223.4) (172.7) (114.9)
Acquisitions of businesses, net of
cash acquired (48.6) (74.6) (142.4)
Sale of investment - 11.6 -
Sales of property, plant and equipment 2.1 1.2 14.6
------- ------- -------
Net cash used in investing activities (269.9) (234.5) (242.7)
------- ------- -------
Net cash provided before financing
activities 303.1 107.5 311.8
------- ------- -------
Cash Flows from Financing Activities
- ------------------------------------
Joint venture cash distributions to
Freeport-McMoRan Resource Partners,
Limited Partnership (221.2) (242.0) (228.1)
Payments of long-term debt (175.4) (93.2) (182.0)
Proceeds from issuance of long-term
debt, net 245.3 75.6 131.5
Changes in short-term debt, net 9.9 (42.5) 17.5
Cash dividends paid (30.1) (35.5) (24.6)
Stock options exercised 7.1 25.8 2.0
Purchase of treasury stock (105.1) - -
Other - 10.2 -
------- ------- -------
Net cash used in financing activities (269.5) (301.6) (283.7)
------- ------- -------
Net change in cash and cash equivalents 33.6 (194.1) 28.1
Cash and cash equivalents - beginning of year 9.6 203.7 175.6
------- ------- -------
Cash and cash equivalents - end of year $ 43.2 $ 9.6 $ 203.7
======= ======= =======
(See Notes to Consolidated Financial Statements)
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(In millions except per share amounts)
<CAPTION>
Foreign
Capital in Currency
Common Excess of Retained Treasury Translation
Stock Par Value Earnings Stock Adjustment
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at June 30,
1994 $ 96.0 $ 777.2 $ 90.2 $(107.1) $ -
Net earnings - - 180.9 - -
Dividends ($.26
per share) - - (25.0) - -
Restricted stock
awards - 0.3 - - -
Stock options
exercised and other 0.4 5.1 - (0.3) -
Foreign currency
translation adjustment - - - - (9.9)
------ ------ ------ ------ ------
Balance at June 30,
1995 96.4 782.6 246.1 (107.4) (9.9)
Net earnings - - 144.3 - -
Dividends ($.33 per
share) - - (31.3) - -
Stock options exercised
and other 1.1 24.6 - (0.1) -
Issuance of common stock
pursuant to
acquisitions 0.4 14.5 - 0.2 -
Foreign currency
translation adjustment - - - - (5.2)
------ ------ ------ ------ ------
Balance at June 30,
1996 97.9 821.7 359.1 (107.3) (15.1)
Net earnings - - 193.1 - -
Dividends ($.32 per
share) - - (30.1) - -
Stock options exercised
and other 0.3 6.8 - - -
Issuance of common stock
pursuant to
acquisitions - 7.7 - 0.2 -
Conversion of
convertible notes 3.6 110.8 - - -
Purchase of treasury
shares - - - (105.1) -
Foreign currency
translation adjustment - - - - (3.7)
------ ------ ------ ------ ------
Balance at June 30,
1997 $ 101.8 $ 947.0 $ 522.1 $(212.2) (18.8)
====== ====== ====== ====== ======
(See Notes to Consolidated Financial Statements)
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions except as otherwise indicated)
1. Business of the Company
-----------------------
IMC Global Inc. (the Company), which operates in a single industry
segment, is the parent corporation of several subsidiaries and joint
venture operations which together comprise one of the world's leading
producers of phosphate and potash crop nutrients as well as animal feed
ingredients. The Company mines and processes potash in the United
States and Canada and has a 56.5 percent economic interest in
IMC-Agrico Company (IMC-Agrico), the nation's leading producer,
marketer and distributor of phosphate crop nutrients and animal feed
ingredients. The remaining interest is held by Freeport-McMoRan
Resource Partners, Limited Partnership (FRP). The Company also markets
and distributes crop nutrients and related products on a wholesale
basis through independent dealers and cooperatives, and on a retail
basis through its farm service outlets. In addition, the Company sells
potash and certain other products to industrial users in the United
States and Canada. Through its interests in other joint ventures, the
Company also produces sulphur and oil and natural gas. (See also Note
22, "Subsequent Events," of Notes to Consolidated Financial
Statements.)
2. Summary of Significant Accounting Policies
------------------------------------------
Basis of Presentation
The consolidated financial statements include the accounts of the
Company and all subsidiaries which are more than 50 percent owned and
controlled; the Company proportionately consolidates its 25 percent
interest in the sulphur joint venture. All significant intercompany
accounts and transactions are eliminated in consolidation. Certain
amounts in the consolidated financial statements for periods prior to
June 30, 1997 have been reclassified to conform to the current
presentation. The Company's fiscal year ends June 30.
Change in Fiscal Year
Effective with the calendar year ending December 31, 1997, the
Company will change from a fiscal year end of June 30 to December 31 in
order to permit more effective business planning, including annual
budgeting, government reporting and audit functions, as well as align
statistical and financial reporting with competitors. The Company will
file a transition report on Form 10-K for the calendar year ended
December 31, 1997.
Use of Estimates
Management is required to make estimates and assumptions that affect
the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
Cash Equivalents
The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents which are
reflected at their approximate fair value. The effect of foreign
currency exchange rate fluctuations on the total cash and cash
equivalents balance was not significant.
<PAGE>
Concentration of Credit Risk
Domestically, the Company sells its products to farmers primarily in
the midwestern and southeastern United States. Internationally, the
Company's products are sold primarily through one Canadian and two U.S.
export associations. In 1997, sales of concentrated phosphates and
potash to China accounted for approximately 13 percent of the Company's
net sales. No single customer or group of affiliated customers
accounted for more than ten percent of the Company's net sales.
Receivables
Under an agreement with a financial institution, IMC-Agrico
Receivables Company, L.L.C. (IMC-Agrico L.L.C.), a special purpose
limited liability company of which IMC-Agrico is the sole equity owner,
may sell, on an ongoing basis, an undivided percentage interest in a
designated pool of receivables, in an amount not to exceed $65.0
million. Effective, January 1, 1997, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities," which requires the sale of receivables sold with recourse
to be classified as short-term debt.
Inventories
Inventories are valued at the lower of cost or market (net
realizable value). Cost for substantially all of the Company's
inventories is calculated on a cumulative annual-average cost basis.
Cost for the remaining portion of inventories, primarily for products
sold through the Company's retail farm service outlets, is determined
using the first-in, first-out method.
Property, Plant and Equipment
Property (including mineral deposits), plant and equipment are
carried at cost. Cost of significant assets includes capitalized
interest incurred during the construction and development period.
Expenditures for replacements and improvements are capitalized;
maintenance and repair expenditures, except for repair and maintenance
overhauls (Turnarounds), are charged to operations when incurred.
Expenditures for major Turnarounds are deferred when incurred and
amortized into cost of goods sold on a straight-line basis, generally
over an 18-month period. Turnarounds are large-scale maintenance
projects that are performed regularly, usually every 18 to 24 months,
on average. Turnarounds are necessary to maintain the operating
capacity and efficiency rates of the production plants. The deferred
portion of the Turnaround expenditures is classified in other assets in
the Company's Consolidated Balance Sheet.
Depreciation and depletion expenses for mining operations, including
mineral interests, are determined using the unit-of-production method
based on estimates of recoverable reserves. Other asset classes or
groups are depreciated or amortized on a straight-line basis over their
estimated useful lives as follows: buildings, 17 to 45 years; machinery
and equipment, 3 to 25 years.
In fiscal 1997, the Company adopted SFAS No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of." The statement requires the recognition of an impairment
loss on a long-lived asset held for use when events and circumstances
indicate that the estimate of undiscounted future cash flows expected
to be generated by the asset are less than its carrying amount.
<PAGE>
Goodwill
Goodwill, representing the excess of purchase cost over the fair
value of net assets of acquired companies, is generally amortized using
the straight-line method over periods not exceeding 40 years. At June
30, 1997 and 1996, goodwill, included in other assets in the
Consolidated Balance Sheet, totaled $89.8 million and $68.1 million,
respectively.
Postemployment Benefits
The Company provides benefits such as workers' compensation and
disabled employee medical care to certain former or inactive employees
after employment but before retirement. Effective July 1, 1994, the
Company adopted SFAS No. 112, "Employers' Accounting for Postemployment
Benefits," which requires the Company to accrue the cost of providing
such postemployment benefits when the event occurs giving rise to the
obligation.
Stock-Based Compensation Plans
In December 1995, the Financial Accounting Standards Board issued
SFAS No. 123, "Accounting for Stock-Based Compensation," which
establishes a fair value-based method of accounting for stock-based
compensation plans. Under SFAS No. 123, the Company has the option of
either accounting for its stock-based compensation plans under the fair
value method or continuing under the accounting provisions of
Accounting Principles Board Opinion No. 25 (APB No. 25). The Company
continues to account for its stock-based compensation plans under the
provisions of APB No. 25 and, accordingly, no compensation cost has
been charged to operations for options granted. (See also Note 18,
"Stock Plans," of Notes to Consolidated Financial Statements.)
Accrued Environmental Costs
The Company's activities include the mining of phosphate and potash,
the manufacturing and blending of crop nutrients, and the blending of
crop nutrients with pesticide products. These operations are subject to
extensive federal, state, provincial and local environmental
regulations in the United States and Canada, including laws related to
air and water quality; management of hazardous and solid wastes;
management and handling of raw materials and products; and the
restoration of lands disturbed by mining and production activities.
Expenditures that relate to an existing condition caused by past
operations of the Company or prior land owners, and which do not
contribute to current or future revenue generation, are charged to
operations. Liabilities are recorded when environmental remedial
efforts are probable and the cost of such efforts can be reasonably
estimated. Revisions to current estimates are made when costs of
required remedial efforts change.
In 1997, the Company adopted Statement of Position 96-1,
"Environmental Remediation Liabilities," promulgated by the American
Institute of Certified Public Accountants, which provides new guidance
for the accrual of environmental remediation costs. Adoption of this
statement did not have a material adverse effect on the Company's
financial statements.
Derivatives
The Company periodically enters into options to purchase natural gas
and entered into diammonium phosphate (DAP) futures contracts to manage
its exposure to price fluctuations. Net hedging gains and
<PAGE>
losses are recognized as a part of the transactions hedged and were not
significant in the years ended June 30, 1997, 1996 and 1995. The
Company monitors its market risk on an ongoing basis and considers such
risk to be minimal.
Foreign Currencies
The functional currency of the Company's Canadian operations is the
Canadian dollar. As of June 30, 1997, the Company's cumulative foreign
currency translation adjustment resulted in a reduction of
stockholders' equity of $18.8 million.
Earnings Per Share
All share and per share information appearing in the consolidated
financial statements and notes herein give effect to the Company's
2-for-1 stock split effected in the form of a 100 percent stock
dividend which was distributed on November 30, 1995.
Earnings per share are based on the weighted average number of
shares and equivalent shares outstanding. Fully diluted earnings per
share are not significantly different from primary earnings per share
and, accordingly, are not presented.
In February 1997, the Financial Accounting Standards Board issued
SFAS No. 128, "Earnings Per Share," which is required to be adopted for
financial statements for periods ending after December 15, 1997. The
Company will be required to change the method currently used to compute
earnings per share and to restate all prior periods. The Company's
primary earnings per share as reflected in the accompanying
Consolidated Statement of Earnings are not materially different from
basic and diluted earnings per share calculated under the new
methodology.
Recently Issued Accounting Standards
In June 1997, SFAS No. 130, "Reporting Comprehensive Income," was
issued. This statement establishes standards of reporting and display
of comprehensive income and its components in a full set of general
purpose financial statements. This statement will be effective for the
Company's year ending December 31, 1998. Adoption of this statement is
not expected to have a significant effect on the Company's financial
statements.
In June 1997, SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," was issued. This statement
changes the way public companies report segment information in annual
financial statements and also requires those companies to report
selected segment information in interim financial reports to
stockholders. This statement will be effective for the Company's year
ending December 31, 1998. Adoption of this statement will result in
additional disclosures.
3. Vigoro Merger
-------------
In March 1996, the Company completed a merger with The Vigoro
Corporation (Vigoro) that resulted in Vigoro becoming a subsidiary of
the Company (Merger). 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
<PAGE>
purposes and was accounted for as a pooling of interests. Accordingly,
the Company's financial statements for periods prior to the merger date
have been restated to reflect the Merger.
Summarized operating results of the Company and Vigoro for the eight
months ended February 29, 1996 and the year ended June 30, 1995 were as
follows:
<TABLE>
<CAPTION>
Eight months Year
ended ended
February 29, June 30,
1996 1995
-------- --------
<S> <C> <C>
IMC GLOBAL INC.
Net sales $1,413.5 $1,924.0
Extraordinary item - (6.5)
Accounting change - (5.9)
Net earnings 102.8 114.7
THE VIGORO CORPORATION
Net sales $ 406.5 $ 871.4
Net earnings 12.7 66.2
INTERCOMPANY SALES ELIMINATION $ (41.1) $ (59.3)
COMBINED
Net sales $1,778.9 $2,736.1
Extraordinary item - (6.5)
Accounting change - (5.9)
Net earnings 115.5 180.9
</TABLE>
4. Merger and Restructuring Charges
--------------------------------
In connection with the Merger in 1996, 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: (i) $6.5 million for lease
terminations resulting from office consolidations and (ii) $16.6
million for severance and related benefits from staff reductions
resulting from the termination of approximately 120 employees,
primarily middle management personnel, and other related actions. As
of June 30, 1997, the following amounts were paid: (a) $20.2 million
for charges relating to the Merger; (b) $5.6 million for lease
terminations resulting from office consolidations and (c) $13.4 million
relating to the termination of approximately 120 employees and other
actions.
In connection with the 1996 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: (i) $26.3 million ($23.3 million net of minority
interest) to cost of goods sold of which $17.5 million was primarily
<PAGE>
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; (ii) $2.4 million of general and
administrative expenses for the write-off of miscellaneous assets;
(iii) $16.6 million to other income and expense, net, to reduce certain
long-term assets to net realizable value and other provisions and (iv)
$13.0 million to minority interest for the transfer of 0.85 percent
interest of IMC-Agrico Distributable Cash (as defined in the IMC-Agrico
Partnership Agreement (Partnership Agreement)) from the Company to FRP.
(See also Note 22, "Subsequent Events," of Notes to Consolidated
Financial Statements.) As of June 30, 1997, $29.5 million of non-cash
write-offs were charged against the reserve.
5. Acquisitions
------------
In January 1995, the Company acquired substantially all of the
assets of the Central Canada Potash division (CCP) of Noranda, Inc. 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 operating cash 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.
In 1997, the Company completed several acquisitions, including a
precision farming operation (Top-Soil); several retail distribution
operations (Crop-Maker, Frankfort Supply, Sanderlin, and Hutson Ag
Services, Inc.); a storage terminal company (Hutson Company, Inc.); and
the remaining interest in a subsidiary. Total cash payments for
acquisitions during the year were $48.6 million and approximately
200,000 shares of common stock were issued.
These acquisitions were accounted for under the purchase method of
accounting, and, accordingly, results of operations for the acquired
businesses have been included in the Company's Consolidated Statement
of Earnings since the respective dates of acquisition. Pro forma
consolidated operating results reflecting these acquisitions would not
have been materially different from reported amounts.
Common stock issued for acquisitions was $7.9 million, $14.9 million
and $4.5 million for 1997, 1996 and 1995, respectively. In fiscal year
1997, liabilities assumed in acquisitions were $40.7 million.
6. IMC-Agrico Cash Sharing
------------------------
IMC-Agrico makes cash distributions to each partner based on
formulas and sharing ratios as defined in the Partnership Agreement.
For the year ended June 30, 1997, the total amount of cash generated by
IMC-Agrico was $382.5 million, of which $210.7 million was distributed
to FRP, including $49.8 million payable as of June 30, 1997.
<PAGE>
On January 23, 1996, the Company and FRP entered into certain
amendments to the Partnership Agreement. Effective March 1, 1996,
there was a shift of 0.85 cash interest in IMC-Agrico from the Company
to FRP. Effective July 1, 1997, the Company's share of cash
distributions increased to approximately 58.6 percent. (See also Note
22, "Subsequent Events," of Notes to Consolidated Financial
Statements.)
7. Non-Recurring Items
--------------------
Non-recurring items included the following:
Sale of Investments and Land
In 1996, the Company realized a gain of $11.6 million from the sale
of a 50 percent interest in Chinhae Chemical Company, a producer of
crop nutrients located in South Korea. In 1995, a gain of $5.0 million
was realized from the sale of land in Florida. These amounts were
included in other income and expense, net in the Consolidated Statement
of Earnings.
Remediation
In 1995, provisions totaling $10.3 million ($5.8 million net of
minority interest) were included in cost of goods sold, in the
Consolidated Statement of Earnings, for remediation costs associated
with a sinkhole beneath a phosphogypsum storage stack at IMC-Agrico's
New Wales crop nutrient production facility in Florida and for repair
and cleanup costs related to earthen dam breaches at IMC-Agrico's Payne
Creek and Hopewell phosphate mining facilities in Florida.
8. Receivables, Net
----------------
<TABLE>
Accounts receivable as of June 30 were as follows:
<CAPTION>
1997 1996
<S> <C> <C>
Trade accounts $315.1 $379.0
Non-trade receivables 71.0 37.0
------ ------
386.1 416.0
Less:
Allowances 6.8 6.3
Receivable interests sold 16.8 59.5
------ ------
$362.5 $350.2
====== ======
</TABLE>
The carrying value of accounts receivable was equal to the estimated
fair value of such assets due to their short maturity.
The net residual interest included in the receivables shown on the
Consolidated Balance Sheet are owned by IMC-Agrico L.L.C., a
special-purpose limited liability company of which IMC-Agrico is the
sole equity owner. Under an agreement with a financial institution,
IMC-Agrico L.L.C. may sell, on an ongoing basis, an undivided
percentage interest in a designated pool of receivables, subject to
limited recourse provisions related to the international receivables,
<PAGE>
in an amount not to exceed $65.0 million. At June 30, 1997, IMC-Agrico
L.L.C. had sold a total of $49.3 million of such receivable interests,
$32.5 million of which are classified as short-term debt in the
Consolidated Balance Sheet. Costs, primarily from discount fees and
other administrative costs, totaled $3.4 million, $3.6 million and $2.5
million in 1997, 1996 and 1995, respectively.
9. Inventories
-----------
Inventories as of June 30 were as follows:
<TABLE>
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
Products (principally finished) $432.8 $377.8
Operating materials and supplies 110.3 103.9
------ ------
Gross inventories 543.1 481.7
Less: Inventory allowances 8.9 5.0
------ ------
Net inventories $534.2 $476.7
====== ======
</TABLE>
10. Property, Plant and Equipment
-----------------------------
<TABLE>
The Company's investment in property, plant and equipment as of June
30 is summarized as follows:
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Land $ 112.2 $ 104.9
Mineral properties and rights 693.7 658.9
Buildings and leasehold improvements 474.0 483.5
Machinery and equipment 2,848.6 2,755.3
Construction in progress 208.7 121.0
-------- --------
4,337.2 4,123.6
Accumulated depreciation and
depletion (1,928.0) (1,772.3)
-------- --------
Net property, plant and equipment $2,409.2 $2,351.3
======== ========
</TABLE>
As of June 30, 1997, idle facilities of the Company included two
phosphate rock mines, two concentrated phosphates plants and two
uranium oxide extraction and processing facilities, all of which remain
closed subject to improved market conditions. The net book value of
these facilities totaled $62.9 million. In the opinion of management,
the net book value of its idle facilities is not in excess of net
realizable value. Subsequent to June 30, 1997, the Company announced
the temporary closure of one additional phosphate rock mine and resumed
production at one of its concentrated phosphate plants.
11. Accrued Liabilities
-------------------
<PAGE>
<TABLE>
Accrued liabilities as of June 30 were as follows:
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
Salaries, wages and bonuses $ 38.6 $ 38.3
Taxes other than income taxes 33.3 28.1
Income taxes 21.7 11.8
Environmental 14.7 14.1
Interest 11.6 11.7
Restructuring 1.8 14.9
Other 16.6 26.2
------ ------
$138.3 $145.1
====== ======
</TABLE>
12. Financing Arrangements
----------------------
Short-term borrowings were $32.5 million and $22.7 million as of
June 30, 1997 and 1996, respectively, which primarily consisted of
revolving credit facilities with various financial institutions, vendor
financing arrangements and sale of receivables classified as short-term
debt as of June 30, 1997, as required by SFAS No. 125.
The weighted-average interest rate on short-term borrowings was 5.8
percent, 6.3 percent and 6.3 percent for 1997, 1996 and 1995,
respectively. Long-term debt at June 30 consisted of the following:
<TABLE>
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
Revolving and long-term credit
facilities, variable rates $175.4 $ 95.4
Money market borrowings 162.1 -
Term loans, maturing through 2005 120.0 120.0
9.45% Senior debentures, due 2011 100.0 100.0
7.525% Industrial revenue bonds,
due 2015 75.0 75.0
7.7% Industrial revenue bonds,
due 2022 27.1 27.1
9.25% Senior notes, due 2000 4.0 61.6
10.125% Senior notes, due 2001 2.6 60.4
10.75% Senior notes, due 2003 3.4 54.3
6.25% Convertible subordinated notes,
due 2001 - 114.9
Other debt 33.2 33.1
------ ------
702.8 741.8
Less current maturities 8.0 5.1
------ ------
$694.8 $736.7
====== ======
</TABLE>
As of June 30, 1997, the estimated fair value of long-term debt
described above was approximately the same as the carrying amount of
such debt in the Consolidated Balance Sheet. The fair value was
<PAGE>
calculated in accordance with the requirements of SFAS No. 107,
"Disclosures of Fair Value of Financial Instruments" and was estimated
by discounting the future cash flows using rates currently available to
the Company for debt instruments with similar terms and remaining
maturities.
In fiscal 1997, the Company purchased a total of $166.4 million
principal amount of its 9.25 percent senior notes due 2000, 10.125
percent senior notes due 2001 and 10.75 percent senior notes due 2003
(collectively, Senior Notes) prior to maturity in an effort to reduce
higher cost indebtedness. As a result, the Company recorded an
extraordinary charge of $10.8 million, net of taxes, for the redemption
premium and write-off of previously deferred finance charges. In
addition, in fiscal 1997, the Company completed the redemption of its
outstanding $114.9 million, 6.25 percent convertible subordinated notes
due 2001 (Subordinated Notes). In connection with the conversion of
the Subordinated Notes, the Company recorded an extraordinary charge,
net of taxes, of $0.6 million for write-off of previously deferred
finance charges associated with the Subordinated Notes. The Company
issued approximately 3.6 million shares of common stock to holders of
$114.4 million principal amount of the Subordinated Notes who converted
the Subordinated Notes prior to the redemption date. The balance of
$0.5 million principal amount was redeemed by the Company for cash.
In 1995, the Company purchased $165.0 million principal amount of
its Senior Notes prior to maturity in an effort to reduce higher cost
indebtedness. As a result, the Company recorded an extraordinary
charge of $6.5 million, net of taxes, for the redemption premium and
write-off of previously deferred finance charges.
In February 1996, the Company entered into an unsecured credit
facility (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 $450.0 million under a revolving credit facility which
matures on March 1, 1999 and $50.0 million under a long-term credit
facility which matures on March 2, 2001. In addition, the Company has
a maximum availability of approximately $283.0 million under
uncommitted money market lines. On June 30, 1997, the Company and its
subsidiaries had borrowed $50.0 million under the revolving credit
facility, $46.9 million under the long-term credit facility and $162.1
million under the money market lines. The Company has classified
borrowings under revolving credit facilities and money market lines as
long-term debt since the Company has the ability and the intent to
maintain these obligations for longer than one year. Additionally,
$33.3 million was drawn under the Credit Facility as letters of credit
principally to support industrial revenue bonds and other debt and
credit risk guarantees.
Simultaneously with the execution of the Credit Facility, the
Company and one of its subsidiaries refinanced certain of its unsecured
term loans. The new $120.0 million unsecured term loans (Term Loans)
bear interest at rates between 7.12 percent and 7.18 percent and mature
at various times between 2000 and 2005.
The Credit Facility, Term Loans and Senior Notes contain provisions
which: (i) restrict the Company's ability to make capital expenditures
and dispose of assets; (ii) limit the payment of dividends or other
distributions to stockholders and (iii) limit the incurrence of
<PAGE>
additional indebtedness. These debt instruments also contain various
financial ratio requirements and other covenants.
IMC-Agrico has several agreements with a group of banks to provide
it with an aggregate revolving credit facility of $125.0 million
(collectively, IMC-Agrico Revolving Credit Facility or Agreements)
maturing September 1997, December 1997 and February 1998. The
IMC-Agrico Revolving Credit Facility has a letter of credit subfacility
for up to $25.0 million. Borrowings under the IMC-Agrico Revolving
Credit facility are unsecured with a negative pledge on substantially
all of IMC-Agrico's assets and bear interest at rates based on a base
rate or an adjusted Eurodollar rate. As of June 30, 1997, IMC-Agrico
had drawn $8.7 million under the letter of credit subfacility and had
borrowings of $78.5 million under the remainder of the IMC-Agrico
Revolving Credit Facility. IMC-Agrico has classified borrowings under
the IMC-Agrico Revolving Credit Facility as long-term debt since
IMC-Agrico has the ability and the intent to maintain these obligations
for longer than one year.
The Agreements have restrictive covenants including minimum net
partners' capital, fixed charge and current ratio requirements; place
limitations on indebtedness of IMC-Agrico; and restrict the ability of
IMC-Agrico to make cash distributions in excess of Distributable Cash
(as defined in the Partnership Agreement). The Agreements require
IMC-Agrico to repay all revolving loans for a minimum of 30 consecutive
days within each calendar year. In addition, pursuant to the
Partnership Agreement, IMC-Agrico is required to obtain the approval of
the Policy Committee of IMC-Agrico prior to incurring more than an
aggregate of $5.0 million (adjusted annually for inflation) in
indebtedness (excluding a total of $125.0 million of indebtedness under
the IMC-Agrico Revolving Credit Facility). (See also Note 22,
"Subsequent Events," of Notes to Consolidated Financial Statements.)
Cash payments for interest were $52.6 million, $67.0 million and
$70.6 million in 1997, 1996 and 1995, respectively. In 1997, $114.4
million of long-term debt was converted to common stock.
Scheduled maturities, excluding the revolving credit facilities, for
the next five years are as follows:
1998 $ 8.0
1999 8.7
2000 3.3
2001 83.3
2002 5.1
In May 1997, the Company increased its existing registration
statement on Form S-3 to issue up to $300.0 million of debt and equity
securities. In July 1997, the Company issued $150.0 million of 6.875
percent senior debentures due 2007. The proceeds were used to reduce
higher cost indebtedness.
13. Other Noncurrent Liabilities
----------------------------
<PAGE>
<TABLE>
Other noncurrent liabilities as of June 30 were as follows:
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
Employee and retiree benefits $143.0 $127.2
Environmental 102.5 102.3
Deferred gain 37.8 40.6
Restructuring charges 28.2 33.4
Other 33.0 48.5
------ ------
$344.5 $352.0
====== ======
</TABLE>
14. Pension Plans
-------------
The Company has non-contributory pension plans that cover
approximately 73 percent of its employees. Benefits are based on a
combination of years of service and compensation levels, depending on
the plan. Generally, contributions to the United States plans are made
to meet minimum funding requirements of the Employee Retirement Income
Security Act of 1974 (ERISA), while contributions to Canadian plans are
made in accordance with Pension Benefits Acts, instituted by the
provinces of Saskatchewan and Ontario. Certain other employees are
covered by defined contribution pension plans.
Employees in the United States and Canada whose pension benefits
exceed Internal Revenue Code and Revenue Canada limitations,
respectively, are covered by supplementary non-qualified, unfunded
pension plans.
<TABLE>
The components of net pension expense for the years ended June 30,
computed actuarially, were as follows:
<CAPTION>
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
Service cost for benefits earned
during the year $12.5 $10.0 $ 9.0
Interest cost on projected
benefit obligation 17.7 15.8 14.7
Return on plan assets (16.8) (28.8) (11.8)
Net amortization and deferral 1.9 17.5 (0.1)
----- ----- -----
Net pension expense $15.3 $14.5 $11.8
===== ===== =====
</TABLE>
The plans' assets consist mainly of corporate equity and United
States government and corporate debt securities, and units of
participation in a collective short-term investment fund.
In a number of these plans, the plan assets exceed the accumulated
benefit obligations (overfunded plans) and in the remainder of the
plans, the accumulated benefit obligations exceed the plan assets
(underfunded plans). The funded status, based on an April 1
measurement date, of the Company's pension plans and amounts recognized
in the Consolidated Balance Sheet as of June 30 were as follows:
<PAGE>
<TABLE>
<CAPTION>
Overfunded Underfunded
Plans Plans
--------------- ---------------
1997 1996 1997 1996
------ ------ ------ ------
<S <C> <C> <C> <C>
Plans' assets at fair value $173.7 $163.8 $ 29.8 $ 28.9
Actuarial present value of
projected benefit obligations:
Vested benefits 136.8 124.2 36.5 34.8
Non-vested benefits 14.4 16.1 5.9 3.0
Accumulated benefit
obligations 151.2 140.3 42.4 37.8
Projected future salary
increases 46.9 54.6 17.7 3.8
------ ------ ------ ------
Total projected benefit
obligations 198.1 194.9 60.1 41.6
------ ------ ------ ------
Plans' assets less than projected
benefit obligations 24.4 31.1 30.3 12.7
Items not yet recognized in earnings:
Unrecognized net gain (13.9) (20.0) (9.8) (2.0)
Unrecognized transition
liability (asset) 2.2 0.9 (0.7) (0.2)
Unrecognized prior service cost (7.7) (10.4) (15.2) (9.5)
Additional minimum liability - - 1.8 11.0
Fourth quarter contributions (0.4) (0.6) (1.0) (0.5)
------ ------ ------ ------
Accrued pension liability $ 4.6 $ 1.0 $ 5.4 $ 11.5
====== ====== ====== ======
</TABLE>
<TABLE>
Significant actuarial
assumptions were as follows:
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Discount rate 7.5% 7.6% 8.2%
Long-term rate of return on assets 9.5% 9.6% 7.8%
Rate of increase in compensation levels 5.1% 5.2% 5.2%
</TABLE>
The Company also has defined contribution pension and investment
plans (Plans) for certain of its employees. Under each of the Plans,
participants are permitted to defer a portion of their compensation.
Company contributions to the Plans are based on a percentage of wages
earned by the eligible employees or by matching a percentage of
employee contributions. The Company's contributions to the Plans
totaled $7.3 million, $9.7 million and $9.7 million for the years ended
June 30, 1997, 1996 and 1995, respectively.
15. Postretirement and Postemployment Benefit Plans
-----------------------------------------------
The Company provides certain health care benefit plans for certain
retired employees. The plans may be either contributory or
<PAGE>
non-contributory and contain certain other cost-sharing features such
as deductibles and coinsurance. The plans are unfunded. Employees are
not vested and such benefits are subject to change.
<TABLE>
The components of postretirement benefits other than pensions
(OPEBS) expense for years ended June 30 were as follows:
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Service cost $1.9 $1.7 $1.5
Interest cost 5.0 5.3 5.3
Net amortization and deferral (1.9) (1.8) (1.5)
---- ---- ----
$5.0 $5.2 $5.3
==== ==== ====
</TABLE>
<TABLE>
The significant assumptions used in determining OPEBS costs were as
follows:
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Discount rate 7.5% 7.5% 8.2%
Health care trend rate:
Under age 65 8.6% (1) 9.2% (1) 9.8% (1)
Over age 65 5.8% (2) 6.0% (2) 6.3% (2)
(1) Decreasing gradually to 5.5% in 2003 and thereafter.
(2) Decreasing gradually to 5.5% in 1999 and thereafter.
</TABLE>
If the health care trend rate assumptions were increased by 1.0
percent, the accumulated postretirement benefit obligation would
increase by 6.2 percent as of June 30, 1997. This would have the
effect of an 8.1 percent increase on OPEBS expense in 1997.
<TABLE>
The components of the Company's OPEBS liability as of June 30 were
as follows:
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
Retirees $ 33.8 $ 35.1
Actives:
Fully eligible 11.3 13.0
Not fully eligible 31.1 26.6
------ ------
Total 76.2 74.7
Items not yet recognized in earnings:
Unrecognized transition obligation 1.8
Unrecognized prior service cost 10.7 12.1
Unrecognized net gain 11.5 10.5
------ ------
Accrued postretirement benefits liability $100.2 $ 97.3
====== ======
</TABLE>
<PAGE>
The Company also provides benefits such as workers' compensation and
disability to certain former or inactive employees after employment but
before retirement. The plans are unfunded. Employees are not vested
and plan benefits are subject to change.
Effective July 1, 1994, the Company adopted SFAS No. 112 to account
for disability benefits of certain employees. Prior to July 1, 1994,
the Company recognized the cost of providing certain of these benefits
on a cash basis. SFAS No. 112 requires the cost of providing these
benefits be recognized when it becomes probable that such benefits will
be paid and when sufficient information exists to make reasonable
estimates of the amounts to be paid. Consequently, the Company
recognized a $13.3 million liability for postemployment benefits as of
July 1, 1994 and recorded a charge of $5.9 million, net of taxes, for
the cumulative effect of the Company's unfunded obligation prior to
July 1, 1994. The effect of the adoption of SFAS No. 112 on 1995
earnings before the cumulative effect of the accounting change was not
material.
16. Income Taxes
------------
Two of the Company's three potash operations that are subject to
Canadian taxes, Kalium Canada and Central Canada Potash, are included
in the consolidated United States federal income tax return filed by
the Company.
Deferred income taxes reflect the net tax effects of temporary
differences between the amounts of assets and liabilities for
accounting purposes and the amounts used for income tax purposes.
Significant components of the Company's deferred tax liabilities and
assets as of June 30 were as follows:
<TABLE>
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
Deferred tax liabilities
Property, plant and equipment $455.6 $437.4
Taxes on undistributed foreign earnings 1.9 19.6
Other liabilities 76.2 50.0
------ ------
Total deferred tax liabilities 533.7 507.0
------ ------
Deferred tax assets
Alternative minimum tax credit
carryforwards 69.9 82.8
Postretirement and postemployment benefits 42.6 39.6
Foreign tax credit carryforward 33.5 27.5
Sterlington litigation settlement 28.6 31.1
Reclamation and decommissioning accruals 24.1 27.4
Restructuring accruals 9.5 25.3
Other assets 39.9 46.5
------ ------
Total deferred tax assets 248.1 280.2
Valuation allowance (33.5) (27.5)
------ ------
<PAGE>
Net deferred tax assets 214.6 252.7
------ ------
Net deferred tax liabilities $319.1 $254.3
====== ======
</TABLE>
As of June 30, 1997, the Company had alternative minimum tax credit
carryforwards of approximately $69.9 million, which can be carried
forward indefinitely. In addition, the Company has a foreign tax
credit carryforward of approximately $33.5 million. The foreign tax
credit carryforward will expire in 2001 to the extent it is not
utilized. The realization of the foreign tax credit carryforward is
dependent upon the Company's future foreign earnings and taxes. Due to
the uncertainty of its ultimate realization, the Company has
established a full valuation allowance against this carryforward
benefit.
<TABLE>
The provision for income taxes for the years ended June 30 consisted
of the following:
<CAPTION>
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Current
Federal $ 22.4 $ 74.0 $ 33.6
State and local 7.0 2.8 8.6
Foreign 26.6 14.9 52.9
------ ------ ------
56.0 91.7 95.1
Deferred
Federal 42.7 (7.4) 8.1
State and local 2.8 4.4 (0.9)
Foreign 16.0 5.4 13.2
------ ------ ------
61.5 2.4 20.4
------ ------ ------
$117.5 $ 94.1 $115.5
====== ====== ======
</TABLE>
The components of earnings before income taxes, extraordinary charge
and cumulative effect of accounting change and the effects of
significant adjustments to tax computed at the federal statutory rate
were as follows:
<TABLE>
<CAPTION>
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Domestic $245.8 $195.7 $193.6
Foreign 76.2 42.7 115.2
------ ------ ------
Earnings before income taxes,
extraordinary charge and
cumulative effect of
accounting change $322.0 $238.4 $308.8
====== ====== ======
<PAGE>
Computed tax at the federal
statutory rate of 35% $112.7 $ 83.4 $108.1
Foreign income and withholding
taxes 11.0 12.7 19.5
Percentage depletion in excess
of basis (12.5) (10.4) (18.1)
Merger expenses not deductible
for tax purposes - 7.1 -
State income taxes, net of
federal income tax benefit 6.3 4.8 4.9
Benefit of foreign sales
corporation (5.6) (4.3) (2.3)
Federal taxes on undistributed
foreign earnings - - 4.4
Other items (none in excess of
5% of computed tax) 5.6 0.8 (1.0)
------ ------ ------
Provision for income taxes $117.5 $ 94.1 $115.5
====== ====== ======
Effective tax rate 36.5% 39.5% 37.4%
</TABLE>
United States income and foreign withholding taxes are provided on
the earnings of foreign subsidiaries that are expected to be remitted
to the extent that taxes on the distribution of such earnings would not
be offset by foreign tax credits. The Company has no present intention
of remitting undistributed earnings of foreign subsidiaries aggregating
$211.7 million at June 30, 1997 and, accordingly, no deferred tax
liability has been established relative to these earnings. If these
amounts were not considered permanently reinvested, a deferred tax
liability of $42.2 million would have been required.
Income taxes paid, net of refunds received, were $91.6 million,
$125.3 million and $84.7 million for 1997, 1996 and 1995, respectively.
17. Capital Stock
-------------
<TABLE>
Changes in the number of shares of common stock issued and in
treasury were as follows:
<CAPTION>
1997 1996
---------- ----------
S> <C> <C>
Common stock issued
Balance, beginning of year 97,863,784 96,408,200
Common stock issued - 442,653
Stock options exercised 351,001 1,009,466
Conversion of convertible debt 3,604,366 2,265
Award of restricted shares - ,200
---------- ----------
Balance, end of year 101,819,151 97,863,784
Treasury common stock
Balance, beginning of year 5,545,884 5,552,840
Common stock issued (208,364) (9,396)
Purchases 2,919,100 2,440
---------- ----------
Balance, end of year 8,256,620 5,545,884
<PAGE>
---------- ----------
Common stock outstanding, end of year 93,562,531 92,317,900
========== ==========
</TABLE>
Pursuant to a Shareholders Rights Plan adopted by the Company in
June 1989, a dividend of one preferred stock purchase right (Right) for
each outstanding share of common stock of the Company was issued on
July 12, 1989 to stockholders of record on that date. Under certain
conditions, each Right may be exercised to purchase one two-hundredth
of a share of Junior Participating Preferred Stock, Series C, par value
$1 per share, at a price of $75, subject to adjustment. This preferred
stock is designed to participate in dividends and vote on essentially
equivalent terms with a whole share of common stock. The Rights
generally become exercisable apart from the common stock only if a
person or group acquires 15 percent or more of the common stock or
makes a tender offer for 15 percent or more of the outstanding common
stock. Upon the acquisition by a person or group of 15 percent or more
of the common stock, each Right will entitle the holder to purchase, at
the then-current exercise price of the Right, a number of shares of
common stock having a market value at that time of twice the exercise
price. The Rights may be redeemed at a price of $.005 per Right under
certain circumstances prior to their expiration on June 21, 1999. No
event during 1997 made the Rights exercisable.
18. Stock Plans
-----------
The Company has various stock option plans (Stock Plans) under which
it may grant non-qualified stock options and stock appreciation rights
(SARs) to officers and key managers of the Company, accounted for under
APB Opinion No. 25. The Stock Plans, as amended, provide for the
issuance of a maximum of 9.2 million shares of common stock of the
Company which may be authorized but unissued shares or treasury shares.
Under the terms of the Stock Plans, the option price per share may
not be less than 100 percent of the fair market value on the date of
the grant. Stock options and SARs granted under the Stock Plans extend
for ten years and generally become exercisable either 50 percent one
year after the date of the grant and 100 percent two years after the
date of the grant, or in one-third increments: one-third one year after
the date of the grant, two-thirds two years after the date of the
grant, and 100 percent three years after the date of the grant.
The Company also adopted a long-term incentive plan in fiscal 1994
under which officers and key managers were awarded shares of restricted
common stock of the Company along with contingent stock units. Based
on performance objectives, these shares and units were intended to vest
in whole or in part during and at the end of a three-year performance
period ending June 30, 1997. On June 30, 1996, the long-term incentive
plan was deemed to be fully vested, one year prior to the completion of
the performance period, and 141,480 shares of common stock were
distributed. Restricted stock was valued on the issuance date, and the
related expense amortized over the vesting period.
At the Company's 1996 Annual Meeting, the stockholders approved the
1996 long-term incentive plan which replaced the 1994 long-term
incentive plan discussed in the preceding paragraph. The new plan
became effective October 17, 1996. Under the plan, officers and key
managers may be awarded stock or cash upon achievement of specified
<PAGE>
objectives over a three-year period beginning July 1, 1996. Final
payouts are made at the discretion of the Compensation Committee of the
Company's Board of Directors whose members are not participants of the
plan. In 1997, $5.1 million was charged to earnings for the cost of
performance awards earned for the relevant three year period under the
1996 long-term incentive plan.
SARs granted totaled 65,250 shares in fiscal 1996. The market price
for the SARs was $38.00 in fiscal 1996. A total of 10,650 shares and
69,375 shares were exercised in fiscal 1997 and 1996, respectively.
<TABLE>
The following table summarizes stock option activity:
<CAPTION>
1997 1996
------------------------- -------------
- ----------
Weighted Average Weighted
Average
Shares Exercise Price Shares
Exercise Price
--------- ------------- -------- ------------
- -
<S> <C> <C> <C> <C>
Outstanding at July 1 3,215,892 $23.64 3,592,669 $20.24
Granted 1,902,240 39.00 771,511 35.58
Exercised (350,402) 20.34 (1,006,866) 20.09
Cancelled (72,075) 35.11 (141,422) 27.39
--------- ---------
Outstanding at June 30 4,695,655 $29.93 3,215,892 $23.65
========= =========
Exercisable at June 30 2,216,600 $22.29 1,732,273 $20.37
========= =========
Available for future
grant at June 30 2,296,316 4,126,481
========= =========
</TABLE>
<TABLE>
Data related to significant option ranges as of June 30, 1997 and
related weighted average price and contract life information follows:
<CAPTION>
Options Outstanding Options Exercisable
-------------------------------- ------------------
Weighted
Average Weighted Weighted
Remaining Average Average
Range of Number Contractual Exercise Number Exercise
Exercise Prices of Options Life Price of Options Price
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$11.00 to 16.50 173,7776 years $15.06 173,777 $15.06
16.51 to 24.75 1,459,5058 years 19.74 1,321,077 19.49
24.76 to 37.13 872,5588 years 27.50 555,246 26.48
37.14 to 40.88 2,189,8151 years 38.87 166,500 38.10
- ----------------------------------------------------------------------
$11.00 to 40.88 4,695,6555 years $29.93 2,216,600 $22.29
</TABLE>
The assumption regarding the stock options contractual life was that
100 percent of such options vested in the first year after issuance
rather than ratably according to the applicable vesting period as
provided by the terms of the grants.
<PAGE>
If the Company's stock option plans' compensation cost had been
determined based on the fair value at the grant date for awards
beginning in fiscal 1996 consistent with the provisions of SFAS No.
123, the Company's net earnings and earnings per share would have been
reduced to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
Net earnings - pro forma $188.8 $142.7
Earnings per share - pro forma 1.99 1.54
Weighted average fair value of
options granted 39.04 35.48
</TABLE>
For the pro forma disclosures, the estimated fair value of the
options is amortized to expense over their expected six year life.
These pro forma amounts are not indicative of anticipated future
disclosures because SFAS No. 123 does not apply to grants before fiscal
1996.
<TABLE>
The fair value of these options was estimated at the date of grant
using the Black Scholes option pricing model using the following
weighted average assumptions:
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
Expected dividend yield 0.85% 0.85%
Expected stock price
volatility 25.4% 26.6%
Risk-free interest rate
(5 year government) 6.4% 6.5%
Expected life of options 6 years 6 years
</TABLE>
Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because
changes in the subjective input assumptions can materially affect the
fair value estimate, in management's opinion the existing models do not
provide a reliable single measure of the value of the employee stock
options.
Another stock option plan provides for the granting of awards of up
to 200,000 shares of common stock to directors of the Company who were
directors prior to the Merger and who were not also employees of the
Company. Options may be exercised at any time the director holding the
option remains a director of the Company and within two years after the
director ceases to be a director of the Company. Under the terms of
the plan, options granted are exercisable over ten years beginning with
the grant date of the option. Options were granted to purchase 24,000
shares and 14,000 shares of common stock in 1997 and 1996,
respectively, at an option price of $41.94 and $29.75 per share,
respectively. A total of 500 shares and 2,600 shares were exercised in
1997 and 1996, respectively.
19. Commitments
-----------
<PAGE>
The Company purchases sulphur, natural gas and ammonia from third
parties under contracts extending, in some cases, for multiple years.
Purchases under these contracts are generally at prevailing market
prices. These contracts generally range from one to four years.
The Company and FRP have an agreement to supply a portion of the
Company's sulphur requirements to IMC-Agrico over the life of the joint
venture partnership. Since the term of the sulphur purchase commitment
is indeterminable, the dollar value of such commitments has been
excluded from the schedule below after the year 2002. (See also Note
22, "Subsequent Events," of Notes to Consolidated Financial
Statements.)
The Company leases plants, warehouses, terminals, office facilities,
railcars and various types of equipment under operating leases. Lease
terms generally range from three to five years, although some leases
have longer terms.
<TABLE>
Summarized below is a schedule of future minimum long-term purchase
commitments and minimum lease payments under non-cancelable operating
leases as of June 30, 1997:
<CAPTION>
Purchase Lease
Commitments Commitments
----------- -----------
<S> <C> <C>
1998 $260.4 $ 19.9
1999 204.0 17.1
2000 120.4 13.9
2001 114.8 11.9
2002 109.7 8.4
Subsequent years 17.5 21.7
------ ------
$826.8 $ 92.9
====== ======
</TABLE>
Rental expense for 1997, 1996 and 1995 amounted to $31.9 million,
$45.6 million and $39.7 million, respectively.
International Minerals & Chemical (Canada) Global Limited is
committed under a service agreement with Potash Corporation of
Saskatchewan Inc. (PCS) to produce annually from mineral reserves
specified quantities of potash for a fixed fee plus a pro rata share of
total production and capital costs at the potash mines located in
Esterhazy, Saskatchewan. The agreement extends through June 30, 2001
and is renewable at the option of PCS for five additional five-year
periods. Potash produced for PCS may, at PCS's option, amount to an
annual maximum of approximately one-fourth of the Esterhazy mines'
production capacity but no more than approximately 1.1 million tons.
During 1997, production of potash for PCS amounted to 500,000 tons, or
16 percent of the Esterhazy mines' total tons produced.
Mississippi Chemical Corporation Property Reserves
In July 1994, IMC-Agrico entered into an option agreement with
Mississippi Chemical Corporation (MCC) to purchase land (Property) in
Florida. The Property, along with land previously purchased from MCC,
contains approximately 87.5 million tons of phosphate rock reserves.
Prior to January 16, 1998, IMC-Agrico may exercise its option to
purchase the Property for $57.0 million. If IMC-Agrico fails to
<PAGE>
exercise its option by that date, MCC has the right to sell the
Property to IMC-Agrico and IMC-Agrico will be obligated to purchase the
Property for $50.0 million.
20. Contingencies
-------------
Mining Risks
Since December 1985, the Company has experienced an inflow of water
into one of its two interconnected potash mines located at Esterhazy,
Saskatchewan. As a result, the Company has incurred expenditures,
certain of which due to their nature were capitalized while others were
charged to expense, to control the inflow. Since the initial discovery
of the inflow, the Company has been able to meet all sales obligations
from production at the mines. The Company has considered, and
continues to evaluate, alternatives to the operational methods employed
at Esterhazy. However, recent changes in the procedures utilized to
control the water inflow have proven successful to date, and the
Company currently intends to continue conventional shaft mining.
Despite the relative success of these modified measures, there can be
no assurance that the amounts required for remedial efforts will not
increase in future years or that the water inflow or remediation costs
will not increase to a level which would cause the Company to change
its mining process or abandon the mines.
Sterlington Litigation
ANGUS Chemical Company (ANGUS), numerous third parties alleging
personal injury and the Company are involved in various litigation
arising out of a May 1991 explosion at a nitroparaffins plant located
in Sterlington, Louisiana. The Company continues to litigate each of
the matters arising out of the Sterlington explosion. Approximately
1,300 class action plaintiffs seek damages for personal injuries, "fear
and fright," and punitive damages against ANGUS, the Company and other
defendants arising from the explosion. Discovery is still not
complete, and the trial date has been postponed indefinitely. The
Company is unable to estimate the magnitude of its exposure at this
time.
The Company has settled actions filed by ANGUS with respect to
claims for amounts ANGUS paid for settled claims in connection with the
explosion and has settled actions filed by ANGUS for claimed rights of
direct action against the Company's insurers. In addition, ANGUS'
claims for certain environmental claims were dismissed by the trial
court and are on appeal.
Potash Antitrust Litigation
The Company was a defendant, along with other Canadian and United
States potash producers, in a class action antitrust lawsuit filed in
federal court in 1993. The plaintiffs alleged a price-fixing
conspiracy among North American potash producers beginning in 1987 and
continuing until the filing of the complaint. The class action
complaint against all defendants, including the Company, was dismissed
by summary judgment in January 1997. The summary judgment dismissing
the case is currently on appeal by the plaintiffs to the United States
Court of Appeals for the Eighth Circuit. The Court of Appeals is
expected to rule during calendar 1998.
In addition, in 1993 and 1994, class action antitrust lawsuits with
allegations similar to those made in the federal case were filed
<PAGE>
against the Company and other Canadian and United States potash
producers in state courts in Illinois and California. The Illinois
case was dismissed for failure to state a claim. In the California
case, merits discovery has been stayed and the case is currently
inactive.
Pine Level Property Reserves
In October 1996, IMC-Agrico signed an agreement with Consolidated
Minerals, Inc. (CMI) for the purchase of real property, Pine Level,
containing approximately 100 million tons of phosphate rock reserves.
In connection with the purchase, IMC-Agrico has agreed to obtain all
environmental, regulatory and related permits necessary to commence
mining on the property.
Within five years from the date of this agreement, IMC-Agrico is
required to provide notice to CMI regarding one of the following: (i)
whether they have obtained the permits necessary to commence mining any
part of the property; (ii) whether they wish to extend the permitting
period for an additional three years or (iii) whether they wish to
decline to extend the permitting period. If the permits necessary to
commence mining the property have been obtained, IMC-Agrico is
obligated to pay CMI an Initial Royalty payment of $28.9 million. In
addition to the Initial Royalty payment described above, IMC-Agrico is
required to pay CMI a mining royalty on phosphate rock mined from the
property to the extent the permits are obtained.
Environmental Matters
The historical use and handling of regulated chemical substances and
crop nutrient products in the normal course of the Company's business
has resulted in contamination at facilities presently or previously
owned or operated by the Company. The Company has also purchased
facilities that were contaminated by previous owners through their use
and handling of regulated chemical substances. Spills or other
unintended releases of regulated substances have occurred in the past,
and potentially could occur in the future, possibly requiring the
Company to undertake or fund cleanup efforts. The Company cannot
estimate the level of expenditures that may be required in the future
to clean up contamination from the handling of regulated chemical
substances or crop nutrients.
At some locations, the Company has agreed, pursuant to consent
orders with the appropriate governmental agencies, to undertake certain
investigations (which currently are in progress) to determine whether
remedial action may be required to address contamination. The cost of
any remedial actions that ultimately may be required at these sites
currently cannot be determined.
The Company believes that it is entitled to at least partial
indemnification for a portion of the costs that may be expended by the
Company to remedy environmental issues at certain facilities and
operations pursuant to indemnification agreements. These agreements
address issues that resulted from activities occurring prior to the
Company's acquisition of facilities from parties including: PPG
Industries, Inc.; Kaiser Aluminum & Chemical Corporation; Beatrice
Companies, Inc.; Estech, Inc. and certain private parties. The Company
has already received and anticipates receiving amounts pursuant to the
indemnification agreements for certain of its expenses incurred to
date.
<PAGE>
Other
Most of the Company's export sales of phosphate and potash crop
nutrients are marketed through three export associations. As a member,
the Company is contractually obligated to reimburse the export
association for any losses or other liabilities incurred. There were
no such operating losses or other liabilities in 1997, 1996 and 1995.
The Company also has certain other contingent liabilities with
respect to litigation, claims and guarantees of debt obligations to
third parties arising in the ordinary course of business. The Company
does not believe that any of these contingent liabilities will have a
material adverse impact on the Company's financial position.
21. Operations by Geographic Area
-----------------------------
<TABLE>
Financial information relating to the Company's operations in
various geographic areas was as follows:
<CAPTION>
Net Sales
---------------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
United States $2,939.8 $2,910.8 $2,589.0
Canada 306.7 326.9 388.6
Other 24.9 20.9 11.7
Transfers between
geographic areas (289.4) (277.6) (253.2)
-------- -------- --------
Consolidated $2,982.0 $2,981.0 $2,736.1
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Operating Earnings Identifiable Assets
--------------------------- ---------------------------
1997 1996 1995 1997 1996 1995
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
United States $ 399.0 $ 445.5 $ 352.0 $3,095.8 $2,828.0 $2,854.9
Canada 100.5 29.0 130.2 865.4 845.7 734.9
Other 23.5 18.9 10.2 8.4 7.8 8.2
Eliminations (0.2) (9.2) 1.6 (358.0) (244.7) (274.8)
-------- -------- -------- -------- -------- --------
Consolidated $ 522.8 $ 484.2 $ 494.0 $3,611.6 $3,436.8 $3,323.2
======== ======== ======== ======== ======== ========
</TABLE>
Transfers of product between geographic areas were at prices
approximating those charged to unaffiliated customers.
<PAGE>
<TABLE>
Net sales from the United States, as shown in the preceding table,
included sales to unaffiliated customers in other geographic areas as
follows:
<CAPTION>
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Far East $641.4 $753.5 $643.9
Latin America 212.6 190.3 121.7
Europe 10.7 10.5 27.1
------ ------ ------
$864.7 $954.3 $792.7
====== ====== ======
</TABLE>
22. Subsequent Events
-----------------
In August 1997, the Company signed a definitive agreement with
Freeport-McMoRan Inc. (FTX), which holds a 51.6 percent interest in
FRP, providing for the merger of FTX into the Company. The Company
will be the surviving entity and the transaction will be accounted for
as a purchase. In the proposed merger (FTX Merger), each share of
common stock of FTX would be exchanged for 0.90 shares of the Company's
common stock plus one-third of a warrant, with each whole warrant
entitling the holder to purchase one share of the Company's common
stock at a price equal to $44.50 per share. Immediately prior to the
FTX Merger, the sulphur businesses of FRP and the Company will be
transferred to Freeport Sulphur Company, a newly-formed subsidiary of
FRP. Shares of Freeport Sulphur Company will be distributed to all FRP
unitholders, including FTX. As of June 30, 1997, the net carrying
value of the Company's sulphur investment was approximately $200.0
million. The Company expects to record a significant non-cash charge
on the disposition of this investment in connection with the FTX
Merger. The FTX Merger is subject to various closing conditions,
including approval by stockholders of FTX and the Company.
In May 1997, the Company announced that it had reached a definitive
agreement to acquire Western Ag-Minerals Company (Western Ag), a
subsidiary of Toronto-based Rayrock Yellowknife Resources Inc., for
$53.0 million. Western Ag, located in Carlsbad, New Mexico, has annual
capacity of 400,000 tons of potash and had calendar-year 1996 revenues
of approximately $41.0 million. On September 5, 1997, the acquisition
of Western Ag was consummated.
<PAGE>
<TABLE>
QUARTERLY RESULTS (UNAUDITED)
(In millions except per share amounts)
<CAPTION>
Quarter
-------------------------------------
First Second Third Fourth Year
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fiscal 1997
Net sales $ 603.6 $ 665.4 $ 664.8 $1,048.2 $2,982.0
Gross margins 155.5 184.5 171.5 258.5 770.0
Earnings before
income taxes 45.0 76.3 61.6 139.1 322.0
Earnings before extra-
ordinary item 28.6 48.5 39.1 88.3 204.5
Net earnings 21.1 47.9 39.1 85.0 193.1
Earnings per share:
Earnings before extra-
ordinary item $ .31 $ .51 $ .41 $ .93$
2.15(1)
Net earnings .23 .50 .41 .90
2.03(1)
- ----------------------------------------------------------------------
Fiscal 1996(2)
Net sales $ 599.4 $ 709.6 $ 716.9 $ 955.1 $2,981.0
Gross margins 150.7 201.5 185.5 219.5 757.2
Earnings before
income taxes 51.7 83.2 2.6 100.9 238.4
Net earnings (loss) 32.1 54.1 (8.3) 66.4 144.3
Earnings (loss) per
share $ .35 $ .58 $ (.09)$ .71$
1.56(1)
- -----------------------------------------------------------------------
(1) Due to weighted average share differences, when stated on a
quarter and year-to-date basis, the earnings per share for the
fiscal years ended June 30, 1997 and 1996 do not equal the sum of
the respective earnings per share for the four quarters then ended.
(2) The quarterly results reflected above give retroactive effect to
the Merger discussed in Note 3 of Notes to Consolidated Financial
Statements and, accordingly, the amounts have been restated for all
periods prior to the Merger to include the accounts and operations
of Vigoro.
</TABLE>
Fiscal 1997
Fourth quarter operating results reflected the acquisition of
Hutson's Ag Services, Inc. and Hutson Company, Inc. in May 1997.
Fiscal 1996
Second, third and fourth quarter operating results reflected the
acquisition of Feed Ingredients in October 1995.
Third quarter operating results included an after-tax charge of
$69.6 million, or $0.75 per share, from charges related to the
Merger, as well as costs associated with, among other things, a
corporate restructuring, other asset valuations and environmental
issues.
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
Not applicable.
PART III.
Item 10. Directors and Executive Officers of the Registrant.
DIRECTORS OF THE REGISTRANT
The ages and five-year employment history of each member of the
Board of Directors at August 29, 1997 is as follows:
Raymond F. Bentele
- -------------------
Age 60. Retired President and Chief Executive Officer, Mallinckrodt
Inc. Mr. Bentele was Executive Vice President of Mallinckrodt Group
Inc. (formerly known as IMCERA Group Inc.) from 1989 until his
retirement. He is also a director of the Kellwood Company,
Mallinckrodt Inc., Legett & Platt Inc. and was previously a director of
IMC Global from 1990 to 1991. Mr. Bentele has served as an IMC Global
Director since June 1994, and his term expires in April 1998.
Mr. Bentele currently serves as Chairman of the Compensation Committee
and as a member of the Committee on Directors and Board Affairs.
Wendell F. Bueche
- ------------------
Age 66. Chairman of the Board of the Company. Mr. Bueche served as
Chairman and Chief Executive Officer from August 1994 through June
1997. From February 1993 until August 1994, he served as President and
Chief Executive Officer. Mr. Bueche was Chairman of the Board, Chief
Executive Officer and President of Allis-Chalmers Corporation from 1986
through 1988. He retired from full-time employment from 1989 until
February 1993. Mr. Bueche is also a director of Marshall & Ilsley
Corporation, M&I Marshall & Ilsley Bank, WICOR, Inc., Wisconsin Gas
Company and Executive Association, American Industrial Partners, L. P.
Mr. Bueche has served as an IMC Global Director since July 1991, and
his term expires in April 1999. Mr. Bueche currently serves on the
Executive Committee and is a non-voting member of the Committee on
Directors and Board Affairs.
Rod F. Dammeyer
- ----------------
Age 56. Managing Director of Equity Group Investments, Inc. Since
January 1993, Mr. Dammeyer has served as Chief Executive Officer of
Anixter International, Inc. In addition, he has served as President
and as a director of Anixter International, Inc. since October 1985.
Mr. Dammeyer is a trustee of Van Kampen American Capital, Inc. closed
end investment companies and a member of the Chase Manhattan
Corporation National Advisory Board. Mr. Dammeyer is also a director
of Antec Corporation, Capsure Holdings Corp., Inc.; Jacor
Communications, Inc.; Lukens Inc.; Sealy Corporation and TeleTech
Holdings, Inc. He previously served as a director of Vigoro from
August 1993 until March 1996 and has served as an IMC Global Director
<PAGE>
since March 1996. His term expires in April 1998. Mr. Dammeyer
currently serves on the Compensation Committee.
James M. Davidson, Ph.D.
- -------------------------
Age 63. Vice President for Agriculture and Natural Resources,
University of Florida. Dr. Davidson joined the University of Florida in
1974, became Professor and Assistant Dean for Research in 1979,
Professor and Dean for Research, Institute of Food and Agricultural
Sciences, and Director, Florida Agricultural Experiment Station,
Gainesville, Florida in 1986, and assumed his present position in 1992.
Dr. Davidson has served as an IMC Global Director since July 1991, and
his term expires in April 1999. Dr. Davidson currently serves as
Chairman of the Audit Committee and as a member of the Environmental,
Health and Safety Committee.
Robert E. Fowler, Jr.
- ----------------------
Age 61. President and Chief Executive Officer of the Company. Mr.
Fowler served as President and Chief Operating Officer from March 1996
through June 1997. He served as President and Chief Executive Officer
of Vigoro from September 1994 through February 1996 and as President
and Chief Operating Officer from July 1993 to September 1994.
Mr. Fowler served as President and Chief Executive Officer of BCC
Industrial Services from June 1991 to June 1993. He is a director of
Anixter International, Inc. Mr. Fowler previously served as a director
of Vigoro from August 1993 through February 1996 and has served as an
IMC Global Director since March 1996. His term expires in April 2000.
Mr. Fowler currently serves on the Executive Committee and is a non-
voting member of the Committee on Directors and Board Affairs.
Harold H. MacKay
- ----------------
Age 57. Partner of the law firm MacPherson Leslie & Tyerman in Regina,
Saskatchewan, Canada. Mr. MacKay served as managing partner of
MacPherson Leslie & Tyerman from 1989 through 1996 and as Chairman of
the firm after January 1997, a position from which he is presently on
leave of absence while serving as Chair of the Task Force on the Future
of the Canadian Financial Services Sector. He is a director of IPSCO
Inc. and Weyerhaeuser Canada Ltd. Mr. MacKay previously served as a
director of Vigoro from November 1993 until March 1996 and has served
as an IMC Global Director since March 1996. His term expires in April
2000. Mr. MacKay currently serves as Chairman of the Environmental,
Health and Safety Committee and as a member of the Audit Committee.
David B. Mathis
- ---------------
Age 59. Chairman and Chief Executive Officer of Kemper Insurance
Companies. Mr. Mathis served as Chairman, President and Chief
Executive Officer of Kemper Insurance Companies from March 1996 to
September 1996. From February 1992 through February 1996, he served as
Chairman and Chief Executive Officer of Kemper Corporation. Mr. Mathis
has been employed by Kemper since 1960 in management positions of
successively increasing importance. He is currently a director of
Kemper Insurance Companies. Mr. Mathis also serves on the board of
trustees of Lake Forest College and is an advisory board member of the
J. L. Kellogg Graduate School of Management of Northwestern University.
He also serves on the board of directors of Evanston Hospital
<PAGE>
Corporation and the board of trustees of the Chicago Symphony
Orchestra. Mr. Mathis has served as an IMC Global Director since
February 1995, and his term expires in April 2000. Mr. Mathis
currently serves as Chairman of the Committee on Directors and Board
Affairs and as a member of the Executive Committee and the Compensation
Committee.
Thomas H. Roberts, Jr.
- ----------------------
Age 73. Retired Chairman and Chief Executive Officer of DEKALB Energy
Company (formerly known as DEKALB Corporation). Mr. Roberts is a
director of Pride Petroleum Services. From 1968 through 1988
Mr. Roberts served as a director of International Minerals & Chemical
Corporation. Mr. Roberts has served as an IMC Global Director since
February 1988, and his term expires in April 1998. Mr. Roberts
currently serves on the Audit Committee and the Compensation Committee.
Joseph P. Sullivan
- ------------------
Age 64. Retired Chairman of the Board of Vigoro, a position he held
from March 1991 through February 1996. From March 1991 to
September 1994, Mr. Sullivan served as Chief Executive Officer of
Vigoro. He served as Chief Operating Officer of Vigoro from March 1991
to July 1993 and as President from January 1986 to March 1991.
Mr. Sullivan served as a director of Vigoro from January 1986 through
February 1996. He is a director of American Classic Voyages Co. Mr.
Sullivan has served as an IMC Global Director since March 1996, and his
term expires in April 1999. Mr. Sullivan currently serves as Chairman
of the Executive Committee and as a member of the Environmental, Health
and Safety Committee.
Richard L. Thomas
- -----------------
Age 66. Retired Chairman of First Chicago NBD Corporation and The
First National Bank of Chicago. Mr. Thomas is also a director of First
Chicago NBD Corporation; CNA Financial Corporation; The PMI Group;
Inc.; The Sabre Group Holdings, Inc. and Sara Lee Corporation.
Mr. Thomas is a life trustee of the Orchestral Association of Chicago,
a trustee of Rush-Presbyterian-St. Luke's Medical Center (Chicago) and
a trustee of Northwestern University. He is also Chairman of the Board
of Trustees of Kenyon College. Mr. Thomas has served as an IMC Global
Director since June 1996, and his term expires in April 2000.
Mr. Thomas currently serves on the Executive Committee and the
Committee on Directors and Board Affairs.
Billie B. Turner
- ----------------
Age 66. Chairman Emeritus of the Board. Retired President and Chief
Executive Officer, a capacity in which he served from the Company's
incorporation in 1987 until his retirement in February 1993. He is a
director of Cyprus-Amax Minerals Company. Mr. Turner has served as an
IMC Global Director since 1987, and his term expires in April 1999.
Mr. Turner currently serves on the Environmental, Health and Safety
Committee.
EXECUTIVE OFFICERS OF THE REGISTRANT
<PAGE>
The ages and five-year employment history of the Company's
executive officers at August 29, 1997 is as follows:
Wendell F. Bueche
- -----------------
Age 66. Chairman of the Board of the Company. Mr. Bueche served as
Chairman and Chief Executive Officer from August 1994 through June
1997. From February 1993 until August 1994, he served as President and
Chief Executive Officer. Mr. Bueche was Chairman of the Board, Chief
Executive Officer and President of Allis-Chalmers Corporation from 1986
through 1988. He retired from full-time employment from 1989 until
February 1993. Mr. Bueche is also a director of Marshall & Ilsley
Corporation, M&I Marshall & Ilsley Bank, WICOR, Inc., Wisconsin Gas
Company and Executive Association, American Industrial Partners, L. P.
Mr. Bueche has served as an IMC Global Director since July 1991, and
his term expires in April 1999. Mr. Bueche currently serves on the
Executive Committee and is a non-voting member of the Committee on
Directors and Board Affairs.
Robert E. Fowler, Jr.
- ---------------------
Age 61. President and Chief Executive Officer of the Company. Mr.
Fowler served as President and Chief Operating Officer from March 1996
through June 1997. He served as President and Chief Executive Officer
of Vigoro from September 1994 through February 1996 and as President
and Chief Operating Officer from July 1993 to September 1994.
Mr. Fowler served as President and Chief Executive Officer of BCC
Industrial Services from June 1991 to June 1993. He is a director of
Anixter International, Inc. Mr. Fowler previously served as a director
of Vigoro from August 1993 through February 1996 and has served as an
IMC Global Director since March 1996. His term expires in April 2000.
Mr. Fowler currently serves on the Executive Committee and is a non-
voting member of the Committee on Directors and Board Affairs.
C. Steven Hoffman
- -----------------
Age 48. Senior Vice President of the Company. Mr. Hoffman served as
Senior Vice President, Marketing from 1993 until 1994; Senior Vice
President, Sales from 1992 until 1993; Senior Vice President, Wholesale
Marketing from 1990 until 1992.
John U. Huber
- -------------
Age 59 . Senior Vice President of the Company and President of the IMC
Kalium business unit. Mr. Huber has served as President of the IMC
Kalium business unit since joining the Company in March 1996. Prior to
joining the Company, Mr. Huber served as Executive Vice President of
The Vigoro Corporation from June 1993 to March 1996. Prior thereto he
served as President of Kalium Chemicals, Ltd. (now known as IMC Kalium
Ltd.) and as President of Kalium Canada, Ltd. (now known as IMC Kalium
Canada Ltd.) from August 1991 to March 1996.
B. Russell Lockridge
- --------------------
Age 47. Senior Vice President, Human Resources of the Company since
joining the Company in July 1996. Mr. Lockridge served as Corporate
Director, Executive Compensation and Development at FMC Corporation
from 1992 to 1996 and as Human Resource Director for FMC's Chemical
Business from 1986-1992.
<PAGE>
Anne M. Scavone
- ---------------
Age 34. Controller of the Company. Ms. Scavone served as Director,
Joint Venture Finances from April 1995 to April 1996 and as Joint
Venture Financial Coordinator from April 1993 to April 1995. Prior to
joining the Company, Ms. Scavone was a Manager at Ernst & Young from
July 1990 to April 1993.
Brian J. Smith
- --------------
Age 53. Executive Vice President and Chief Financial Officer of the
Company since joining the Company in February 1996. From June 1996 to
February 1997, Mr. Smith served as Treasurer. Mr. Smith served as
Executive Vice President and Chief Financial Officer at W. R. Grace &
Co. from 1989 to 1995. Mr. Smith resigned from the Company effective
September 30, 1997.
Marschall I. Smith
- ------------------
Age 52. Senior Vice President and General Counsel of the Company since
joining the Company in 1993. Mr. Smith was Senior Vice President and
General Counsel of American Medical International Inc. from 1992 until
1993 and Associate General Counsel of Baxter International Inc.from
1980 to 1992.
Robert M. Van Patten
- --------------------
Age 52. Senior Vice President of the Company and President of the IMC
AgriBusiness business unit. Mr. Van Patten has served as President of
the IMC AgriBusiness business unit since joining the Company in March
1996. Prior to joining the Company, Mr. Van Patten served as Executive
Vice President of The Vigoro Corporation and as President of Vigoro
Industries, Inc. (now known as IMC AgriBusiness Inc.) from June 1993 to
March 1996. Prior thereto he served as President of the Agribusiness
Division of Vigoro Industries, Inc.
All of the Company's executive officers are elected annually, with
the terms of the officers listed above to expire in April 1998. No
"family relationships," as that term is defined in Item 401(d) of
Regulation S-K, exist among any of the listed officers.
BENEFICIAL OWNERSHIP OF COMMON STOCK
Section 16(a) Beneficial Ownership Reporting Compliance
- -------------------------------------------------------
Each director and executive officer of the Company who is subject
to Section 16 of the Securities Exchange Act of 1934, as amended (the
Exchange Act), is required by Section 16(a) of the Exchange Act to
report to the SEC, by a specified date, his or her beneficial ownership
of or transactions in the Company's securities. Reports received by
the Company indicate that all such directors and officers filed all
requisite reports with the SEC on a timely basis during fiscal 1997
except that a Form 4 for Dr. Davidson relating to the exercise by Dr.
Davidson of IMC Global options was not timely filed with the SEC.
<PAGE>
Item 11. Executive Compensation.
Compensation of Executive Officers
- ----------------------------------
The following table sets forth information as to the compensation
of the Chief Executive Officer and each of the other four most highly
compensated executive officers of the Company serving as such on
June 30, 1997. The executive officers listed below are collectively
referred to as the "Named Executive Officers" in this Annual Report.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation Long-Term Compansation
---------------------------- -----------------------
- ---------
Awards
Payouts
----------------------
- -------
Restricted Securities
Other Annual Stock Underyling
LTIP All Other
Name and Fiscal Salary Bonus Compensation Awards Options
Payouts Compensation
Principal Position Year ($) ($) ($) ($) (#)
($) ($) (12)
- ------------------------------------------------------ -----------------------
- ------------------------
<S> <C> <C> <C> <C> <C> <C>
<C> <C>
W.F. Bueche(1) 1997 600,000 386,256 0 0 89,000(8)
597,364(10) 102,407
Chairman 1996 544,600 425,000 0 0 50,000
1,472,078(11) 48,117
1995 530,040 460,000 0 0 20,000(9)
298,141 52,441
R.E. Fowler,Jr.(2) 1997 450,000 267,408 0 0 158,000(8)
371,024(10) 41,211
President & CEO 1996 148,600 85,000 0 0 0
0 0
<PAGE>
B.J. Smith(3) 1997 335,500 160,445 6,947(6) 0 74,000(8)
209,030(10) 29,750
Executive VP & CFO 1996 115,077 60,000 3,996(6) 0 25,000
0 36,442
J.U. Huber(4) 1997 299,075 227,443 12,900(7) 0 64,000(8)
243,036(10) 16,901
Senior VP
R.M. VanPatten(5) 1997 278,353 154,894 0 0 54,000(8)
220,957(10) 14,243
Senior VP
- -------------------------------------------------------------------------------
- ------------------------
(1) Mr. Bueche retired as CEO of the Company on June 30, 1997.
(2) Mr. Fowler's employment with the Company commenced on March 4, 1996.
(3) Mr. Smith's employment with the Company commenced on February 26, 1996.
Mr. Smith resigned from the Company effective September 30, 1997.
(4) Mr. Huber was elected Senior Vice President of the Company on February 25,
1997.
(5) Mr. Van Patten was elected Senior Vice President of the Company on
February 25, 1997.
(6) Represents payments to offset expenses incurred for relocation.
<PAGE>
(7) Represents payments to compensate Mr. Huber for lower pension benefits to
be paid by the Company than were payable under the plan of Mr. Huber's
former employer.
(8) Represents options granted in June 1997 and August 1996. The Company
normally grants options to its executive officers once each fiscal year.
Due to the Vigoro merger and the decision of the Board of Directors to
change the fiscal year of the Company from June 30 to December 31, the
Company made two grants of options during fiscal 1997. The Company did
not grant any options to the Named Executive Officers during August 1997.
(9) Reflects a 2-for-1 stock split effected in November 1995.
(10) Payments were made pursuant to the Company's 1996 Long-Term Performance
Incentive Plan.
(11) Reflects restricted shares and contingent stock units payouts under the
1994 Long-Term Performance Incentive Plan that vested on
June 30, 1996, pursuant to action taken by the Board of Directors. The
awards were scheduled to vest on June 30, 1997.
(12) Consists of: (i) the value of the benefit for life insurance premiums paid
by the Company as follows: Mr. Bueche, $64,881 in fiscal 1997; $39,117 in
fiscal 1996; and $34,638 in fiscal 1995; Mr. Fowler, $32,211 in fiscal
1997; Mr. Smith, $19,325 in fiscal 1997 and $6,442 in fiscal 1996; Mr.
Huber, $10,151 and Mr. Van Patten, $6,248; (ii) contributions made by the
Company to the Company's Defined Contribution Savings Plan as follows: Mr.
Bueche, $9,000 in fiscal 1997; $9,000 in fiscal 1996; and $17,803 in
fiscal 1995; Mr. Fowler, $9,000 in fiscal 1997; Mr. Smith, $9,000 in
fiscal 1997; Mr. Huber, $6,750 and Mr. Van Patten, $3,167; (iii)
reimbursement by the Company for estate planning expenditures of $7,400
and $1,425 incurred by Mr. Bueche and Mr. Smith, respectively; (iv) income
<PAGE>
attributable to Mr. Van Patten's use of a vehicle owned by the Company;
(v) $21,146 of premiums paid by the Company for additional insurance for
Mr. Bueche and (vi) $30,000 paid to Mr. Smith upon commencement of his
employment.
Company for additional insurance for Mr. Bueche and (vi) $30,000 paid to
Mr. Smith upon commencement of his employment.
</TABLE>
OPTION GRANTS IN THE LAST FISCAL YEAR
The following table sets forth information with respect to all
options to purchase common stock granted in fiscal 1997 to each of the
Named Executive Officers. There were no grants of stock appreciation
rights in fiscal 1997. The Company normally grants options to its
executive officers once each fiscal year. Due to the Vigoro merger and
the decision of the Board of Directors to change the fiscal year of the
Company from June 30 to December 31, the Company made two grants of
options during fiscal 1997. The Company did not grant any options to
the Named Executive Officers during August 1997.
<PAGE>
<TABLE>
<CAPTION>
Individual Grants Grant Date
Value
----------------------------------------------------------
- ----------------
Number of % of Total
Securities Options Grant Date
Underlying Granted to Exercise Present
Options Employees in Price Expiration Value
Name Granted(#)(1) Fiscal Year ($/Share)(2) Date
($)(3)
- ----------- ------------- ----------- -------
- ----- -----------
<S> <C> <C> <C> <C> <C>
W. F. Bueche 89,000 10.67 40.875 8/14/06 14.84
R. E. Fowler, Jr.53,000 6.35 40.875 8/14/06 14.84
105,000 9.93 37.625 6/23/07 12.56
B. J. Smith 29,000 3.48 40.875 8/14/06 14.84
45,000 4.25 37.625 6/23/07 12.56
J. U. Huber 21,000 2.52 40.875 8/14/06 14.84
43,000 4.07 37.625 6/23/07 12.56
R. M. Van Patten19,000 2.28 40.875 8/14/06 14.84
35,000 3.31 37.625 6/23/07 12.56
- -----------------------------------------------------------------------
- ------
(1) Except for options granted to Mr. Bueche, all options granted and
reported in this table have the following terms: each option vests
over a three-year period, with one-third of the options becoming
exercisable at the end of each of the first three years following
the date of grant and with the entire option becoming exercisable
at the end of the third year, unless the vesting schedule is
accelerated in the event of a change of control of the Company in
accordance with the Company's 1988 Stock Option and Award
Plan, as amended and restated. Each option granted to Mr. Bueche
during fiscal 1997 vests over a two-year period, with one-half of
the options becoming exercisable at the end of each fiscal year.
(2) Exercise price is the fair market value of the common stock on the
date of grant, determined by calculating the average of the high
and low prices at which the common stock is traded on such date,
as reflected on the consolidated tape of the New York Stock
Exchange.
(3) The Black-Scholes Option Pricing Model was used to determine the
grant date present value of the options to purchase common stock
granted in fiscal 1997 by the Company. The material assumptions
and adjustments incorporated in the model in estimating the value
of the options which have an expiration date of (i) August 2006
and (ii) June 2007, respectively, include the following:
(a) option exercise prices of $40.875 and $37.625, respectively,
equal to the fair market value of the underlying stock on the date
of grant; (b) an option term of ten years; (c) interest rates of
6.64 percent and 6.49 percent, respectively, representing the
interest rate on a U. S. Treasury security on the date of grant
with a maturity date corresponding to that of the option term;
(d) volatilities of 35.09 percent and 30.31 percent, respectively,
calculated using daily stock prices for the one-year period prior
<PAGE>
to the date of grant; (e) dividends at the rate of $0.32 per
share, representing the annualized dividends paid with respect to
a share of common stock at the date of grant and (f) reductions of
approximately 33 percent and 34 percent, respectively, to reflect
the probability of forfeiture due to termination prior to vesting
and the probability of a shortened option term due to termination
of employment prior to the option exercise date.
The ultimate value of the options will depend on the future market
price of the common stock, which cannot be forecast with
reasonable accuracy. The actual value, if any, an optionee will
realize upon exercise of an option will depend on the excess of
the market value of the common stock over the exercise price on
the date the option is exercised.
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information with respect to all
exercises of options to purchase common stock in fiscal 1997 by each of
the Named Executive Officers and all outstanding options to purchase
common stock held by such individuals at June 30, 1997.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of
Unexercised
Options at Fiscal In-the-Money Options
Year-End (#) at Fiscal Year-End
($)(1)
Shares Acquired Value ------------------------- ------
- ---------------------
Name on Exercise(#) Realized($) Exercisable
Unexercisable Exercisable Unexercisable
- ------------- -------------- ----------- ----------- ---------
- ---- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
W. F. Bueche _ _ 228,000 114,000 3,620,603 0
R. E. Fowler, Jr. _ _ 395,763 312,427 4,974,851 1,714,598
B. J. Smith _ _ 12,500 86,500 0 0
J. U. Huber 5,000 122,969 57,137 89,891 894,594 176,180
R. M. Van Patten17,338 458,373 24,751 76,168 162,053 165,154
- -----------------------------------------------------------------------
(1) The value is based on a stock price of $35.625, which is the
average of the high and low prices at which the common stock was
traded on June 30, 1997 as reflected on the consolidated tape of
the New York Stock Exchange, less the relevant exercise price(s).
</TABLE>
Pension Plans
Qualified Pension Plan
The Company maintains a non-contributory qualified pension plan
which covers all United States salaried employees, including the Named
Executive Officers (except for Messrs. Huber and Van Patten). The
annual pension to which a participant is entitled at normal retirement
age (65) is an amount based on the highest final average annual
remuneration for the five consecutive highest paid years out of the ten
years immediately preceding retirement and years of credited service up
to 35 years. The plan is integrated with benefits payable under Old
Age Survivors and Disability Insurance. Remuneration for these
<PAGE>
purposes includes salary and 50 percent of bonus as shown in the
Summary Compensation Table.
The Internal Revenue Code of 1986, as amended (the Code), requires
certain limitations on benefits provided under a qualified retirement
plan. To the extent pension benefits otherwise payable under the
qualified pension plan's formula exceed the Code's limitations, the
Board of Directors has approved a non-qualified plan, the Supplemental
Executive Retirement Plan, which provides for payment of amounts in
excess of the Code's limitations from the Company's operating funds to
its participants.
The following table shows the estimated annual pension benefits
which would be payable to the Named Executive Officers for life at
normal retirement under the qualified pension plan. (If elected, an
optional form of pension would, on an actuarial basis, reduce benefits
to the participant but provide benefits to a surviving beneficiary or
permit a one-time lump sum present value payment.)
<TABLE>
<CAPTION>
Annual Average of
Highest Five Years Annual Benefits for Years
Covered Remuneration of Service Indicated
for Pension Purposes -------------------------------------
- ------------------------
in Ten Years Preceding 35
Years
Normal Retirement Date 10 Years 15 Years 20 Years 25 Years 30
Years or More
- ----------------- ------ ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
$100,000 $ 16,700 $ 25,000$ 33,300 $ 41,600 $ 48,100 $54,700
200,000 34,500 51,700 68,900 86,100 99,800 113,500
300,000 52,300 78,400 104,500 130,600 151,400 172,300
400,000 70,100 105,100 140,100 175,100 203,100 231,100
500,000 87,900 131,800 175,700 219,600 254,700 289,900
600,000 105,700 158,500 211,300 264,100 306,400 348,700
700,000 123,500 185,200 246,900 308,600 358,000 407,500
800,000 141,300 211,900 282,500 353,100 409,700 466,300
900,000 159,100 238,600 318,100 397,600 461,300 525,100
- ----------------------------------------------------------------------
</TABLE>
Credited service under the pension plan for the Named Executive
Officers as of June 30, 1996 is as follows: Mr. Bueche, 4 years, 5
months; Mr. Fowler, 1 year, 4 months; Mr. Smith, 1 year, 5 months;
Mr. Huber, 1 year, 4 months; and Mr. Van Patten, 1 year, 4 months.
Supplemental Executive Retirement Plan
The Supplemental Executive Retirement Plan, which is a
non-contributory, non-qualified plan, provides an additional pension
benefit for Company executive officers (including the Named Executive
Officers) and certain other key executives based on the participant's
final average annual remuneration for pension purposes. The plan takes
into account 100 percent of bonus and years of credited service up to a
maximum of 20 years, payable to the extent that such benefits exceed
those payable under the above-described pension plan. There are no
other offsets under this plan.
<PAGE>
The following table shows the additional annual retirement benefits
payable under the Supplemental Executive Retirement Plan to the Named
Executive Officers and covered key employees for life beginning at age
65 based upon ten, 15 and 20 years of service.
<TABLE>
<CAPTION>
Annual Average of Net Additional
Highest Five Years Annual Benefits
Covered Remuneration for Years of
for Pension Purposes Service Indicated
in Ten Years Preceding ---------------------------------
Normal Retirement Date 10 Years 15 Years 20 Years
- ---------------------- -------- -------- --------
<S> <C> <C> <C>
$100,000 $ 13,300 $ 20,000 $ 26,700
200,000 25,500 38,300 51,100
300,000 37,700 56,600 75,500
400,000 49,900 74,900 120,000
500,000 62,100 105,000 180,000
600,000 74,300 150,000 240,000
700,000 90,000 195,000 300,000
800,000 120,000 240,000 360,000
900,000 150,000 285,000 420,000
- ------------------------------------------------------------------
</TABLE>
Compensation of Directors
Non-Employee Directors
Each non-employee director receives an annual retainer of $24,000,
attendance fees of $1,000 for each Board meeting attended and an
additional $1,000 for attendance at each meeting of a Board committee
to which he is assigned. Each non-employee director receives an
additional annual retainer of $3,000 for service as chairperson of a
Board committee.
Pursuant to the 1994 Stock Option Plan for Non-Employee Directors,
each non-employee director annually receives options to purchase 2,000
shares of common stock. Options are granted at 100 percent of the fair
market value of the stock at the time of grant. Options granted are
immediately exercisable and may be exercised at any time while the
director remains in office and for 24 months thereafter. However,
common stock issuable upon exercise of options may not be sold within
the six-month period following the date of grant without the consent of
the Compensation Committee nor may options be exercised more than ten
years after the date of the grant.
Pursuant to the Directors' Retirement Service Plan, a non-employee
director who has served at least six years as a director, has agreed to
remain available to provide consultation services to the Company
management and does not work for a competitor will, upon attainment of
age 70 and after retirement from the Board, receive an annual pension
for a period of ten years (subject to earlier termination upon death).
Such pension will be equal to 60 percent to 100 percent of the annual
retainer in effect at retirement, depending upon the length of the
director's service (60 percent if six years, 70 percent if seven, 80
<PAGE>
percent if eight, 90 percent if nine, and 100 percent if ten years or
more).
Mr. MacKay received approximately $4,700 during fiscal 1997 for
serving on the Canadian Advisory Board of the Company.
Employee Directors
Employee directors (currently Messrs. Bueche and Fowler) receive no
fees or other remuneration for service on the Board or any committee of
the Board.
Termination of Employment Agreements
Agreements with Messrs. Bueche, Fowler and Smith, to become
effective in the event of a change in control of the Company, are
intended to assure the Company of the continued services of these
executives. In general, each of the agreements provides that, in the
event there is a change in control of the Company (as defined in the
agreement), the executive shall remain employed by the Company in his
then current position at the then current base and incentive
compensation and benefit levels for a period of three years, subject to
earlier expiration because of voluntary resignation, mandatory
retirement, disability, or termination for cause, as defined in the
agreements. If the Company breaches the agreement, the Company is
obligated to provide the executive certain severance benefits,
including three years' base salary plus three times the average of the
prior three years' bonuses. In addition, the Company would become
obligated to continue the executive's participation in various
compensation and benefit plans in which the executive was participating
when the agreement became effective. These agreements are in addition
to the other agreements and arrangements described in this Annual
Report on Form 10-K.
These agreements were amended in August 1995 to update the
definition of change in control and to increase the severance and bonus
payment from two years to three years.
Certain provisions of the federal tax law impose a 20 percent
surcharge upon an executive of a corporation and deny federal income
tax deductibility to the corporation as to a significant portion of the
severance payments made to an executive because of a change in control,
if such payments as a whole exceed three times his or her average
annual base and incentive compensation for the most recent five years.
The amounts estimated to be payable under the aforesaid agreements, if
those agreements become effective, could be large enough to subject the
executives to the surcharge and to deprive the Company of a deduction.
The Company has agreed with each of the executives that, if a surcharge
were assessed upon payment of the aforementioned severance benefits, it
will provide "grossed up" reimbursement to the executive, including any
tax payable on such additional amounts paid to him.
If a change in control were to occur and the contingent employment
agreements were to be breached by the Company within three years
thereafter, the amount of cash that would be payable in respect of
these amended agreements is estimated (as of July 1, 1997 based on
fiscal 1997 salary and bonus and excluding any gross-up reimbursements
for taxes) to be approximately: Mr. Bueche, $3.1 million; Mr. Fowler,
<PAGE>
$2.3 million and Mr. Smith, $1.6 million. The merger of FTX into the
Company does not constitute a change of control under these agreements.
Mr. Smith's resignation from the Company will not result in any payment
pursuant to the agreement between Mr. Smith and the Company.
Employment and Other Agreements
On March 4, 1996, the Company and Mr. Bueche entered into an
agreement which amended his employment agreement and which amended his
agreement to provide consulting services to the Company following his
retirement as Chairman of the Company. Pursuant to the employment
agreement, as amended, Mr. Bueche is to serve as Chairman of the
Company from July 1, 1997 through June 30, 1998 at a salary of $250,020
per annum. In addition, Mr. Bueche will be retained as a consultant
for one year from the date of his retirement as Chairman for a total
fee of $250,020.
Mr. Smith and the Company entered into a letter agreement effective
as of March 1, 1996 which provides that if Mr. Smith is terminated
prior to February 28, 1999, he will be entitled to receive the sum of:
two times his annualized salary as of the termination date and two
times the highest annual bonus (annualized if he is employed for less
than a complete bonus year) earned by him for one of the two
consecutive complete bonus years ending immediately preceding the
termination. "Termination" is defined generally in the letter
agreement as the termination prior to February 28, 1999 of employment
with the Company for any reason other than death, disability, cause or
voluntary resignation.
Certain of the Company's directors and executive officers entered
into severance and other similar agreements in connection with the
Vigoro merger. (See "Severance Plans" and "Non-Competition
Agreements," in Part III, Item 11, "Executive Compensation," of this
Annual Report on Form 10-K for further detail.)
Management Compensation and Benefit Assurance Program
The Board adopted a Management Compensation and Benefit Assurance
Program (the Program) in October 1988 and amended this Program in
August 1995. The purpose of the Program is to ensure that officers and
key management personnel receive the compensation and benefits that
have been committed to, and are reasonably expected by, them under the
terms of certain benefit plans, including severance and benefits in the
event of termination of employment after a change in control.
Under the Program, trusts have been established with the Wachovia
Bank of North Carolina, N.A. of Winston-Salem, North Carolina to ensure
appropriate payment when due of commitments, awards and benefits under
the Management Incentive Compensation Plan (including any deferred
bonuses), the Supplemental Executive Retirement Plan, the 1988 Stock
Option and Award Plan, the contingent employment agreements and
gross-up arrangements referred to under the caption "Termination of
Employment Arrangements." These trusts are minimally funded with
operating funds of the Company, subject to full funding in the event
that the Trustee is notified that a change in control has occurred or
is about to occur.
<PAGE>
Assuming a change in control were to occur, distributions by the
Trustee would be made only if an officer were involuntarily terminated
without cause within three years after a change in control and/or only
to the extent the Company were to fail to honor its commitments and
subject to the claims of the Company's creditors and to the terms of
the benefit plan involved. The annual cost to the Company to maintain
the trusts is estimated to be $21,000. Full funding under the
arrangements that could be required would depend on the Company's
outstanding commitments subject to the Program from time to time.
"Change in control" of the Company is defined to occur as of the
first day that any one or more of the following conditions shall have
been satisfied:
(1) the acquisition by any individual entity or group (a
Person), including any "person" within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act, of beneficial ownership
within the meaning of Rule 13d-3 promulgated under the Exchange
Act, of 15 percent or more of either (i) the then outstanding
shares of common stock of the Company (the Outstanding Company
Common Stock) or (ii) the combined voting power of the then
outstanding securities of the Company entitled to vote generally in
the election of directors (the Outstanding Company Voting
Securities); excluding, however, the following: (A) any acquisition
directly from the Company (excluding any acquisition resulting from
the exercise of an exercise, conversion or exchange privilege
unless the security being so exercised, converted or exchanged was
acquired directly from the Company); (B) any acquisition by the
Company; (C) any acquisition by an employee benefit plan (or
related trust) sponsored or maintained by the Company or any
corporation controlled by the Company; and (D) any acquisition by
any corporation pursuant to a transaction which complies with
clauses (i), (ii) and (iii) of subsection (3) of this definition;
(2) individuals who, as of the date hereof, constitute the Board
of Directors (the Incumbent Board) cease for any reason to
constitute at least a majority of such Board; provided that any
individual who becomes a director of the Company subsequent to the
date hereof whose election, or nomination for election by the
Company's stockholders, was approved by the vote of at least a
majority of the directors then comprising the Incumbent Board shall
be deemed a member of the Incumbent Board; and provided further,
that any individual who was initially elected as a director of the
Company as a result of an actual or threatened election contest, as
such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act, or any other actual or threatened
solicitation of proxies or consents by or on behalf of any Person
other than the Board shall not be deemed a member of the Incumbent
Board;
(3) approval by the stockholders of the Company of a
reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the
Company (a Corporate Transaction); excluding, however, a Corporate
Transaction pursuant to which (i) all or substantially all of the
individuals or entities who are the beneficial owners,
respectively, of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities immediately prior to such
Corporate Transaction will beneficially own, directly or
<PAGE>
indirectly, more than 60 percent of, respectively, the outstanding
shares of common stock, and the combined voting power of the
outstanding securities of such corporation entitled to vote
generally in the election of directors, as the case may be, of the
corporation resulting from such Corporate Transaction (including,
without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the
Company's assets either directly or indirectly) in substantially
the same proportions relative to each other as their ownership,
immediately prior to such Corporate Transaction, of the Outstanding
Company Common Stock and the Outstanding Company Voting Securities,
as the case may be, (ii) no Person (other than: the Company; the
corporation resulting from such Corporate Transaction; and any
Person which beneficially owned, immediately prior to such
Corporate Transaction, directly or indirectly, 25 percent or more
of the Outstanding Company Common Stock or the Outstanding Voting
Securities, as the case may be) will beneficially own, directly or
indirectly, 25 percent or more of, respectively, the outstanding
shares of common stock of the corporation resulting from such
Corporate Transaction or the combined voting power of the
outstanding securities of such corporation entitled to vote
generally in the election of directors and (iii) individuals who
were members of the Incumbent Board will constitute at least a
majority of the members of the Board of Directors of the
corporation resulting from such Corporate Transaction; or
(4) approval by the stockholders of the Company of a plan of
complete liquidation or dissolution of the Company.
The merger of FTX into the Company does not constitute a change in
control under the Program.
Severance Plans
In connection with the March 1996 merger of Vigoro into a
wholly-owned subsidiary of the Company (the Vigoro Merger), the Vigoro
Board adopted and the Company assumed a Severance Plan (the Vigoro
Severance Plan) applicable to 28 employees of Vigoro, including
Mr. Fowler, the current President and Chief Executive Officer of the
Company, and Messrs. Huber and Van Patten, each of whom is currently a
Senior Vice President of the Company. The Vigoro Severance Plan
provides that a covered employee will receive "Severance Benefits" if
the employee is terminated in circumstances that constitute a
"Severance Event" and such employee executes a release of claims.
Severance Benefits consist of an amount equal to the employee's then
annualized base salary or, if greater, annualized base salary as of
November 13, 1995 (Base Salary), plus an amount generally equal to the
employee's highest annual bonus and other incentive payments received
for any of the prior three years (Bonus Base), paid in 12 equal monthly
installments plus unpaid salary and pro-rated bonus and earned but
unused vacation. Eligible employees will also be entitled to
continuation of benefits for the lesser of one year or until the
employee finds new employment providing comparable benefits. A
Severance Event occurs if within three years of November 13, 1995, an
eligible employee's employment is terminated: (i) by the employer other
than because such employee engaged in willful and intentional conduct
which has caused demonstrable and serious injury to the Company, was
convicted of or entered a plea of nolo contendere to any felony, was
<PAGE>
convicted of a criminal offense or entered a plea of nolo contendere to
any offense involving dishonesty, breach of trust or moral turpitude,
committed a breach of fiduciary duty involving personal profit or
willfully refused to perform or was grossly negligent in the
performance of his or her duties or responsibilities (unless
significantly changed without the consent of the employee)
(collectively, Cause); (ii) by such employee within 90 days after such
employee has or should have knowledge that his or her Base Salary was
not maintained in accordance with prior levels, he or she is not
included on a comparable basis with similar employees in bonus plans or
stock option or similar plans or he or she is not included on a
comparable basis with similar employees in benefit plans or vacation or
other perquisite plans (collectively, Good Reason); or (iii) by such
employee on or after the date such employee has reached the age of 60.
A covered employee is not entitled to Severance Benefits if the
employee terminates his or her employment other than in circumstances
constituting a Severance Event or the employee's employment is
terminated as a result of the death or disability of the employee.
Other than as described above, no Named Executive Officer is eligible
to receive Severance Benefits under the Vigoro Severance Plan.
Non-Competition Agreements
Upon consummation of the Vigoro merger, the Company entered into
Non-Competition Agreements (the Non-Competition Agreements) with a
total of 14 officers and key employees of Vigoro, including
Messrs. Fowler, Huber and Van Patten, and with nine key employees of
the Company which provide that such employees will not compete with the
Company or any of its affiliates for specified periods following the
termination of their employment with Vigoro or its subsidiaries because
of a Severance Event (as defined under the caption "Severance Plans")
and will receive scheduled payments in equal monthly installments
during the period of non-competition. Employees entering into
Non-Competition Agreements will agree not to compete (i) for a period
of three years if a Severance Event occurs on or before the first
anniversary of the Effective Time; (ii) for two years if a Severance
Event occurs after the first anniversary and on or before the second
anniversary of the Effective Time; and (iii) for one year if a
Severance Event occurs after the second anniversary and on or before
the third anniversary of the Effective Time (the Non-Competition
Periods). During the Non-Competition Periods, certain employees of the
Company will be prohibited from rendering employment or consulting
services to any business enterprise in North America in a capacity in
which such employee will directly supervise a business which is
directly competitive with the business which the employee supervised
during the one-year period preceding the Severance Event. The maximum
aggregate payments under the Non-Competition Agreements payable to
Messrs. Fowler, Huber and Van Patten are $1,580,000, $920,000 and
$772,000, respectively. Other than as described above, no Named
Executive Officer is a party to a Non-Competition Agreement.
Compensation Committee Interlocks and Insider Participation
Robert E. Fowler, Jr., the President and Chief Executive Officer of
the Company, is the Chairman of the Compensation Committee of the Board
of Directors of Anixter International, Inc. Rod F. Dammeyer is the
Chief Executive Officer of Anixter International, Inc. and is on the
Compensation Committee of the Board of Directors of the Company.
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
BENEFICIAL OWNERSHIP OF COMMON STOCK
Ownership of Common Stock by Directors and Executive Officers
The following table shows the number of shares of the common stock
that are owned beneficially, as of August 29, 1997, by (i) each
director, (ii) each executive officer named in the Summary Compensation
Table and (iii) the directors, all such executive officers and all
other executive officers as a group (18 persons), with sole voting and
investment power unless otherwise indicated.
<TABLE>
<CAPTION>
Number of Shares
Owned Beneficially
Name as of 8/29/97(1)(2)
- ----------------------------------------------------------------------
<S> <C>
Wendell F. Bueche 331,980(3)(4)
Raymond F. Bentele 9,000(5)
Rod F. Dammeyer 17,000(5)(6)
James M. Davidson 8,000(5)
Robert E. Fowler, Jr. 587,328(3)(6)
Harold H. MacKay 21,600(5)(6)
David B. Mathis 8,000(5)
Thomas H. Roberts, Jr. 25,000(5)
Joseph P. Sullivan 698,675(5)(6)
Richard L. Thomas 6,000(5)
Billie B. Turner 61,906(5)
Brian J. Smith 48,239(3)
John U. Huber 236,691(3)(6)(7)
Robert M. Van Patten 296,850(3)(6)(8)
Directors and all executive officers as a group 2,568,262(3)(5)(6)
- ---------------------------------------------------------------------
(1) Beneficial ownership of the common stock is based on information
furnished or confirmed by each director or executive officer
described above.
(2) No individual director or executive officer is a beneficial owner
of more than one percent of the outstanding shares of common
stock. Directors and the executive officers described above as a
group beneficially own an aggregate of approximately 2.8 percent
of the outstanding shares of common stock.
(3) Includes shares of common stock currently purchasable or
purchasable within 60 days of August 29, 1997 through the exercise
of options granted under the 1988 Stock Option and Award Plan, as
amended and restated, as follows: Mr. Bueche, 272,500 shares;
Mr. Fowler, 17,666 shares; Mr. Smith, 22,166 shares; Mr. Huber,
7,000 shares; Mr. Van Patten, 6,333 shares; and directors and all
executive officers as a group, 496,971 shares.
(4) Includes 1,600 shares of common stock held by the Nancy Bird
Jacobson Trust dated March 27, 1974 (the Trust). Mr. Bueche
disclaims beneficial ownership of the 1,600 shares of common stock
<PAGE>
held by the Trust.
(5) Includes shares of common stock purchasable within 60 days of
August 29, 1997 through the exercise of options granted to
non-employee directors under the 1994 Stock Option Plan for
Non-Employee Directors, as follows: Mr. Bentele, 8,000 shares;
Mr. Dammeyer, 4,000 shares; Dr. Davidson, 6,000 shares;
Mr. MacKay, 4,000 shares; Mr. Mathis, 6,000 shares; Mr. Roberts,
8,000 shares; Mr. Sullivan, 4,000 shares; Mr. Thomas, 4,000
shares; and Mr. Turner, 8,000 shares.
(6) Includes shares of common stock currently purchasable or
purchasable within 60 days of August 29, 1997 through the exercise
of options granted under The Vigoro Corporation 1991 Stock Option
Plan, as amended, as follows: Mr. Dammeyer, 8,000 shares;
Mr. Fowler, 550,190 shares; Mr. Huber, 64,104 shares; Mr. MacKay,
16,000 shares; Mr. Sullivan, 261,000 shares; Mr. Van Patten,
40,517 shares; and directors and the executive officers described
above as a group, 939,811 shares.
(7) Includes 155,000 shares held by the John and Janice Huber Family
Limited Partnership, an Illinois limited partnership (the Huber
Partnership). Mr. Huber and his wife are the sole general
partners of the Huber Partnership. Mr. Huber disclaims beneficial
ownership of any of the 155,000 shares of common stock owned by
the Huber Partnership except to the extent of his ownership
interest in the Huber Partnership.
(8) Includes 250,000 shares held by the Robert and Susan Van Patten
Family Limited Partnership, an Illinois limited partnership (the
Van Patten Partnership). Mr. Van Patten and his wife are the sole
general partners of the Van Patten Partnership. Mr. Van Patten
disclaims beneficial ownership of any of the 250,000 shares of
common stock owned by the Van Patten Partnership except to the
extent of his ownership interest in the Van Patten Partnership.
</TABLE>
Ownership of Common Stock by Others
The Company believes that, as of August 29, 1997, based on filings
with the Securities and Exchange Commission (the SEC), only the
following named institutions are the beneficial owners of more than
five percent of the outstanding common stock.
<PAGE>
<TABLE>
<CAPTION>
Percent
Shares of
Name and Address of Beneficial Owner Beneficially Outstanding
Owned Common
Stock
<S> <C> <C>
Wellington Management Company, L.L.P. (1) 10,102,025 10.97%
75 State Street
Boston, Massachusetts 02109
Neuberger & Berman, L.L.C. (2) 6,678,834 7.25%
605 Third Avenue
New York, New York 10158-3698
Eagle-GVI One L.L.C. (3) 6,510,286 7.07%
Two North Riverside Plaza, Suite 1100
Chicago, Illinois 60606
MacKay Shields Financial Corporation (4) 5,041,640 5.47%
9 West 57th Street
New York, New York 10019
(1) Wellington Management Company, L.L.P. is a parent holding company
which files one Schedule 13G to report beneficial ownership of
common stock by all of its affiliates. Includes shares as to which
Wellington Management Company, L.L.P. has or shares investment and
voting power as follows: shared voting power, 2,640,100 shares and
shared investment power, 10,102,025 shares.
(2) Neuberger & Berman, L.L.C. is an investment adviser registered
under the Investment Advisers Act of 1940 (the Advisers Act) and
has or shares investment and voting power as follows: sole voting
power, 1,706,136 shares; shared voting power, 3,870,400 shares and
shared investment power, 6,678,834 shares.
(3) Eagle-One GVI L.L.C. has sole investment and voting power with
respect to the common stock reported.
(4) MacKay-Shields Financial Corporation is an investment adviser
registered under Section 203 of the Advisers Act and has or shares
investment and voting power as follows: shared voting power,
5,041,640 shares and shared investment power, 5,041,640 shares.
</TABLE>
The Company knows of no contractual arrangements which may, at a
subsequent date, result in a change in control of the Company.
Item 13. Certain Relationships and Related Transactions.
TRANSACTIONS WITH PRINCIPAL STOCKHOLDERS, DIRECTORS AND EXECUTIVE
OFFICERS
The Company, Great American Management and Investment, Inc. (GAMI)
and certain former stockholders of Vigoro (including Rod F. Dammeyer, a
Director) entered into a Registration Rights Agreement (the
Registration Rights Agreement) in connection with the Vigoro merger.
On May 8, 1996, pursuant to such Registration Rights Agreement, GAMI
requested that the Company register the shares of common stock held by
<PAGE>
GVI Holdings, Inc., a wholly owned subsidiary of GAMI. On July 2,
1996, the Company effected such registration.
The Registration Rights Agreement provides that GAMI will cause any
affiliate or associate of GAMI to resign as a director of the Company
if GAMI's direct or indirect ownership of common stock is reduced below
3.5 percent of the outstanding shares of common stock.
Certain of the Company's directors and executive officers entered
into severance and other similar agreements in connection with the
Vigoro merger. (See "Severance Plans" and "Non-Competition Agreements,"
in Part III, Item 11, "Executive Compensation," of this Annual Report
on Form 10-K for further detail.)
PART IV.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-
K.
(a) (1) Consolidated financial statements filed as part of this
report are listed under Part II, Item 8 of this Annual Report on Form
10-K.
(a) (2) All schedules for which provision is made in the applicable
accounting regulations of the Securities and
Exchange Commission are not required under the related
instructions or are inapplicable, and therefore
have been omitted.
(a) (3) The exhibits listed in the following index have previously
been filed with the Securities and Exchange
Commission or are being filed as part of this report.
<PAGE>
Filed with
Exhibit Incorporated Herein Electronic
No. Description By Reference to Submission
3.1 Restated Certificate of Company's Report on
Incorporation, as amended Form 8-K dated
November 1, 1994
3.2 Certificate of Amendment to X
Restated Certificate of
Incorporation, dated October
20, 1994
3.3 Certificate of Amendment to Exhibit 3.2 to the
Restated Certificate of Company's
Incorporation, dated October Registration
23, 1995 Statement on Form 8-
A/A-1 dated January
12, 1996
3.4 Certificate of Amendment to X
Restated Certificate of
Incorporation, dated March
1, 1996
3.5 By-Laws, amended as of March Exhibit 4.4 to the
4, 1996, and as currently in Company's Post-
effect Effective Amendment
No. 1 on Form S-8
to Form S-4,
(No. 333-0439)
3.6 Rights Agreement dated June Company's Report on
21, 1989, amended as of Form 8-A/A dated
August 17, 1995, with The September 7, 1995.
First National Bank of
Chicago (including the
Shareholder Rights Plan).
4.1 Indenture dated as of Exhibit 4.4 to the
December 1, 1991 between the Company's Form SE
Registrant and The Bank of filed on December
New York, as Trustee, 3, 1991
relating to $100,000,000
aggregate principal amount
of 9.45% Senior Debentures
due 2011
<PAGE>
4.2 Indenture, dated as of June Exhibit 4.7 to the
15, 1993, between IMC Global Company's
Inc. and NationsBank of Registration
Georgia, National Statement on Form S-
Association, as Trustee 4, (No. 33-49795)
relating to the issuance of
10 1/8% Senior Notes due
2001 and 10 1/8% Series B
Senior Notes due 2001 and
10 3/4% Senior Notes Due
2003 and 10 3/4% Series B
Senior Notes Due 2003
4.3 First Supplemental Exhibit 4.9 to the
Indenture, dated as of 1996 Annual Report
September 5, 1996, between on Form 10-K
IMC Global Inc. and The Bank
Of New York, as successor
trustee to NationsBank of
Georgia, which amends and
supplements the Indenture
dated as of June 15, 1993,
between IMC Global Inc. and
the trustee relating to the
issuance of 10 1/8% Senior
Notes due 2001 and 10 1/8 %
Series B Senior Notes due
2001
4.4 Second Supplemental X
Indenture, dated as of May
8, 1997, between IMC Global
Inc. and The Bank of New
York, as successor trustee
to NationsBank of Georgia,
which amends and supplements
the Indenture dated as of
June 15, 1993, between IMC
Global Inc. and the trustee
relating to the issuance of
10 3/4% Senior Notes due
2003 and 10 3/4% Series B
Senior Notes due 2003
4.5 Indenture dated as of Exhibit 4.1 to the
October 1, 1993, between IMC Company's Report on
Global Inc. and The Bank of Form 8-K dated
New York, as successor October 12, 1993
trustee to NationsBank of
Georgia, relating to the
issuance of a series of
Senior Debt Securities known
as the 9 1/4% Senior Notes
due 2000
<PAGE>
4.6 First Supplemental Exhibit 4.1 to the
Indenture, dated as of Company's Report on
October 1, 1993, between IMC Form 8-K dated
Global Inc. and NationsBank October 12, 1993
of Georgia, National
Association, as Trustee
relating to the issuance of
a series of Senior Debt
Securities known as the 9
1/4% Senior Notes due 2000
4.7 Second Supplemental Exhibit 4.10 to the
Indenture, dated as of 1996 Annual Report
September 3, 1996, between on Form 10-K
IMC Global Inc. and The Bank
Of New York, as successor
trustee to NationsBank of
Georgia, which amends and
supplements the Indenture
dated as of October 1, 1993,
between IMC Global Inc. and
the trustee and the
Supplemental Indenture dated
as of October 1, 1993
between IMC Global Inc. and
the trustee, relating to the
issuance of a series of
Senior Debt Securities known
as the 9 1/4% Senior Notes
due 2000.
4.8 Indenture, dated as of July Exhibit 4.1 to the
17, 1997, between IMC Global Company's Report on
Inc. and The Bank of New Form 8-K dated July
York, relating to the 23, 1997
issuance of 6 7/8% Senior
Notes due 2007
10.1 Intercorporate Agreement Exhibit 10.1 to the
dated as of July 1, 1987, by Company's
and between Mallinckrodt and Registration
IMC Global Operations Inc. Statement on Form S-
with Exhibits 1, (Amendment No.
2),
(No. 33-17091)
10.2 Supply agreements (Included Exhibit 10.1 to the
in Exhibit 10.1) Company's
Registration
Statement on Form S-
1, (No. 33-17091)
<PAGE>
10.3 Agreement dated June 27, Exhibit 10.6 to the
1985, supplementing, Company's
amending and continuing Registration
Potash Resource Payment Statement on Form S-
Agreement dated October 15, 1, (Amendment No.
1979, between Mallinckrodt 2),
and the Province of (No. 33-22914)
Saskatchewan
10.4 Mining and Processing Exhibit 10.7 to the
Agreement dated January 31, Company's
1978, between Potash Registration
Corporation of Saskatchewan Statement on Form S-
Inc. and International 1, (No. 33-17091)
Minerals & Chemical (Canada)
Global Limited
10.5* Management Incentive Exhibit 10.17 to
Compensation Program, as the Company's
amended through July 1, 1996 Registration
Statement on Form S-
1, (No. 33-17091)
10.6 * Amendment to Management X
Incentive Compensation
Program
10.7* 1996 Long-Term Performance Exhibit 10.77 to
Incentive Plan the Company's
September 30, 1996
Form 10-Q
10.8* 1988 Stock Option & Award X
Plan, as amended and
restated
10.9* 1994 Stock Option Plan for Exhibit 4(a) to the
Non-Employee Directors Company's
Registration
Statement on Form S-
8, (No. 33-56911)
10.10* Retirement Plan for Salaried Exhibit 10.9 to the
Employees, as amended 1995 Annual Report
through November 1, 1994, on Form 10-K
and as currently in effect
10.11* Supplemental Benefit Plan Exhibit 10.12 to
the Company's
Registration
Statement on Form S-
1, (No. 33-17091)
10.12* Supplemental Executive Exhibit 10.7 to the
Retirement Plan, as amended Company's
through June 30, 1992, and Registration
as currently in effect Statement on Form S-
1, (No. 33-17091)
<PAGE>
10.13* Investment Plan for Salaried Exhibit 10.12 to
Employees, as amended the 1995 Annual
through July 1, 1994, and as Report on Form 10-K
currently in effect
10.14* Management Compensation and X
Benefit Assurance Program,
as amended through
August 17, 1995
10.15* Form of Trust Agreement with Exhibit 10.33 to
Wachovia Bank & Trust Co., the 1992 Annual
N.A., as amended through Report on Form 10-K
August 15, 1991
10.16* Form of Contingent Exhibit 10.18 to
Employment Agreement dated the 1995 Annual
September 1, 1995, with Report on Form 10-K
Officers of Corporation
10.17* Form of "Gross Up" Exhibit 10.20 to
Agreement dated September 1, the 1995 Annual
1995, with Officers of Report on Form 10-K
Corporation, as amended
10.18* Directors' Retirement Exhibit 10.54 to
Service Plan Effective July the 1992 Annual
1, 1989 Report on Form 10-K
10.19* Amendment Number 2 to Exhibit 10.44 to
Investment Plan for Salaried the Company's
Employees effective March 1, Registration
1988 and restated effective Statement on Form S-
January 1, 1992 4, (No. 33-49795)
10.20* First Amendment, dated July Exhibit 10.45 to
2, 1991, to form of the Company's
Contingent Employment Registration
Agreement with Officers of Statement on Form S-
Corporation 4, (No. 33-49795)
10.21* Amendment, dated July 2, Exhibit 10.46 to
1991, to Form of "Gross Up" the Company's
Agreement with Officers of Registration
Corporation Statement on Form S-
4, (No. 33-49795)
10.22* Consulting Agreement, dated Exhibit 10.48 to
July 19, 1993, between the Company's
Wendell F. Bueche and IMC Registration
Global Inc. Statement on Form S-
4, (No. 33-49795)
<PAGE>
10.23* Amendment and Extension Exhibit 10.49 to
Agreement, dated as of June the 1995 Annual
15, 1995, to Employment Report on Form 10-K
Agreement dated as of April
15, 1993 and Consulting
Agreement dated as of July
19, 1993, between Wendell F.
Bueche and IMC Global Inc.
10.24* Non-competition Agreement Exhibit 10.71 to
dated as of March 1, 1996 the 1996 Annual
between IMC Global Inc., IMC Report on Form 10-K
Global Operations Inc. and
C. Steven Hoffman
10.25* Non-competition Agreement Exhibit 10.72 to
dated as of February 29, the 1996 Annual
1996 between IMC Global Inc. Report on Form 10-K
and Robert E. Fowler, Jr.
10.26* Non-competition Agreement X
dated as of March 1, 1996
between IMC Global Inc. and
John U. Huber
10.27* Non-competition Agreement X
dated as of March 1, 1996
between IMC Global Inc. and
Robert M. Van Patten
10.28* Transition Bonus Agreement Exhibit 10.73 to
dated as of March 1, 1996 the 1996 Annual
between IMC Global Inc., IMC Report on Form 10-K
Global Operations Inc. and
Marschall I. Smith
10.29* The Vigoro Corporation Exhibit 10.74 to
Severance Plan, as amended the 1996 Annual
Report on Form 10-K
10.30* The IMC Global Inc. Exhibit 10.75 to
Severance Plan the 1996 Annual
Report on Form 10-K
10.31* Letter Agreement dated March Exhibit 10.76 to
5, 1996, between the Company the 1996 Annual
and Brian J. Smith Report on Form 10-K
10.32 Suspension Agreement Exhibit 10.17 to
concerning Potassium the Company's
Chloride from Canada among Registration
the U.S. Department of Statement on Form S-
Commerce and the signatory 1, (No. 33-17091)
purchasers/exporters of
potassium chloride from
Canada dated January 7, 1988
<PAGE>
10.33 Settlement Agreement dated Exhibit 10.18 to
as of November 3, 1987, by the Company's
and among the Board of Registration
Trustees of the Internal Statement on Form S-
Improvement Trust Fund of 1, (No. 33-17091)
the State of Florida, the
Department of Natural
Resources of the State of
Florida and Mallinckrodt
10.34 Sulphur Joint Operating Exhibit 10.40 to
Agreement dated as of May 1, the 1990 Annual
1988, among Freeport-McMoRan Report on Form 10-K
Resource Partners, IMC
Global Operations Inc. and
Felmont Oil Corporation
10.35 Oil/Gas Operating Agreement Exhibit 10.41 to
dated as of June 5, 1990, the 1990 Annual
among Freeport-McMoRan Report on Form 10-K
Resource Partners, IMC
Global Operations Inc. and
Felmont Oil Corporation
10.36 Agreement in Principle dated Exhibit 10.43 to
September 7, 1990, with the 1990 Annual
Mallinckrodt Report on Form 10-K
10.37 Agreement dated as of Exhibit 10.44 to
September 12, 1990, with the 1990 Annual
Mallinckrodt Report on Form 10-K
10.38 Memorandum of Agreement as Exhibit 10.51 to
of December 21, 1990, the 1991 Annual
amending Mining and Report on Form 10-K
Processing Agreement of
January 31, 1978, between
Potash Corporation of
Saskatchewan Inc. and
International Minerals &
Chemical (Canada) Global
Limited
10.39 Division of Proceeds Exhibit 10.52 to
Agreement dated December 21, the 1991 Annual
1990, between Potash Report on Form 10-K
Corporation of Saskatchewan
Inc. and International
Minerals & Chemical (Canada)
Global Limited
10.40 Contribution Agreement dated Exhibit 10.55 to
April 5, 1993 between the Company's March
Freeport-McMoRan Resource 31, 1993 Form 10-
Partners, Limited Q/A (Amendment No.
Partnership and IMC Global 1) filed on May 19,
Operations Inc. 1993
<PAGE>
10.41 Form of Partnership Exhibit 10.29 to
Agreement, dated as of July the 1995 Annual
1, 1993, as further amended Report on Form 10-K
and restated as of May 26,
1995, between IMC-Agrico GP
Company, Agrico Limited
Partnership and IMC-Agrico
MP Inc., including
definitions
10.42 Form of Parent Agreement, Exhibit 10.30 to
dated as of July 1, 1993, as the 1995 Annual
further amended and restated Report on Form 10-K
as of May 26, 1995, between
IMC Global Operations Inc.,
Freeport-McMoRan Resource
Partners, Limited
Partnership, Freeport-
McMoRan Inc. and IMC-Agrico
Company
10.43 Amendment, Waiver and Exhibit 10.31 to
Consent, dated May 26, 1995, the 1995 Annual
among IMC Global Inc.; IMC Report on Form 10-K
Global Operations Inc.; IMC-
Agrico GP Company; IMC-
Agrico MP, Inc.; IMC-Agrico
Company; Freeport-McMoRan
Inc.; Freeport-McMoRan
Resource Partners, Limited
Partnership; and Agrico,
Limited Partnership
10.44 Agreement and Plan of Exhibit 10.32 to
Complete Liquidation and the 1995 Annual
Dissolution, dated May 26, Report on Form 10-K
1995, among IMC Global
Operations Inc., IMC-Agrico
GP Company, and IMC-Agrico
MP, Inc.
10.45 Sterlington Settlement Exhibit 10.58 to
Agreement between IMC Global the Company's March
Inc., ANGUS Chemical Company 31, 1993 Form 10-
and Industrial Risk Insurers Q/A (Amendment No.
dated April 1, 1993 1) filed on May 19,
1993
10.46 First Amendment to Exhibit 10.59 to
Contribution Agreement, the Company's
dated as of July 1, 1993, Report on Form 8-K
between Freeport-McMoRan dated July 16, 1993
Resource Partners, Limited
Partnership and IMC Global
Operations Inc.
<PAGE>
10.47 Loan Agreement, dated as of Exhibit 10.64 to
December 1, 1991, between the Company's
IMC Global Operations Inc. Registration
and the Polk County Statement on Form S-
Industrial Development 4, (No. 33-49795)
Authority (Florida)
10.48 Amended and Restated Exhibit 10.65 to
Unconditional Guaranty, the Company's
dated as of December 1, 1991 Registration
of IMC Global Inc. with Statement on Form S-
respect to Polk County 4, (No. 33-49795)
Industrial Development
Authority (Florida)
Industrial Development
Revenue Bonds (IMC Global
Operations Inc. Project)
1991 Tax-Exempt Series A and
1992 Tax-Exempt Series A
10.49 Supplemental Loan Agreement, Exhibit 10.66 to
dated as of January 1, 1992, the Company's
between IMC Global Registration
Operations Inc. and the Polk Statement on Form S-
County Industrial 4, (No. 33-49795)
Development Authority
(Florida)
10.50 Second Supplemental Loan Exhibit 10.67 to
Agreement, dated as of June the Company's
30, 1993, between IMC Global Registration
Operations Inc. and the Polk Statement on Form S-
County Industrial 4, (No. 33-49795)
Development Authority
(Florida)
10.51 Amendment to Guaranty, dated Exhibit 10.68 to
June 30, 1993, with respect the Company's
to Polk County Industrial Registration
Development Authority Statement on Form S-
(Florida) Industrial 4, (No. 33-49795)
Development Revenue Bonds
(IMC Global Operations Inc.
Project) 1991 Tax-Exempt
Series A and 1992 Tax-Exempt
Series A
<PAGE>
10.52 Indenture of Trust, dated as Exhibit 10.69 to
of December 1, 1991, between the Company's
Polk County Industrial Registration
Development Authority (the Statement on Form S-
"Authority") and The Bank of 4, (No. 33-49795)
New York, as Trustee (the
"IRB Trustee") relating to
the Industrial Development
Revenue Bonds (IMC Global
Operations Inc. Project)
1991 Tax-Exempt Series A
(the "Series 1991 Bonds")
10.53 Supplemental Indenture of Exhibit 10.70 to
Trust, dated as of January the Company's
1, 1992, between the Registration
Authority and the IRB Statement on Form S-
Trustee, relating to the 4, (No. 33-49795)
Industrial Development
Revenue Bonds (IMC Global
Operations Inc. Project)
1992 Tax-Exempt Series A
(the "Series 1992 Bonds")
10.54 Second Supplemental Exhibit 10.71 to
Indenture of Trust, dated as the Company's
of June 30, 1993, between Registration
the Authority and the IRB Statement on Form S-
Trustee, relating to the 4, (No. 33-49795)
Series 1991 Bonds and the
Series 1992 Bonds
10.55 Amendment No. 1, dated as of Exhibit 10.53 to
June 24, 1994 to Credit the 1995 Annual
Agreement, dated as of Report on Form 10-K
February 9, 1994 between
IMC-Agrico Company,
NationsBank of Georgia and
the Banks Listed Therein
10.56 Amendment No. 2, dated as of Exhibit 10.54 to
February 25, 1995 to Credit the 1995 Annual
Agreement, dated as of Report on Form 10-K
February 9, 1994 between
IMC-Agrico Company,
NationsBank of Georgia and
the Banks Listed Therein
10.57 Credit Agreement, dated as Exhibit 99.1 to the
of February 9, 1994, between Company's
IMC-Agrico Company, Registration
NationsBank of Georgia, and Statement on Form
the Banks Listed Therein S-3, (Amendment No.
1)
(No. 33-52377)
<PAGE>
10.58 Letter Agreement, dated as X
of October 30, 1996,
relating to Credit
Agreement, dated as of
February 9, 1994, between
IMC-Agrico Company,
NationsBank of Georgia, and
the Banks Listed Therein
10.59 Agreement Under the Parent Exhibit 10.63 to
Agreement, dated as of the Company's
January 23, 1996, among IMC December 31, 1995
Global Inc.; IMC Global Form 10-Q
Operations Inc.; Freeport-
McMoRan Resource Partners,
Limited Partnership;
Freeport-McMoRan Inc.; and
IMC-Agrico Company, a
Delaware general partnership
10.60 Amendment and Agreement Exhibit 10.64 to
Under the Partnership the Company's
Agreement, dated as of December 31, 1995
January 23, 1996, by and Form 10-Q
among IMC-Agrico GP Company;
Agrico, Limited Partnership;
IMC-Agrico MP, Inc.; IMC
Global Operations Inc. and
IMC-Agrico Company
10.61 Credit Agreement, dated as Exhibit 10.65 to
of February 28, 1996, among the Company's
IMC Global Inc., IMC Global Report on Form 8-K
Operations Inc., dated March 15,
International Minerals & 1996
Chemical (Canada) Global
Limited, Kalium Canada Ltd.,
Central Canada Potash, Inc.
and the Banks Listed Therein
10.62 Amendment No. 1 to Credit X
Agreement, dated as of
February 28, 1996, among IMC
Global Inc., IMC Global
Operations Inc.,
International Minerals &
Chemical (Canada) Global
Limited, Kalium Canada Ltd.,
Central Canada Potash, Inc.
and the Banks Listed Therein
<PAGE>
10.63 Second Amended and Restated Exhibit 10.66 to
Note Purchase Agreement, the Company's
dated as of February 28, Report on Form 8-K
1996, to the Amended and dated March 15,
Restated Note Purchase and 1996
Private Shelf Agreement
dated as of December 22,
1994, among IMC Global Inc.,
The Vigoro Corporation and
The Prudential Insurance
Company of America
10.64 Amendment No. 1, dated X
September 30, 1996, to
Second Amended and Restated
Note Purchase Agreement,
dated as of February 28,
1996, to the Amended and
Restated Note Purchase and
Private Shelf Agreement
dated as of December 22,
1994, among IMC Global Inc.,
The Vigoro Corporation and
The Prudential Insurance
Company of America
10.65 Second Amended and Restated Exhibit 10.67 to
Note Purchase Agreement, the Company's
dated as of February 28, Report on Form 8-K
1996, to the Amended and dated March 15,
Restated Note Purchase and 1996
Private Shelf Agreement
dated as of December 22,
1994, between Kalium Canada,
Ltd. and The Prudential
Insurance Company of America
10.66 Amended and Restated Credit X
Agreement, dated as of
October 23, 1996 between
IMC-Agrico Company as
Borrower and NationsBank,
N.A. as Lender U.S.
$50,000,000
10.67 Second Amended and Restated X
Party Guaranty, dated as of
February 28, 1996 by IMC
Global Inc. and The Vigoro
Corporation, a Delaware
corporation, in favor of The
Prudential Insurance Company
of America
<PAGE>
10.68 Third Amendment dated as of X
August 1, 1995 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
of North Carolina, N.A., as
Agent)
<PAGE>
10.69 Fourth Amendment and Waiver X
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)
10.70 Fifth Amendment dated as of X
February 4, 1997 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)
10.71 Sixth Amendment, Consent and X
Waiver dated as of May, 1997
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)
10.72 Transfer and Administration X
Agreement, dated as of June
27, 1997, among IMC-Agrico
Receivables Company L.L.C.,
IMC-Agrico Company and
Enterprise Funding
Corporation, a Delaware
corporation
10.73 Receivables Purchase X
Agreement between IMC-Agrico
Company as Seller and
IMC-Agrico Receivables
Company L.L.C. as Purchaser,
dated as of June 27, 1997
<PAGE>
10.74 Registration Rights Exhibit 99.6 to the
Agreement dated as of March Company's March
1, 1996 among IMC Global 31,1996 Form 10-Q
Inc. and certain former
stockholders of The Vigoro
Corporation
11.1 Fully diluted earnings per
share for the years ended X
June 30, 1997, 1996 and 1995
12 Ratio of Earnings to Fixed X
Charges
13.1 Report of Arthur Andersen X
LLP
21.1 Subsidiaries of the X
Registrant
23.1 Consent of Ernst & Young LLP X
23.2 Consent of Arthur Andersen X
LLP
24 Power of Attorney X
27.1 Financial Data Schedule X
* Denotes management contract or compensatory plan.
(b) REPORTS ON FORM 8-K
During the fourth quarter and through the date of this filing, the
following reports were filed:
A report under Item 8 Dated June 24, 1997
A report under Item 5 Dated July 17, 1997
A report under Item 5 Dated July 28, 1997
A report under Item 5 Dated August 28, 1997
(c) EXHIBITS
See exhibit index listed at Item 14(a)(3) hereof.
(d) Financial statements and schedules and summarized financial information
of 50 percent or less owned persons are omitted as none of such persons are
individually or in the aggregate significant under the tests specified in
Regulation S-X under Article 3.09 of general instructions to the financial
statements.
<PAGE>
INDEX TO FINANCIAL STATEMENTS, SUPPLEMENTARY DATA
AND FINANCIAL STATEMENT SCHEDULES
Page References
Consolidated Balance Sheet at June 30, 1997 and 1996 33
For the years ended June 30, 1997, 1996, and 1995:
Consolidated Statement of Earnings 32
Consolidated Statement of Cash Flows 34
Consolidated Statement of Changes in Stockholders' Equity 35
Notes to Consolidated Financial Statements 36-54
Supplementary Financial Information - Quarterly Results (Unaudited) 55
- --------------------
Financial statements and schedules and summarized financial information of
50 percent or less owned persons are omitted as none of such persons are
individually or in the aggregate significant under the tests specified in
Regulation S-X under Article 3.09 of general instructions to the financial
statements.
SIGNATURES
Pursuant to the requirements of 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
IMC GLOBAL INC.
(Registrant)
------------------------------------
Robert E. Fowler, Jr.
Chief Executive Officer and President
Date: September 24,1997
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated:
Signature Title Date
- ----------------------------------------------------------------------
- -------------------- Chief Executive Officer September 24, 1997
Robert E. Fowler, Jr. (principal executive
officer), President
(principal operating
officer) and Director
- -------------------- Chief Financial Officer September 24, 1997
Brian J. Smith (principal financial officer),
- -------------------- Controller (principal September 24, 1997
Anne M. Scavone accounting officer)
* Chairman and Director September 24, 1997
- --------------------
Wendell F. Bueche
* Director September 24, 1997
- --------------------
Raymond F. Bentele
* Director September 24, 1997
- --------------------
Rod F. Dammeyer
* Director September 24, 1997
- --------------------
Dr. James M. Davidson
* Director September 24, 1997
- --------------------
Harold H. MacKay
* Director September 24, 1997
- --------------------
David B. Mathis
* Director September 24, 1997
- --------------------
Thomas H. Roberts, Jr.
* Director September 24, 1997
- --------------------
Joseph P. Sullivan
* Director September 24, 1997
- --------------------
Richard L. Thomas
* Director September 24, 1997
- --------------------
Billie B. Turner
<PAGE>
* By:
----------------------------------
Marschall I. Smith
Attorney in fact
EXHIBIT 3.2
CERTIFICATE OF AMENDMENT
of
RESTATED CERTIFICATE OF INCORPORATION
of
IMC FERTILIZER GROUP, INC.
__________________________
Pursuant to Section 242 of the Delaware General Corporation Law
_________________________
IMC Fertilizer Group, Inc., a corporation organized and
existing under and by virtue of the Delaware General Corporation Law,
DOES HEREBY CERTIFY:
FIRST: The Restated Certificate of Incorporation of IMC
Fertilizer Group, Inc. is amended by deleting Article First thereof in
its entirety and replacing it with the following new Article First:
"ARTICLE FIRST
The name of the Corporation is IMC Global Inc."
SECOND: The Board of Directors of IMC Fertilizer Group,
Inc., at a meeting duly held, adopted a resolution proposing and
declaring advisable the above described amendment to the Restated
Certificate of Incorporation of IMC Fertilizer Group, Inc.
THIRD: An annual meeting of stockholders of IMC Fertilizer
Group, Inc. was duly called and held on October 20, 1994, upon notice
in accordance with Section 222 of the Delaware General Corporation Law,
and at such meeting the number of shares required by statute were voted
in favor of the above described amendment.
FOURTH: The above described amendment was duly adopted in
accordance with the provisions of Section 242 of the Delaware General
Corporation Law.
FIFTH: The capital of IMC Fertilizer Group, Inc. shall not
be reduced under or by reason of the above described amendment.
SIXTH: The above described amendment is effective on
October 21, 1994 at 6:01 p.m. Eastern Daylight Savings Time.
IN WITNESS WHEREOF, IMC Fertilizer Group, Inc. has caused
this Certificate to be executed and attested this 20th day of
October 1994.
Attest: /s/ Linda J. Wood By: /s/ Marschall I. Smith
Title: Assistant Secretary Title: Senior Vice President
EXHIBIT 3.4
CERTIFICATE OF AMENDMENT
OF RESTATED CERTIFICATE OF INCORPORATION
OF IMC GLOBAL INC.
PURSUANT TO SECTION 242 OF THE GENERAL CORPORATION LAW
OF THE STATE OF DELAWARE
IMC Global Inc. (the "Corporation"), a corporation organized
and existing under and by virtue of the General Corporation Law of the
State of Delaware ("DGCL"), DOES HEREBY CERTIFY THAT:
FIRST: At a meeting of the Board of Directors of the Corporation
duly called and held on November 12, 1995 resolutions were duly adopted
setting forth the following proposed amendments to the Restated
Certificate of Incorporation of the Corporation, declaring said
amendments to be advisable and directing such amendments be submitted
to stockholders of the Corporation for approval at a special meeting of
the stockholders of said Corporation. Such resolutions recommended
that the Restated Certificate of Incorporation of the Corporation be
amended as set forth below:
(i) the first paragraph of ARTICLE FOURTH of the Restated
Certificate of Incorporation of the Corporation be amended to read
as follows:
"The aggregate number of shares which the Corporation shall
have authority to issue is 262,000,000 divided into
12,000,000 shares of Series Preferred Stock, $1.00 par value
per share (hereafter called "Series Preferred Stock"), and
250,000,000 shares of Common Stock, $1.00 par value per share
(hereafter called "Common Stock"). All of such shares shall
be issued as fully-paid and non-assessable shares, and the
holders thereof shall not be liable for any further payments
in respect thereto."; and
(ii) the first sentence of ARTICLE NINTH of the Restated
Certificate of Incorporation of the Corporation be amended to read
as follows:
(a) The number of directors of the Corporation, exclusive of
directors, if any, to be elected by the holders of one or
more series of Series Preferred Stock, shall be not less than
five nor more than fifteen.
SECOND: pursuant to a resolution of its Board of Directors, a
special meeting of the stockholders of the Corporation was duly called
and held on March 1, 1996, upon notice in accordance with Section 222
of the DGCL, at which meeting the necessary number of the outstanding
shares of common stock of the Corporation entitled to vote on such
amendments by the DGCL and Restated Certificate of Incorporation were
voted in favor of such amendments.
THIRD: That such amendments were duly adopted in accordance with
the provisions of Section 242 of the DGCL.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed by Marschall I. Smith, Senior Vice President,
Secretary and General Counsel of the Corporation, as of this 1st day of
March, 1996.
IMC GLOBAL INC.
By:_______________________________
Marschall I. Smith
Senior Vice President,
Secretary and General Counsel
EXHIBIT 4.4
THIS SECOND SUPPLEMENTAL INDENTURE, dated as of May 8, 1997,
between IMC GLOBAL INC., formerly known as IMC Fertilizer Group, Inc.,
a Delaware corporation (hereinafter called the "Company"), having its
principal executive offices at 2100 Sanders Road, Northbrook, IL 60062,
and THE BANK OF NEW YORK, a New York banking corporation, as successor
trustee to NationsBank of Georgia, National Association, (the
"Trustee"), amends and supplements the Indenture providing for the
issuance of Senior Debt Securities in series, dated as of June 15,
1993, between the Company and the Trustee (the "Original Indenture")
and to the extent inconsistent therewith, supersedes the Original
Indenture.
RECITALS
WHEREAS, the Company and the Trustee entered into the
Original Indenture to provide for the issuance of 10_% Senior Notes due
2001 and 10_% Series B Senior Notes Due 2001 (collectively, the "10_%
Notes"); and
WHEREAS, holders of more than a majority of the outstanding
principal amount of each of the 10_% Notes have consented to the
execution by the Company and the Trustee of this Second Supplemental
Indenture pursuant to which certain covenants in the Original Indenture
shall be deleted and certain other provisions shall be amended; and
WHEREAS, Section 9.2 of the Original Indenture provides that
the Company and the Trustee may enter into one or more Supplemental
Indentures to amend the Original Indenture with the written consent of
the holders of a majority of the principal amount of the then
outstanding securities of such series.
NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES AND OF THE
MUTUAL COVENANTS CONTAINED HEREIN, THE PARTIES AGREE AS FOLLOWS:
SECTION 1. Definitions, References. Unless otherwise
specifically defined herein, each term used herein which is defined in
the Original Indenture shall have the meaning assigned to such term in
the Original Indenture. Except as amended and supplemented hereby, all
of the terms of the Original Indenture shall remain in full force and
effect and are hereby confirmed in all respects. Each reference to
"hereof," "hereunder," "herein," and "hereby" and each other similar
reference, and each reference to "this Agreement" and each other
similar reference, contained in the Original Indenture shall from and
after the date hereof refer to the Original Indenture as amended by
this Second Supplemental Indenture.
SECTION 2. Amendment to Article Four of the Original
Indenture. Sections 4.3, 4.4, 4.5, 4.6, 4.7, 4.9, 4.10, 4.11, 4.12,
4.13, 4.14, 4.15, 4.17 and 4.18 of the Original Indenture are hereby
deleted in their entirety.
SECTION 3. Amendment to Article Five of the Original
Indenture. Section 5.1 of the Original Indenture is hereby deleted in
its entirety.
SECTION 4. Amendment to Article Six of the Original
Indenture. Section 6.1 of the Original Indenture is hereby amended by
deleting paragraphs (c), (d), (e), and (f) in their entirety.
Paragraphs (g) and (h) of Section 6.1 of the Original Indenture are
hereby redesignated paragraphs (c) and (d).
SECTION 5. Ratification of Provisions of Original Indenture.
All provisions of the Original Indenture not specifically herein
supplemented or modified are hereby ratified and reaffirmed by the
Company and the Trustee.
SECTION 6. Applicability of Second Supplemental Indenture.
The covenants and agreements set forth in this Second Supplemental
Indenture shall, unless otherwise determined by the Company and set
forth in an amendment to the Original Indenture, be applicable solely
to the 10_% Notes.
SECTION 7. Counterparts. This Second Supplemental Indenture
may be executed in counterparts by the parties hereto.
SECTION 8. Section Headings. The Section headings in this
Second Supplement Indenture are inserted for convenience only and shall
not be part of this instrument.
SECTION 9. Governing Law. This Second Supplemental
Indenture shall be governed by and construed in accordance with the
laws of the State of New York.
SECTION 10. Entire Agreement. This Second Supplement
Indenture and the Original Indenture as amended hereby constitute the
entire agreement and understanding between the parties hereto and
supersede any and all prior agreements and understandings relating to
the subject matter hereof.
* * * * *
IN WITNESS WHEREOF, the parties hereto have caused this
Second Supplemental Indenture to be duly executed, and their respective
corporate seals to be hereunto affixed and attested, all of the day and
year first above written.
IMC GLOBAL INC.
By:____________________________
Title: Senior Vice President
Attest:_______________________
Title: Secretary
THE BANK OF NEW YORK
By:_____________________________
Title: Assistant Vice President
Attest:_______________________
Title: Assistant Treasurer
EXHIBIT 10.6
FIRST AMENDMENT
TO THE
MANAGEMENT INCENTIVE COMPENSATION PROGRAM
OF IMC GLOBAL INC.
WHEREAS, IMC Global Inc. (the "Company") has adopted and currently
maintains the Management Incentive Compensation Program, effective July
1, 1988, as amended through July 2, 1991 and July 3, 1995, respectively
(the "MICP"); and
WHEREAS, the Company desires to amend the MICP in certain respects
and as set forth below.
NOW, THEREFORE, pursuant to the power of amendment contained in
Section 15.1 of the MICP, the MICP is hereby amended as follows,
effective July 1, 1996:
1. Section 5.1 is deleted in its entirety and replaced with a new
Section 5.1 as follows:
"5.1 Not later than the end of the third month
of the fiscal year, the Committee, after
consultation with the Chief Executive Officer,
shall determine the Performance Objective for each
"Business Unit" of the Company and for the Company
as a whole for that fiscal year. Each such
Performance Objective shall be expressed in terms
of the economic performance of the Business Unit or
of the Company as a whole. For purposes of the
Program, Business Unit shall mean a subsidiary,
division, joint venture or other unit of the
Company's business which is designated as such by
the Committee."
2. Section 5.2 is deleted in its entirety.
3. Section 5.3 is deleted in its entirety and replaced with a new
Section 5.3 as follows:
"5.3 Not more than 120 days after the
beginning of a fiscal year the Chief Executive
Officer shall cause each participant who is an
officer to be notified in writing of the
Performance Objective applicable to such
participant for that fiscal year. At his
discretion, the Chief Executive Officer may cause
such notices to be sent to other participants.
After such notices shall have been sent, such
Performance Objective shall not be changed."
4. Section 7.5 is deleted in its entirety and replaced with a new
Section 7.5 as follows:
"7.5 If a Performance Percentage for a fiscal
year shall exceed 100%, the Award Pool shall be
determined by (i) taking a fraction, the numerator
of which shall be the number of percentage points
by which the Performance Percentage exceeds 100%,
up to the Maximum Percentage, and the denominator
of which shall be the percentage point spread
between 100% and the Maximum Percentage; (ii)
multiplying such fraction by an amount which shall
be equal to the Target Pool multiplied by a
percentage which shall not be more than 200% and
which shall be determined by the Committee (except
that the Board of Directors may set a different
percentage); and (iii) adding the resulting amount
to the Target Pool."
5. Section 8.1(b) is deleted in its entirety and replaced
with a new Section 8.1(b) as follows:
"(b) The Chief Executive Officer shall
designate the amount, if any, of the Actual
Incentive Award to be made to each participant in
the Plan who is not an officer, in respect of that
year, within the limits of the Award Pool for the
Company and subject to the maximum award for any
participant of not in excess of 200% of his Target
Award."
6. Section 9 is deleted in its entirety and replaced with a new
Section 9 as follows:
"9. Special Pool. If in respect of any
fiscal year there shall be no Award Pool for the
Company, the Committee may establish a Special Pool
which shall not be in excess of 40% of the Target
Pool and within the limitations of that Special
Pool and subject to the 200% limitation set forth
in Section 8.1(b), Incentive Awards may be made to
participants in accordance with the procedures set
forth in Sections 8.1(b) and (c), and 8.2, 8.3 and
8.4."
IN WITNESS WHEREOF, IMC Global Inc. has caused this amendment to
be executed by its officers this ____ day of __________, 1996.
IMC GLOBAL INC.
By:
(corporate seal)
ATTEST:
By:
EXHIBIT 10.8
IMC GLOBAL INC.
1988 Stock Option and Award Plan
As Amended and Restated Effective October 19, 1995
I. Purpose
The purpose of this plan is to further the growth and success
of the Company and its subsidiaries by providing key employees with
additional incentive to contribute to such growth and success and by
aiding the Company in attracting and retaining such key employees.
II. Administration of the Plan
The Board of Directors of the Company shall appoint a
committee (the "Committee") of not less than three of its members to
administer the Plan. A majority of the members of the Committee shall
constitute a quorum, and the acts of a majority of the members present
at any meeting at which a quorum is present, or acts approved in
writing by a majority of the members of the Committee, shall be the
acts of the Committee. Each member of the Committee shall be (a) a
"disinterested person" within the meaning of Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
(b) shall qualify as an "outside director" within the meaning of
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"). The Committee shall have the power to grant options, stock
appreciation rights and awards of Restricted Stock ("Restricted Stock
Awards") under the Plan, to interpret the Plan and options, stock
appreciation rights and Restricted Stock Awards granted under it, to
make regulations and to formulate administrative provisions for
carrying out the Plan, and to make all other determinations in
connection with the granting of options, stock appreciation rights and
Restricted Stock Awards and administration of the Plan.
The Committee may delegate some or all of its power and
authority hereunder to the President and Chief Executive Officer or
other executive officer of the Company as the Committee deems
appropriate; provided, however, that the Committee may not delegate its
power and authority with regard to (i) the grant of an award under this
Plan to any person who is a "covered employee" within the meaning of
Section 162(m) of the Code and the regulations thereunder who, in the
Committee's judgment, is likely to be a covered employee at any time
during the period an award hereunder to such employee would be
outstanding or (ii) the selection for participation in this Plan of an
officer or other person subject to Section 16 of the Exchange Act or
decisions concerning the timing, pricing or amount of an award to such
an officer or other person.
III. Stock Subject to the Plan
(a) The stock to be offered for sale by the Company pursuant to
exercise of options or which may be delivered upon the exercise of
stock appreciation rights or which may be delivered pursuant to
Restricted Stock Awards granted under the Plan shall be shares of the
authorized Common Stock, par value $1.00 per share, of the Company
(hereafter sometimes call the "Stock") and may consist of either
unissued shares or shares reacquired by the Company, or a combination
of both as the Board of Directors or the Committee may from time to
time determine. Subject to the provisions of subsection (b) of this
Section 3, the aggregate number of shares of Stock which may be
delivered under the Plan shall not exceed 3,000,000 shares, reduced by
the sum of the aggregate number of shares of Common Stock (i) that are
issued upon the grant of Restricted Stock Awards and (ii) which become
subject to outstanding options. To the extent that shares of Common
Stock subject to an outstanding option (except to the extent shares of
Common Stock are issued or delivered by the Company in connection with
the exercise of a stock appreciation right) or Restricted Stock Award
are not issued or delivered by reason of the expiration, termination,
cancellation or forfeiture of such award or by reason of the delivery
or withholding of shares of Common Stock to pay all or a portion of the
exercise price of an award, if any, or to satisfy all or a portion of
the tax withholding obligations relating to an award, then such shares
of Common Stock shall again be available under this Plan.
To the extent required by Section 162(m) of the Code and the
rules and regulations thereunder, the maximum number of shares of
Common Stock with respect to which options may be granted during any
calendar year to any person shall be 500,000, subject to adjustment as
provided in Section 3(b).
Except as set forth in this Section 3, any securities
resulting from any stock dividend, stock split, stock distribution or
other recapitalization or any substituted securities in the event of
any substitution referred to in the this Section 3, shall be subject to
the shares covered by the related option, stock appreciation right or
Restricted Stock Award pursuant to the Plan including, in the case of a
Restricted Stock Award, escrow of such shares or other securities.
(b)(i) In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination,
exchange of shares, liquidation, spin-off or other similar change in
capitalization or event, or any distribution to holders of Common Stock
other than a regular cash dividend, the number and class of securities
available under this Plan, the number and class of securities subject
to each outstanding option and the purchase price per security, the
terms of each outstanding stock appreciation right, and the number and
class of securities subject to each outstanding Restricted Stock Award
shall be appropriately adjusted by the Committee, such adjustments to
be made in the case of outstanding options without an increase in the
aggregate purchase price. The decision of the Committee regarding any
such adjustment shall be final, binding and conclusive. If any such
adjustment would result in a fractional security being (1) available
under this Plan, such fractional security shall be disregarded, or (2)
subject to an award under this Plan, the Company shall pay the holder
of such award, in connection with the first vesting or exercise of such
award, in whole or in part, occurring after such adjustment, an amount
in cash determined by multiplying (x) the fraction of such security
(rounded to the nearest hundredth) by (y) the excess, if any, of (A)
the fair market value (determined in accordance with Section 6) on the
vesting or exercise date over (B) the exercise price, if any, of such
award.
(ii) Notwithstanding any provision in this Plan or any agreement,
in the event of a Change in Control in connection with which the
holders of Common Stock receive shares of common stock that are
registered under Section 12 of the Exchange Act, (1) all outstanding
options shall immediately become exercisable in full, (2) the
restrictions applicable to any outstanding Restricted Stock Award shall
lapse and (3) there shall be substituted for each share of Common Stock
available under this Plan, whether or not then subject to an
outstanding award, the number and class of shares into which each
outstanding share of Common Stock shall be converted pursuant to such
Change in Control. In the event of any such substitution, the purchase
price per share in the case of an option shall be appropriately
adjusted by the Committee, such adjustments to be made without an
increase in the aggregate purchase price.
(iii) Notwithstanding any provision in this Plan or any
agreement, in the event of a Change in Control (other than a Change in
Control in connection with which the holders of Common Stock receive
consideration other than shares of common stock that are registered
under Section 12 of the Exchange Act), each outstanding award shall be
surrendered to the Company by the holder thereof, and each such award
shall immediately be canceled by the Company, and the holder shall
receive within ten days of the occurrence of such Change in Control, a
cash payment from the Company in an amount equal to (1) in the case of
an option, the number of shares of Common Stock then subject to such
option, multiplied by the excess, if any, of the greater of (A) the
highest per share price offered to stockholders of the Company in any
transaction whereby the Change in Control takes place or (B) the Fair
Market Value of a share of Common Stock on the date of occurrence of
the Change in Control, over the purchase price per share of Common
Stock subject to the option and (2) in the case of a Restricted Stock
Award, the number of shares of Common Stock then subject to such award,
multiplied by the greater of (A) the highest per share price offered to
stockholders of the Company in any transaction whereby the Change in
Control takes place or (B) the Fair Market Value of a share of Common
Stock on the date of occurrence of the Change in Control. In the event
of a Change in Control, each stock appreciation right shall be
surrendered by the holder thereof and shall be canceled simultaneously
with the cancellation of the related option. The Company may, but is
not required to, cooperate with any person who is subject to Section 16
of the Exchange Act to assure that any cash payment in accordance with
the foregoing to such person is made in compliance with Section 16 and
the rules and regulations thereunder.
IV. Eligibility
Any regular salaried employee of the Company or any of its
subsidiary companies shall be eligible to receive options, stock
appreciation rights and Restricted Stock Awards under the Plan.
Members of the Board of Directors of the Company who are not employed
in any other capacity as regular salaried employees of the Company or
of any subsidiary are not eligible to receive options, stock
appreciation rights and Restricted Stock Awards under the Plan.
V. Offering to Designated Employees
Subject to the terms of the Plan, the Committee shall have
the authority to select the persons to whom options are to be granted
under the Plan (it being understood that more than one option may be
granted to the same person), the number of shares to be subject to each
such option, the option price of such shares, the time or times when
each option may be exercised within the limits stated in this Plan, and
other terms of the option. An option, or a portion thereof, may be an
"incentive stock option" within the meaning of Section 422 of the Code
(an "ISO") or an option that is not an ISO (a "Non-Statutory Stock
Option"), provided that no ISO may be granted more than ten years after
the date on which the stockholders of the Company approve this
amendment and restatement of the Plan providing for the grant of ISOs
hereunder. The Committee shall also have the authority, subject to the
terms of the Plan, to determine (a) whether stock appreciation rights
are to be granted in conjunction with an option and (b) which employees
shall receive Restricted Stock Awards, the number of shares to be
subject to each such Award and the terms and conditions of such Awards.
Each option, stock appreciation right and Restricted Stock Award issued
under the Plan may in the discretion of the Committee be covered by an
agreement executed on behalf of the Company and the Grantee. Each such
Agreement shall be in form approved by the Committee and shall contain
such restrictions, terms and conditions as the Committee may require
and as are not inconsistent with the provisions of the Plan. Each
option and stock appreciation right shall be deemed to have been
granted and shall take effect on the date that the Committee approves
the granting of the option or stock appreciation right, or the date the
Grantee enters the employ of the Company or a subsidiary, whichever is
later, regardless of when the agreement or other document evidencing
the option or stock appreciation right is executed and delivered. Each
such agreement or other document shall be dated as of the date the
option, stock appreciation right or Restricted Stock Award evidenced
thereby is granted.
VI. Price
The option price shall not be less than 100% of the fair
market value of the Stock at the time the option is granted; provided,
however, that if an ISO shall be granted to any person who, at the time
such ISO is granted, owns capital stock possessing more than ten
percent of the total combined voting power of all classes of capital
stock of the Company (or of any parent or subsidiary) (a "Ten Percent
Holder"), the purchase price per share of Common Stock shall be the
price (currently 110% of Fair Market Value) required by the Code in
order to constitute an ISO. The fair market value at the time the
option is granted shall, for purposes of the Plan, be the mean between
the highest and lowest prices at which the Stock is traded on the day
on which the option is granted, as reflected on the consolidated tape
of New York Stock Exchange issues, or if such date is not a trading
day, on the first trading day preceding such date. If there are no
such sales of Stock on the date the option is granted (or on the first
trading day preceding such date, if applicable) the mean between the
bid and the asked prices as reflected on the consolidated tape of New
York Stock Exchange issues at the close of the market on such day shall
be deemed to be the fair market value of the Stock.
VII. Exercise of Options
(a) The period during which an option may be exercised shall be
determined by the Committee at the time the option is granted, except
(but subject to Section 3) that
(i) an employee must continue in the employ of the Company and/or
one or more of its subsidiaries for a period of not less than one year
after the date of grant of the option before he may exercise such
option;
(ii) not more than 50% of the total number of shares subject to
his option may be purchased by an employee during the one-year period
beginning on the first anniversary of the date of grant of the option;
(iii) except as otherwise provided in Section 11, no option shall
be exercisable after the Grantee ceases to be an employee of the
Company; and
(iv) no option shall be exercisable more than ten years after its
date of grant, provided, that if an ISO shall be granted to a Ten
Percent Holder, such ISO shall not be exercisable more than five years
after its date of grant.
For purposes of the foregoing and Section 11, any Grantee who
shall retire from employment with the Company and/or one or more of its
subsidiaries prior to the first of the month following his 65th
birthday, and who at the time of such retirement shall be committed to
render consulting services to the Company and/or one or more of its
subsidiaries pursuant to a contract which is approved by the Board of
Directors and which in the judgment of the Committee requires that
during the period of such contract he be obligated to devote a
substantial portion of his time to rendering such services, shall, if
the Committee so determines, be deemed for purposes of the Plan to
continue in the employment of the Company and/or its subsidiaries so
long as his obligation to render consulting services under such
contract shall continue in effect, but not beyond three years from the
date of his retirement or ten years from the date of grant whichever
shall first occur.
Subject to the foregoing and Section 11, options may be
exercised from time to time in whole or in part. Each exercise of an
option shall be accomplished by giving written notice of such exercise
to the Treasurer of the Company, specifying the number of shares to be
purchased and accompanied by payment in full of the purchase price
therefor (or arrangement made for such payment to the satisfaction of
the Company). An employee to whom an option is granted shall be under
no obligation whatsoever to exercise it, and he may exercise the option
or not in his discretion.
(b) Payment for the options exercised shall be either in (i)
cash, or check, bank draft or money order (collectively referred to as
"cash") to the order of IMC Global Inc. for an amount in United States
dollars equal to the total option price for the number of shares upon
which options are being exercised, or (ii) shares of Common Stock of
the Company (which shall be valued, for this purpose, at a price per
share which is the mean between the highest and lowest prices at which
the Stock is traded on the exercise date (or, if such date is not a
trading day, on the first trading day preceding the exercise date), as
reflected on the consolidated tape of New York Stock Exchange issues,
or if there are no such sales of Stock on the exercise date (or on the
first trading day preceding such date, if applicable), the mean between
the bid and the asked prices as reflected on the consolidated tape of
New York Stock Exchange issues at the close of the market on such date)
with a value equal to or less than the total option price, plus cash
for an amount in United States dollars equal to the amount, if any, by
which the total option price exceeds the value (determined as
aforesaid) of such shares of Company stock. Payment of the option
exercise price in cash may be made by a broker-dealer acceptable to the
Company to whom the optionee has submitted an irrevocable notice of
exercise. Payment of the option exercise price by shares of Common
Stock shall be either (1) by delivery of previously owned whole shares
of Common Stock (which the optionee has held for at least six months
prior to delivery of such shares and for which the optionee has good
title, free and clear of all liens), (2) by authorizing the Company to
withhold whole shares of Common Stock which would otherwise be
delivered upon exercise of the option or (3) a combination of (1) and
(2), in each case to the extent set forth in the agreement relating to
the option. The Committee shall have sole discretion to disapprove of
an election pursuant to any of clauses (1)-(3) and in the case of an
optionee who is subject to Section 16 of the Exchange Act, the Company
may require that the method of making such payment be in compliance
with Section 16 and the rules and regulations thereunder. The exercise
date as used herein shall mean the business day on which an optionee
delivers written notice to the Treasurer of the Company specifying the
number of shares the optionee then desires to purchase under options
held by such optionee.
Payment for shares exercised for Stock and/or cash shall be
delivered to the Treasurer of the Company not later than the end of the
third business day after the exercise date. In the case of payment by
delivery of previously owned shares of Stock, such payment shall be
made by delivery of the necessary share certificates, with executed
stock powers attached, to the Treasurer of the Company or, if such
certificates have not yet been delivered to the optionee by written
notice to the Treasurer of the Company requesting that the shares
represented by such certificates be applied toward payment as
hereinabove provided.
(c) At the request of a participant, the Company may satisfy any
of its tax withholding obligations arising upon the exercise of an
option under Federal, State or other tax laws by withholding from the
number of shares otherwise to be delivered to the Grantee that number
of shares equal to the amount of such tax to be withheld. Shares to be
withheld under this Section 7(c) shall be valued in accordance with the
provisions of Section 7(b)(ii) above. In the alternative, the Grantee
may deliver to the Company in whole or partial satisfaction of the
Company's tax withholding requirements, previously owned whole shares
of Common Stock (which the optionee has held for at least six months
prior to delivery of such shares and for which the optionee has good
title, free and clear of all liens), which shares shall be valued for
such purpose in accordance with the provisions of Section 7(b)(ii)
above. The Committee shall have sole discretion to disapprove of an
election or request to withhold or deliver shares of Stock in order to
satisfy tax withholding obligations and in the case of an optionee who
is subject to Section 16 of the Exchange Act, the Company may require
that the method of satisfying such obligations be in compliance with
Section 16 and the rules and regulations thereunder.
VIII. Stock Appreciation Rights
(a) Stock appreciation rights may be granted in conjunction with
all or part of any option granted under this Plan, either at the time
of the grant of such option or at any subsequent time during the term
of the option; provided, however, that any stock appreciation right
related to an ISO shall be granted at the same time that such ISO is
granted. A "stock appreciation right" is a right to receive, without
payment to the Company, a number of shares of Common Stock of the
Company and/or cash, as provided in this Section 8, in lieu of the
purchase of shares under a related option. A stock appreciation right
shall terminate and no longer be exercisable upon the termination of
the related option. Stock appreciation rights may be exercised, in
accordance with subsection (b) of this Section 8, by a Grantee by
surrendering the related option or applicable portion thereof. Upon
such exercise and surrender, the Grantee shall be entitled to receive
an amount determined in the manner prescribed in subsection (b) of this
Section 8. Options which have been so surrendered, in whole or in
part, shall no longer be exercisable to the extent the related stock
appreciation rights have been exercised.
(b) Stock appreciation rights shall be subject to such terms and
conditions not inconsistent with other provisions of the Plan as shall
be determined from time to time by the Committee, which shall include
the following:
(i) Stock appreciation rights shall be exercisable at such time
or times and only to the extent that the option to which they relate
shall be exercisable in accordance with the provisions of Section 7 and
this Section 8 of this Plan.
(ii) Upon the exercise of a stock appreciation right, an optionee
shall be entitled to receive an amount equal to the excess of the fair
market value of one share of Common Stock over the option price per
share specified in the related option multiplied by the number of
shares in respect of which the stock appreciation right shall have been
exercised. If shares of Common Stock are to be delivered for such
excess amount, the number of whole shares shall be determined by
dividing such excess amount by the fair market value of one share of
Common Stock on the date of exercise of the stock appreciation right.
No fractional shares shall be issued upon exercise of the stock
appreciation right and no cash shall be paid for such fractional
shares. The fair market value of Common Stock on the date of exercise
of stock appreciation rights shall be determined in the same manner as
the fair market value of Common Stock on the date of grant of an option
is determined pursuant to Section 6 hereof.
(iii) The Committee shall have the sole discretion to determine
the form in which payment of the amount described in paragraph (ii) of
this subsection (b) will be made (i.e., cash, Common Stock, or any
combination thereof).
(iv) The obligation to make payments with respect to stock
appreciation rights shall not be funded or secured in any manner.
(c) Upon the exercise of a stock appreciation right, the option
or part thereof to which such stock appreciation right is related shall
be deemed to have been exercised for the purpose of the limitation of
the number of shares of Common Stock to be issued under the Plan as set
forth in Section 3 hereof.
IX. Restricted Stock Awards
(a) Restricted Stock Awards are awards of restricted shares of
Common Stock which are subject to the terms, conditions and
restrictions contained in this Plan and in the Award relating to such
shares. Upon the grant of any Restricted Stock Award, the awarded
shares shall be registered in the name of the Grantee as soon as
reasonably practicable after the award is made, but not until the
Grantee has executed an award agreement and any other documents which
the Committee in its absolute discretion may require. The awarded
shares shall be retained by the Treasurer of the Company, an escrow
holder, and the Grantee shall not be required to make any payment of
cash consideration for such Award. All such Awards shall be contingent
and the rights of the Grantee with respect thereto prior to vesting or
forfeiture as provided in this Plan shall be only as set forth in this
Plan.
(b) Unless and until the shares awarded to a Grantee shall have
vested as provided in this Section 9, but subject to the provisions of
Section 3 where applicable, such shares shall not be sold, transferred
or otherwise disposed of or pledged, but the Grantee, after delivery of
the shares to the escrow holder, shall have the right to vote the
shares and receive all dividends and other distributions paid or made
with respect thereto.
(c) Each Restricted Stock Award shall be granted by the
Committee, in its absolute discretion, subject to the provisions of the
Plan, and shall contain such terms and conditions as the Committee
shall determine consistent with the Plan, but in no event (except as
provided in Section 3 hereto) may any portion of a Restricted Stock
Award vest prior to one year after the date of grant.
(d) Upon the forfeiture of any share of Restricted Stock in
accordance with the provisions of the Plan, or the terms and conditions
of the Award, such share shall automatically be transferred to and
reacquired by the Company at no cost to the Company.
(e) Vested Restricted Stock Awards shall be paid by delivery to
the Grantee of certificates for the appropriate number of shares of
Common Stock of the Company, registered in his name, free of any
restriction or condition other than such restrictions on the resale of
such Stock as the Committee, on advice of counsel, may require, which
restrictions may be expressed, at the option of the Committee, in a
legend on the stock certificate, with appropriate instructions given to
the Company's transfer stock agent.
X. Necessary Approvals
Each option and stock appreciation right and Restricted Stock
Award shall be subject to the requirement that if at any time the Board
of Directors shall determine, in its discretion, that the listing,
registration or qualification of the shares subject to such option or
stock appreciation right or Restricted Stock Award upon any securities
exchange or under any state or federal law, or that the consent or
approval of any governmental authority, is necessary or desirable as a
condition of, or in connection with, the issuance or purchase of shares
under such option or upon exercise of such stock appreciation right or
the award, vesting or delivery of shares covered by a Restricted Stock
Award, such option or stock appreciation right may not be exercised in
whole or in part, and such Restricted Stock Award shall not be made or
vest, and shares thereunder may not be delivered, as the case may be,
unless such listing, registration, qualification, consent or approval
shall have been effected or obtained free of any conditions not
acceptable to the Board of Directors. Any option or stock appreciation
right may be exercised only in accordance with the provisions of all
applicable law.
XI. Termination of Employment
(a) If an employee ceases to be employed for any reason, whether
by his own volition or otherwise, except where termination is due to
death, total disability or retirement (as defined in Section 11(c) of
this Plan) of the employee, all options and stock appreciation rights
held by the employee under this Plan shall be automatically canceled at
the time of termination of employment except that any such option and
stock appreciation right may be exercised by him within three months
after such termination (but not after the expiration of ten years from
the date of grant or after the expiration of any other period for
exercise made applicable by the Committee at the time of grant) to the
extent exercisable by him at the time of such termination; provided,
however, that in the case of an ISO, the period of time after such
termination of employment shall not be greater than three months. If
such an employee dies within such three month period, any such right of
exercise of his option or stock appreciation right, respectively,
possessed by him on the date of his death shall be transferred and may
be exercised as provided in subsection (b) of this Section, unless the
option or stock appreciation right by its terms shall provide
otherwise.
(b) If an employee dies while in the employ of the Company or any
of its subsidiary companies, any option and stock appreciation right
held by him at the time of his death shall be transferred as provided
in his will or as determined by the laws of descent and distribution,
and may be exercised, to the extent exercisable by him at the time or
from time to time within twelve months after the date of death (but not
after the expiration of ten years from the date of grant or after the
expiration of any other period for exercise made applicable by the
Committee at the time of grant) unless the option or stock appreciation
right by its terms shall provide a shorter period of time during which
the option or stock appreciation right may be exercised after death.
(c) An employee whose employment terminates because of total
disability or retirement (as defined in this subsection) may exercise
his option and stock appreciation right, to the extent exercisable by
him at the time of such termination, at any time or from time to time
within three years after the termination of his employment (but not
after the expiration of ten years from the date of grant or after the
expiration of any other period for exercise made applicable by the
Committee at the time of grant). If such a former employee dies, any
such right of exercise of his option or stock appreciation right
possessed by him on the date of his death shall be transferred and may
be exercised as provided in subsection (b) of this Section unless the
option or stock appreciation right by its terms shall provide
otherwise. "Retirement," for purposes of this Plan, shall include
termination of employment at a time when the Grantee is entitled to an
early or normal retirement pension under any retirement plan of the
Company.
(d) If the employment of a Grantee terminates before a Restricted
Stock Award is vested in accordance with the Plan, he shall
automatically forfeit all shares of Stock then subject to Restricted
Stock Awards under the Plan, except to the extent otherwise determined
by the Committee in its sole discretion before or after such
termination.
XII. Miscellaneous
(a) While an option or stock appreciation right is unexercised,
an employee shall have no voting rights or other rights of stockholders
with respect to shares which are subject to his option or which he may
receive upon exercise of his stock appreciation right. Furthermore, no
cash dividends shall accrue or be payable with respect to any such
shares. However, an employee shall have full voting and other rights
upon the date on which the Committee determines that Stock will be
issued to him in connection with the exercise of the stock appreciation
right.
(b) Stock which is subject to options but has not yet been
purchased or which may be issued upon exercise of a stock appreciation
right has no subscription rights.
(c) No fractional shares of Stock shall be issued upon exercise
of an option or a stock appreciation right and in case a fractional
share shall become subject to an option or stock appreciation right by
reason of a stock dividend or otherwise, the employee holding such
option or stock appreciation right shall not be entitled to exercise it
with respect to such fractional share.
(d) The rights granted to any employee pursuant hereto shall be
exercisable, during his lifetime, only by him or by his guardian or
legal representative and none of such rights shall be subject to sale,
hypothecation, assignment or pledge or be transferable otherwise than
by will or intestacy.
(e) No Grantee of an option, stock appreciation right or
Restricted Stock Award shall have any right to be retained in the
employ of the Company or a subsidiary thereof by virtue of his
participation in the Plan.
(f) This Plan, each option, stock appreciation right and
Restricted Stock Award hereunder and the related agreement, and all
determinations made and actions taken pursuant thereto, to the extent
not otherwise governed by the Code or the laws of the United States,
shall be governed by the laws of the State of Delaware and construed in
accordance therewith without giving effect to principles of conflicts
of laws.
XIII. Amendments
Subject to any requirement of stockholder approval required
by applicable law, rule or regulation including Rule 16b-3 under the
Exchange Act and Section 162(m) of the Code, the Board of Directors
shall have the power (a) to make such changes in the Plan and in any
option, stock appreciation right or Restricted Stock Award previously
granted under the Plan as in the opinion of counsel to the Company may
be necessary or appropriate from time to time so that options granted
under the Plan will continue to be ISOs or Non-Statutory Stock Options,
as the case may be, under the Code as in existence from time to time,
and (b) to make such other changes in the Plan and in any option or
stock appreciation right previously granted under the Plan as from time
to time the Board deems proper and in the best interests of the
Company; provided, however, that no amendment shall be made without
stockholder approval if such amendment would (i) increase the maximum
number of shares of Common Stock available under this Plan (subject to
Section 3), (ii) reduce the minimum purchase price in the case of an
option or the base price in the case of a stock appreciation right,
(iii) effect any change inconsistent with Section 422 of the Code or
(iv) extend the term of this Plan. No amendment may impair the rights
of a holder of an outstanding award without the consent of such holder.
XIV. Effective Date and Termination
(a) The Plan or any amendment hereto shall become operative and
in effect as of the date the Plan or any such amendment is approved by
the affirmative vote of a majority of the shares of Common Stock
present in person or represented by proxy at the 1995 annual meeting of
stockholders.
(b) The Plan shall remain in effect until termination by action
of the Board. Termination of this Plan shall not affect the rights of
employees under the options theretofore granted to purchase Common
Stock under the Plan, or the rights of employees pursuant to stock
appreciation rights and Restricted Stock Awards theretofore granted
under the Plan, and all such options, stock appreciation rights and
Restricted Stock Awards shall continue in force and in operation after
termination of the Plan, except as they may be terminated through death
or other termination of employment in accordance with the terms of the
Plan.
XV. Definitions of Certain Terms Referenced Hereto in the Plan
(a) Change in Control: The term "Change in Control" of the
Company when used in this Plan, shall mean, and be deemed to have
occurred as of the first day that any one or more of the following
conditions have been satisfied.
(i) the acquisition by any individual, entity or group (a
"Person"), including any "person" within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act, of beneficial ownership
within the meaning of Rule 13d-3 promulgated under the Exchange Act, of
15% or more of either (1) the then outstanding shares of common stock
of the Company (the "Outstanding Company Common Stock") or (2) the
combined voting power of the then outstanding securities of the Company
entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); excluding, however, the
following: (A) any acquisition directly from the Company (excluding
any acquisition resulting from the exercise of an exercise, conversion
or exchange privilege unless the security being so exercised, converted
or exchanged was acquired directly from the Company); (B) any
acquisition by the Company, (C) any acquisition by an employee benefit
plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (D) any acquisition by any
corporation pursuant to a transaction which complies with clauses (1),
(2) and (3) of subsection (iii) of this definition;
(ii) individuals who, as of the date hereof, constitute the Board
of Directors (the "Incumbent Board") cease for any reason to constitute
at least a majority of such Board; provided that any individual who
becomes a director of the Company subsequent to the date hereof whose
election, or nomination for election by the Company's stockholders, was
approved by the vote of at least a majority of the directors then
comprising the Incumbent Board shall be deemed a member of the
Incumbent Board; and provided further, that any individual who was
initially elected as a director of the Company as a result of an actual
or threatened election contest, as such terms are used in Rule 14a-11
of Regulation 14A promulgated under the Exchange Act, or any other
actual or threatened solicitation of proxies or consents by or on
behalf of any Person other than the Board shall not be deemed a member
of the Incumbent Board;
(iii) approval by the stockholders of the Company of a
reorganization, merger or consolidation or sale or other disposition of
all or substantially all of the assets of the Company (a "Corporate
Transaction"); excluding, however, a Corporate Transaction pursuant to
which (1) all or substantially all of the individuals or entities who
are the beneficial owners, respectively, of the Outstanding Company
Common Stock and the Outstanding Company Voting Securities immediately
prior to such Corporate Transaction will beneficially own, directly or
indirectly, more than 60% of, respectively, the outstanding shares of
common stock, and the combined voting power of the outstanding
securities of such corporation entitled to vote generally in the
election of directors, as the case may be, of the corporation resulting
from such Corporate Transaction (including, without limitation, a
corporation which as a result of such transaction owns the Company or
all or substantially all of the Company's assets either directly or
indirectly) in substantially the same proportions relative to each
other as their ownership, immediately prior to such Corporate
Transaction, of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities, as the case may be, (2) no
Person (other than: the Company; any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation
controlled by the Company; the corporation resulting from such
Corporation Transaction; and any Person which beneficially owned,
immediately prior to such Corporate Transaction, directly or
indirectly, 25% or more of the Outstanding Company Common Stock or the
Outstanding Voting Securities, as the case may be) will beneficially
own, directly or indirectly, 25% or more of, respectively, the
outstanding shares of common stock of the corporation resulting from
such Corporate Transaction or the combined voting power of the
outstanding securities of such corporation entitled to vote generally
in the election of directors and (3) individuals who were members of
the Incumbent Board will constitute at least a majority of the members
of the board of directors of the corporation resulting from such
Corporate Transaction; or
(iv) approval by the stockholders of the Company of a plan of
complete liquidation or dissolution of the Company.
(b) "Non-Statutory Stock Option" shall mean a stock option which
is not an ISO.
(c) "Permanent and Total Disability" shall have the meaning set
forth in Section 22(e)(3) of the Code or any successor thereto.
(d) "Termination of Employment" shall mean the termination of
employment by IMC Global Inc. or the Company or its successor company
of an employee who is a participant in the Plan, that occurs after a
Change in Control (as herein defined) has occurred and is not due to
cause and is not voluntary. Termination shall not be deemed to be
voluntary if the employee elects to resign because his or her position,
responsibility, benefits or compensation have been adversely changed or
diminished.
This definition is applicable to "termination of employment"
when used in the Plan only when the reference to Section 16 appears
along with it.
IN WITNESS WHEREOF, IMC Global Inc. has caused this
instrument as amended to be executed, effective as of July ___, 1995.
IMC GLOBAL INC.
By:
Its:
(corporate seal)
ATTEST:
By:
Its:
EXHIBIT 10.14
5-2-96
IMC GLOBAL INC.
MANAGEMENT COMPENSATION AND BENEFIT ASSURANCE PROGRAM
FOR EMPLOYEES OF IMC GLOBAL INC. AND ITS SUBSIDIARIES
Amended through August 17, 1995
I. INTRODUCTION
There are a number of plans from which officers and other managers
of the Company receive compensation and benefits. The majority of
these come in the form of monthly payments or benefit coverage.
However, there are some that are in the form of commitments to pay or
provide coverage at some future date. These are stock options,
restricted stock, deferred compensation payments, executive retirement
supplements, and other similar arrangements, many of which may be
regarded as already having been earned in the normal course of
employment. All of these commitments are unsecured and unfunded
promises to pay and as such are likely to generate employee concerns as
to whether a successor Corporation or persons would honor the
commitments in the event of a change in control of the Company.
In recognition that concerns about job security, in the context of
a change in control, may adversely affect motivation and attention to
job duties, and consequently hinder productivity and performance, and
to ensure that officers and key management personnel receive the
compensation and benefits which have been committed to them and that
all such personnel receive the appropriate severance arrangements and
benefits in the event of a termination (as defined below) after a
change in control, management has prepared and presented this
Management Compensation and Benefit Assurance Program to the
Compensation Committee. The Program was adopted in 1988, amended in
1992 and was amended again as of August 17, 1995.
II. Definition Of A Change In Control
In implementing such a program, which creates rights and
obligations consequent upon a change in control of the Company, it is
necessary to have a definition of what constitutes a change in control
of the Company.
"Change in Control" shall mean, and be deemed to have occurred as
of the first day that any one or more of the following conditions have
been satisfied.
(1) the acquisition by any individual, entity or group (a
"Person"), including any "person" within the meaning of Section 13
(d)(3) or 14(d)(2) of the Exchange Act, of beneficial ownership
within the meaning of Rule 13d-3 promulgated under the Exchange
Act, of 15% or more of either (i) the then outstanding shares of
common stock of the Company (the "Outstanding Company Common
Stock") or, (ii) the combined voting power of the then outstanding
securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting
Securities"); excluding, however, the following: (A) any
acquisition directly from the Company (excluding any acquisition
resulting from the exercise of an exercise, conversion or exchange
privilege unless the security being so exercised, converted or
exchanged was acquired directly from the Company); (B) any
acquisition by the Company, (C) any acquisition by an employee
benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company or (D) any
acquisition by any corporation pursuant to a transaction which
complies with clauses (i), (ii) and (iii) of subsection (3) of
this definition;
(2) individuals who, as of the date hereof, constitute the
Board of Directors (the "Incumbent Board") cease for any reason to
constitute at least a majority of such Board; provided that any
individual who becomes a director of the Company subsequent to the
date hereof whose election, or nomination for election by the
Company's stockholders, was approved by the vote of at least a
majority of the directors then comprising the Incumbent Board
shall be deemed a member of the Incumbent Board; and provided
further, that any individual who was initially elected as a
director of the Company as a result of an actual or threatened
election contest, as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act, or any other
actual or threatened solicitation of proxies or consents by or on
behalf of any Person other than the Board shall not be deemed a
member of the Incumbent Board;
(3) approval by the stockholders of the Company of a
reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the
Company (a "Corporate Transaction"); excluding, however, a
Corporate Transaction pursuant to which (i) all or substantially
all of the individuals or entities who are the beneficial owners,
respectively, of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities immediately prior to such
Corporate Transaction will beneficially own, directly or
indirectly, more than 60% of, respectively, the outstanding shares
of common stock, and the combined voting power of the outstanding
securities of such corporation entitled to vote generally in the
election of directors, as the case may be, of the corporation
resulting from such Corporate Transaction (including, without
limitation, a corporation which as a result of such transaction
owns the Company or all or substantially all of the Company's
assets either directly or indirectly) in substantially the same
proportions relative to each other as their ownership, immediately
prior to such Corporate Transaction, of the Outstanding Company
Common Stock and the Outstanding Company Voting Securities, as the
case may be, (ii) no Person (other than: the Company; any employee
benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company; the
corporation resulting from such Corporation Transaction; and any
Person which beneficially owned, immediately prior to such
Corporate Transaction, directly or indirectly, 25% or more of the
Outstanding Company Common Stock or the Outstanding Company Voting
Securities, as the case may be) will beneficially own, directly or
indirectly, 25% or more of, respectively, the outstanding shares
of common stock of the corporation resulting from such Corporate
Transaction or the combined voting power of the outstanding
securities of such corporation entitled to vote generally in the
election of directors and (iii) individuals who were members of
the Incumbent Board will constitute at least a majority of the
members of the Board of Directors of the corporation resulting
from such Corporate Transaction; or
(4) approval by the stockholders of the Company of a plan of
complete liquidation or dissolution of the Company.
III. DEFINITION OF TERMINATION OF EMPLOYMENT AND PARTICIPANT
This Program's benefits are intended only to apply to management
personnel who are qualified participants and who are terminated from
employment involuntarily and without cause after a change in control
has occurred.
Therefore, for purposes of the Program, termination means the
termination of employment by Global or the Corporation or its successor
company of an employee who is a qualified participant (as hereinafter
defined) in the Program, that occurs after a change in control (as
herein defined) has occurred and is not due to cause and is not
voluntary. Termination shall not be deemed to be voluntary if the
employee elects to resign because his or her position, responsibility,
benefits, or compensation have been adversely changed or diminished.
Qualified participants for any particular part of the Program
shall be limited to those persons who now are or hereafter become
participants under the plan that is involved in that part of the
Program. For example, qualified participants under the Program are
those who hold or hereafter hold unvested Restricted Stock Awards
and/or Continent Stock Units under the Plan there described.
The fact that a participant who is terminated later becomes
eligible to retire under any pension program or plan of the Corporation
shall not in any way affect his or her benefits or entitlements under
the Program.
IV. LIMITATIONS ON PROGRAM
Nothing in the above definitions or otherwise in this Program is
intended to change any contingent employment to modify any qualified
plan of the Company. Nothing in this Program shall create, or entitle
any employee to, a right of employment or continued employment by the
Company.
The officers who have contingent employment contracts are included
in this Program only to the extent they are not entitled to receive the
payments, incentives, or benefits involved, or their equivalent,
pursuant to their Employment Contracts.
V. THE PROGRAM
The Program includes special Trusts, special placements, and other
documentation and policies described below designed to assure that the
various commitments made to participants are kept and the job security
concerns are minimized, notwithstanding a change in control of the
Corporation. It encompasses the following:
A. RABBI TRUSTS
Background
The Rabbi Trust is one of the key elements in the Program. A
Rabbi Trust is established by one party to ensure that a future
commitment made to another individual is kept. The first such trust of
this kind was approved by the IRS for a Rabbi to fund promises made to
him by his congregation; thus the name, Rabbi Trust. The trust is
funded and the trustee makes the future payment in accord with the
particular agreement. Once the trust is funded, the trustee is obliged
to pay benefits. Another individual, or in the case of a takeover, the
new management or the Company under new management has no access to the
funds in the trust and cannot block payment. Only in the case of
insolvency can the protection afforded by the Trust be penetrated.
Implementation:
The Rabbit Trusts are minimally funded until such time as a change
in control is imminent to assure that the benefits available under the
following plans are paid:
Deferred Management Incentive Awards
Contingent Employment Agreements
Supplemental Exec. Retirement Plan
Gross-Up of Excess Compensation
Management Incentive Compensation Plan
Cost of Action
The annual cost of maintaining the Trusts has averaged
_______________, in excess of those required to pay benefits shall be
returned to the Company.
B. RESTRICTED STOCK AND CONTINGENT STOCK UNITS
Stock Option Awards Background
Restricted Stock and Contingent Stock Units (that have the same
value as common stock) were issued as part of the __________ Long-Term
Incentive Plan beginning in 1992. In total, __________ shares of
Restricted Stock and __________ Contingent Stock units have been issued
under the Plan. Twenty percent of the restricted shares vest based on
service. The remainder vests based on attainment of performance
objectives. Restrictions on all shares and units lapse on the date
they are vested. In the case of contingent stock units, they will be
paid in stock, or converted to cash, at the Committee's discretion, at
the closing price on the vesting date of the Company's Common Stock on
the principal exchange upon which such Common Stock is then traded.
As of today, there are still ______________ shares of Restricted
Stock and _____________ Contingent Stock Units that may be paid to 26
executives. In the event of a Change in Control, the Plan provides for
cancellation and surrender of the Awards to the Company and payment of
the cash equivalent, based on the current Stock price, to the
participant.
The Stock Option and Award Plan has been amended to provide for
surrender of awards within ten days of occurrence of a change in
control, and payment of the cash equivalent based on he number of
shares subject to the award multiplied by the spread if any, between
the grant price and the highest share price during the Change in
Control transaction.
There are currently ______________ employees who hold options to
purchase ___________ shares of Global's common stock. These are under
the 1988 non-qualified stock option plan. _____________ are currently
exercisable. ______________% will become exercisable on
__________________ ____% on ___________ and __________% on
______________. Employees subject to 16(b) short-term profit
restrictions hold options to purchase ____________ shares.
Cost of Action
The cost would be the full difference between the
option/restricted share price and the Change in Control price. For
example, based on all options outstanding today, assuming a spread of
$15 per share the cost would be $_____________. Likewise based on all
restricted shares granted as of _____________________
____________________, the cost based on a spread of $15 per share would
be $______________________.
C. MANAGEMENT INCENTIVE COMPENSATION PROGRAM ("MICP")
Background
The MICP has been amended to provide proportionate payment of
awards earned under the plan in the event of a change in control.
Currently, there are __________ participants in the plan which has an
annual target award this year for all participants of
$_________________.
The MICP also allows participants to defer receipt of awards which
they receive under the plan until a later date.
Currently there are _________ managers who had deferred incentive
payments in the amount of $_____________. These accounts earn interest
at the prime rate and will be paid out over the next 15 years.
This is carried on the books but is an unsecured promise by the
Company to pay in the future. Even though the funds have all been
earned by the incentive plan participants, there is no protection to
ensure the deferred amounts will be paid at a future date if there is a
change in control of the Company.
Cost of Action
The cost of proration would be same percentage of the dollar
figure noted above. The cost of deferral payout may or may
not cost the corporation any more than what would normally be
paid. Payouts earlier than the end of the plan year could
result in a cost related to the item value of money. Actual
amounts paid will depend on the performance of the Company in
the particular year in which the change in control occurs.
This action will not create any "excess
compensation" or trigger any excise taxes.
D. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Background
The Supplemental Executive Retirement Plan provides retirement
benefits to officers and key managers in excess of that provided by the
qualified Retirement Plan that covers all salaried employees. The Plan
provides a benefit equal to three (3) percent times the participant's
years of service (up to 20) times the average of the five highest
earnings (salary plus bonus). The average age of the group covered is
________ years and the average service is ________ years. The Plan
provides that if a participant terminates prior to attaining age 55, he
or she is not entitled to a pension under this plan. This means that
any officer who is less than age 55 and who is terminated for any
reason, including as a result of a change in control, would get nothing
from the SERP. Also, the plan has a provision which allows it to be
terminated at any time. Under, and subject to, the contingent
employment agreements, officers and key managers who have contingent
employment agreements will be given three years of credited service
under the SERP for purpose of pension benefit accrual if they are
actually or constructively discharged other than for cause after a
change in control.
The plan was amended to provide that participants who are
terminated as defined, after a change in control, are entitled to the
value of the benefits they have accrued to the date of their
termination (plus credited service by virtue of their contingent
employment agreements, if applicable). This is calculated using a 4%
reduction factor from age 62 to the age at termination. The
participant may request that the Committee, in its sole discretion,
authorize the payment of benefits in a lump sum; benefits are otherwise
payable monthly.
The plan also provides so that it cannot be terminated after a
change in control without all participants receiving the benefits to
which they are entitled above.
Cost of Action
The additional three years service as provided in the contingent
agreements may result in additional benefits up to _______________ in
the aggregate to certain officers, which may also create "excess
parachute payments" if they are terminated (as defined) after a change
in control, but this would result only if the new owner decided to
terminate them or force their termination without cause. Though the
participant is less than age 55, may result in additional benefits up
to $_____________ in the aggregate to offices and key managers.
E. GROSS-UP OF COMPENSATION TO COVER TAXES
Background
Currently there are contingent employment agreements with ________
officers and key managers. Payments made to these executives resulting
from a change in control of the Company come under IRS regulations that
were passed with the Deficit Reduction Act. If the company makes a
payment to such an individual in an amount which exceeds three times
the executive's average annual compensation income from the Company for
the five tax years preceding the tax year in which a change in control
of the Company occurs, there will be an "excess parachute payment". An
excess parachute payment may not be deducted by the Company and would
result in the imposition of a 20% excise tax on the recipient, in
respect of, generally speaking, the entire payment except for one times
the executive's average annual compensation income and any other
portion of the payment that has been earned. The acceleration of
certain compensation and benefits may create excess parachute payments
that would trigger 20% excise tax for the executive and
nondeductibility for the Company. Whether there are, in fact, any
"excess payments" will be dependent on the timing of the event. If
most of the compensation is earned at the time of a change in control,
there would be very little, if any, excise taxes. Conversely, if a
change in control occurred July 1, 1996, and there is a significant
acceleration of receipt of compensation that is not yet earned, there
would be additional taxes.
The gross-up agreements also provide that the executive must
cooperate with the Corporation in resisting or minimizing any excise
tax or loss of deduction, but that any disputes with the IRS regarding
a loss of deduction are the responsibility of the Corporation and are
at its expense. The executive will, however, be required to return any
part of the gross-up that is not needed for that purpose (net after any
tax imposed on the executive on account of the unneeded amount).
Cost of Action
1. Assumed total severance payments for these individuals are shown
in Exhibit I which has been prepared to show the worst, including
the assumptions (which we believe unwarranted) that all personnel
will be terminated involuntarily and without cause immediately
upon a change in control and that the 1995 contracts and other
payments will become subject to the parachute laws. The estimated
cost of grossing-up reimbursements to cover the excise tax for
individuals with excess payments on this "worst-case" basis is
about $_________________ as shown in Exhibit ___________.
2. Additionally, there will be an estimated cost of $_____________ to
the Company due to the loss of a tax deduction of $______________.
The total estimated "worse-case" to the Company, assuming a change
of control 7/l/96, is $______________. Cost of gross-up and lost
deductions are itemized in the attached Exhibit ________.
3. These costs will change as the base earnings change (average of
last five-year W-2 earnings) and as incentive awards are granted
and become vested.
F. CONTINGENT EMPLOYMENT AGREEMENT
Background
There are currently ____________ contingent employment agreements,
an example of which appears in the attached Exhibit _______, with
certain officers. These contracts provide that if the executive is
terminated as defined in the contract (similar to termination as
defined in this Program) within the three-year period following a
change in control of the Corporation as defined in the contract
(similar to change in control as defined therein), severance will be
paid in the amount of three times annual average salary and bonus. The
contracts do not become effective until a change of control has
occurred, at which point they become unsecured promises to pay by the
Corporation in the above event.
The CEO's contract provides a month long window at the close of
the twelve month period following a change in control. During this
window period he may opt to activate his Contingent Employment
Agreement and leave.
Performance of these contracts is assured by the Rabbi Trust. The
Trust pays the intended benefits and compensation to the executive in
the event he is terminated as provided in his or her contract. The
funding of the Trust for this purpose is triggered by action of the
Compensation Committee.
Cost of Action
Maximum severance payments under the contracts would total
$4,448,000 if all _________ became entitled thereto upon immediate
termination after a change in control (See Exhibit _____). Since these
contracts have already been signed by the executives, there would be no
increase in cost. The only cost associated with these contracts would
be those associated with the establishment of the Rabbi Trust.
G. PENSIONS
Background
The qualified Retirement Plan for Salaried Employees is funded to
provide benefits for all salaried employees. In the event of a change
in control and participants are terminated, they will be entitled to
the benefits to which they are entitled under the plan provided they
are vested (5 years of service). Vested employees less than age 55
become deferred vested participants. Upon leaving the Corporation,
they can take their accrued benefits in a lump sum or leave them in the
plan until age 55. Employees who leave the Corporation after age 55
can begin drawing their pensions in monthly amounts or take a lump sum.
Employees who leave when younger than age 55 with less than ten years
of service would not be entitled to a benefit.
In the event of a change in control, employees who are terminated
(as defined) but are not yet vested at that time will become vested and
will be credited for service for a maximum twenty-four month severance
period.
Cost of Action
There is some cost associated with the vesting of employees with
less than five years of service. In addition, there would only be real
cost in the event an employee is terminated (as defined), and this, of
course, would be the new owner's responsibility. It is very difficult
to estimate how many employees would be terminated after a change in
control.
VII. AMENDMENT AND DURATION OF THE PROGRAM
It is necessary to define the time during which this proposal will
be in effect. As times change and conditions change, the contents of
the Program will have to be reviewed. Having a fixed duration means
that the program will automatically have to be reviewed and reevaluated
at the end of the term.
This Program originated with a five (5) year period automatically
renewing for subsequent annual periods unless the Board of Directors of
the Company, by resolution duly adopted at least six (6) months prior
to the end of the five (5) year period or of any subsequent annual
period, indicates that the Plan shall not be renewed. Further, if a
Change in Control occurs during the term of the Program, the Program
shall continue until the Company shall have fully performed all of its
obligations thereunder with respect to all Participants, with no future
performance being possible.
The Board of Directors reserves the right to amend all or any part
of this Program prior to a change in control if, in the opinion of
counsel, amendment is warranted due to changes in applicable law or
interpretations thereof. This Program may not be amended after a
change in control so as to reduce the benefits of any person who is a
qualified participant in any part of the Program the time of the change
in control.
EXHIBIT 10.26
NON-COMPETITION
AGREEMENT
This Agreement made as of the 1st day of March, 1996, between
IMC GLOBAL INC., a Delaware corporation ("Company"), KALIUM CHEMICALS,
LTD., a Delaware corporation and John U. Huber ("Employee").
WHEREAS, the Company and The Vigoro Corporation, a Delaware
corporation, ("Vigoro") on the date stated above, have completed a
transaction whereby Vigoro has become a wholly-owned subsidiary of the
Company; and
WHEREAS, the Company desires to have the use of and access to
and to protect valuable confidential information relating to the
businesses of the Controlled Group in Employee's possession and other
confidential information which Employee may acquire during employment
by any Employer; and
WHEREAS, the Company has concluded that it is therefore in
the best interest of the Company to provide incentives for Employee to
continue to be employed in the Controlled Group and to secure
Employee's agreement to limitations on Employee's future business
activities in order to protect the Controlled Group from injury that
would occur if the confidential information became available to and
could be used by a competitor of any member of the Controlled Group;
NOW, THEREFORE, for valuable consideration which the parties
acknowledge and in consideration of the mutual covenants and agreements
contained herein, the Employee and the Company agree as follows:
1. Definitions. Each term defined herein shall be given its
defined
meaning wherever used in this Agreement, unless the context requires
otherwise.
"Vigoro" means Vigoro and its Subsidiaries, as they may exist
from time to
time, during Employee's employment with Vigoro or with the Company or
its affiliates in the Controlled Group.
"Cause" means (i) the engaging by the Employee in willful and
intentional conduct which has caused demonstrable and serious injury to
the Company, monetary or otherwise; (ii) conviction of, or plea of nolo
contendere by, the Employee for any felony; (iii) criminal conviction
of, or plea of nolo contendere by, the Employee for any other offense
involving dishonesty, breach of trust or moral turpitude; (iv) a breach
of fiduciary duty by the Employee involving personal profit; or (v)
willful refusal by the Employee to perform his duties or
responsibilities (unless significantly changed without the Employee's
consent), or gross negligence by the Employee in the performance of
such duties: provided, however, that the Employee shall have 30 days,
or such longer period as the Company may determine to be appropriate,
after written notice by the Company, to cure any conduct or act, if
curable, alleged in such notice to provide grounds for termination of
the Employee's employment for Cause.
"Controlled Group" means the Company and all affiliates of
the Company determined under Sections 414(b),(c),(m) and (o) of the
Internal Revenue Code of 1986, as amended.
"Effective Date" means the date first set forth above.
"Employer" means the Company and any Subsidiary or other
member of the Controlled Group which employs Employee on or after the
Effective Date.
"Good Reason" for termination of employment by an Employee
shall mean any of the following:
(a) the failure by the Employer to (i) maintain the
Employee's Base Salary at an annual rate equal to the rate in
effect immediately prior to the Effective Date, or as may be
increased from time to time by the Employer in accordance
with regular practices of the Company thereafter with respect
to employees with comparable duties; provided, however, that
Good Reason shall not exist as the result of any decrease in
Base Salary if such decrease is incident to a general
reduction applied to all senior corporate officers and other
key employees of all members of the Controlled Group on a
proportionate and nondiscriminatory basis; (ii) provide for
continued participation on a comparable basis by the Employee
in an annual bonus plan maintained by the Company or its
Subsidiaries in which employees with comparable duties
participate; (iii) provide for participation in stock option
and other equity incentive plans or programs maintained by
the Company or its Subsidiaries or any other member of the
Controlled Group from time to time in which employees with
comparable duties participate; (iv) provide for participation
in all Company or Subsidiary sponsored group or executive
medical, dental, life, disability, retirement, profit-
sharing, thrift, nonqualified and deferred compensation, and
other plans maintained by the Company or its Subsidiaries to
the same extent as employees with comparable duties
participate; (v) provide vacation and perquisites
substantially equivalent to those provided by the Company or
Subsidiaries to employees with comparable duties; or (vi)
obtain the express unconditional assumption of this Agreement
as required by Section 9; or
(b) any Employer changes the Employee's primary employment
location to a location that is more than 50 miles from the
primary location of such Employee's employment as in effect
immediately prior to the Effective Date; provided, however,
that the relocation of Employee on a nondiscriminatory basis
for bona fide business reasons shall not constitute Good
Reason hereunder; or
(c) a significant adverse change, without the Employee's
written consent, in working conditions or status, including
but not limited to (i) a significant adverse change in the
nature or scope of the Employee's authority, powers,
functions, duties or responsibilities; provided, however, a
change in the Company's status such that it no longer has any
equity securities registered under Section 12(b) or 12(g) of
the Securities Exchange Act of 1934, as amended, or that it
is a subsidiary of another entity and directly results in
changes in the nature or scope of the Employee's authority,
powers, functions, duties or responsibilities shall not in
and of itself constitute Good Reason hereunder, or (ii) a
reduction in the level of support services, staff,
secretarial and other assistance, office space and
accoutrements available to a level below that reasonably
necessary for the performance of such duties.
"Non-Competition Period" shall commence on the date
Employee's employment is terminated and continue for a period of
(a) Three years, if a Severance Event occurs on or before
the first anniversary of the Effective Date;
(b) Two years, if a Severance Event occurs after the first
anniversary of the Effective Date and on or before the second
anniversary thereof; and
(c) One year, if a Severance Event occurs after the second
anniversary of the Effective Date and on or before the third
anniversary thereof or if Employee's employment is terminated for a
reason other than a Severance Event.
"Severance Event" shall be deemed to have occurred if, and
only if, as of or after the Effective Date, but prior to the expiration
of the Severance Period, termination of Employee's employment with the
Company occurs, and such termination is:
(a) Employer-initiated for reasons other than Cause; or
(b) Employee-initiated within ninety (90) days after the
Employee first has or should have knowledge that Good
Reason exists.
"Severance Period" means a period of three (3) years from and
after the Effective Date.
"Subsidiary" means any corporation of which the securities
having a majority of the ordinary voting power in electing the board of
directors are, at the time of such determination, owned by the Company
or another Subsidiary.
2. Proprietary Rights.
(a) Employee acknowledges that each Employer and other
members of the Controlled Group has exclusive ownership of all
information useful in its business (including its dealings with
suppliers, customers and other third parties, whether or not a true
"trade secret"), which at the time or times concerned is not generally
known to persons outside of the Controlled Group engaged in businesses
similar to those conducted by such entities, and which has been or is
from time to time disclosed to, discovered by, or otherwise known by
Employee as a consequence of his employment by the Employer (including
information conceived, discovered or developed by Employee during his
employment) (collectively, "Confidential Information"). Confidential
Information includes, but is not limited to the following especially
sensitive types of information:
(i) The identity, purchase and payment patterns of, and
special relations with, customers;
(ii) The identity, net prices and credit terms of, and
special relations with, the suppliers:
(iii) Inventory selection and management techniques;
(iv) Product development and marketing plans; and
(v) Finances except to the extent publicly disclosed.
(b) The term "Proprietary Materials" shall mean all business
records, documents, drawings, writings, software, programs and other
tangible things which were or are created or received by or for the
Employer and other members of the Controlled Group in furtherance of
its business, including, but not limited to, those which contain
Confidential Information. For example, Proprietary Materials include,
but are not limited to, the following especially sensitive types of
materials: applications software, the data bases of Confidential
Information maintained in connection with such software, and printouts
generated from such data bases; market studies and strategic plans;
customer, supplier and employee lists; contracts and correspondence
with customers and suppliers; documents evidencing transactions with
customers and suppliers, sales calls reports, appointment books,
calendars, expense statements and the like, reflecting conversations
with any company, customer or supplier; architectural and engineering
plans; and purchasing, sales and policy manuals. Proprietary Materials
also include, but are not limited to, any such things which are created
by Employee or with Employee's assistance and all notes, memoranda and
the like prepared using the Proprietary Materials and/or Confidential
Information.
(c) While some of the information contained in Proprietary
Materials may have been known to Employee prior to employment with an
Employer, or may now or in the future be in the public domain, Employee
acknowledges that the compilation of that information contained in the
Proprietary Materials has or will cost the Employer and other members
of the Controlled Group a great effort and expense, and affords persons
to whom Proprietary Materials are disclosed, including Employee, a
competitive, advantage over persons who do not know the information or
have the compilation of the Proprietary Materials. Employee further
acknowledges that Confidential Information and Proprietary Materials
include commercially valuable trade secrets and automatically become
the Company's exclusive property when they are conceived, created or
received.
3. Confidentiality Duties. Employee shall, except as may be
required by law, while an employee of the Company and thereafter for
the longest time permitted by applicable law.
(a) Comply with all instructions of the Company and the
Employer (whether oral or written) for preserving the confidentiality
of Confidential Information and Proprietary Materials.
(b) Use Confidential Information and Proprietary Materials
only at places designated by the Company or the Employer, in
furtherance of businesses of the Employer and other members of the
Controlled Group, and pursuant to directions of the Company or the
Employer.
(c) Exercise appropriate care to advise other employees of
the Company and the Employer (and, as appropriate, subcontractors) of
the sensitive nature of Confidential Information and Proprietary
Materials prior to their disclosure, and to disclose the same only on a
need-to-know basis.
(d) Not copy all or any part of Proprietary Materials,
except as the Company or the Employer directs.
(e) Not sell, give, loan or otherwise transfer any copy of
all or any part of Proprietary Materials to any person who is not an
employee of or otherwise engaged to provide services to the Company or
the Employer, except as the Company directs.
(f) Not publish, lecture on or otherwise disclose to any
person who is not an employee of the Company, except as the Company or
the Employer directs, all or any part of Confidential Information or
Proprietary Materials.
(g) Not use all or any part of any Confidential Information
or Proprietary Materials for the benefit of any third party without the
Company's written consent.
Upon the termination of employment for whatever reason, Employee (or in
the event of death, Employee's personal representative) shall promptly
surrender to the Company the original and all copies of Proprietary
Materials (including all notes, memoranda and the like concerning or
derived therefrom), whether prepared by Employee or others, which are
then in Employee's possession or control. Records of payments made by
the Company or any Employer to or for the benefit of Employee,
Employee's copy of this Agreement and other such things, lawfully
possessed by Employee which relate solely to taxes payable by Employee,
employee benefits due to Employee or the terms of Employee's employment
with the Company or any Employer, shall not be deemed Proprietary
Materials for purposes of this Section 3.
4. Non-Competition.
(a) During Employee's employment with the Company, or any
other members of the Controlled Group, Employee shall not, in any way,
directly or indirectly, manage, operate, control (or participate in any
of the foregoing), accept employment or a consulting position with or
otherwise advise or assist or be connected with or directly or
indirectly own or have any other interest in or right with respect to
(other than through ownership of not more than 5 % of the outstanding
shares of a corporation's stock which is listed on a national
securities exchange) any enterprise (other than for the Company or any
other member of the Controlled Group) which competes with Company or
its affiliates in the Controlled Group.
(b) During the Non-competition Period, Employee shall not
render employment or consulting services to any business enterprise in
North America (except to the Company or any member of its Controlled
Group) in a capacity in which Employee will directly supervise a
business which is directly competitive with the business which Employee
supervised during the one year period preceding the Severance Event.
(c) Employee recognizes that the foregoing limitations are
reasonable and properly required for the adequate protection of the
business of the Company, the Employers and the members of the
Controlled Group. If any such limitations are deemed to be
unreasonable by a court having jurisdiction of the matter and parties,
Employee hereby agrees and submits to the reduction of any such
limitations to such territory or time as to such court shall appear
reasonable.
(d) Employee agrees that the remedy at law for any breach of
the provisions of Sections 2 or 3 or this Section 4 shall be inadequate
and that the Company and any Employer shall be entitled to injunctive
relief in addition to any other remedies it may have.
5. Payments
(a) If Employee's employment is terminated because of a
Severance Event, the Employer shall pay the Employee:
(i) If the Severance Event occurs on or before the
first anniversary of the Effective Date, $1,380,000, in thirty-six (36)
monthly installments;
(ii) If the Severance Event occurs after the first
anniversary of the Effective Date and on or before the second
anniversary, $920,000, in twenty-four (24) monthly installments; and
(iii) If the Severance Event occurs after the second
anniversary of the Effective Date and on or before the third
anniversary, $460,000, in twelve (12) monthly installments.
In each case the first installment shall be due on the first day of the
month following the month in which the Severance Event occurs and
subsequent installments shall be due on the first day of each
succeeding month until all installments have been paid.
(b) The Company has assessed the reasonableness of the
payments provided for herein and believes that the amounts provided are
both reasonable in the light of the benefits secured for the Company by
this Agreement and related to the business of the Company.
6. Obligation of Employer. The Company agrees to cause
Employee's Employer at the time of the Severance Event to make all
payments required hereunder to be made to Employee, and agrees that the
liability for making such payments and providing such benefits shall be
the sole and exclusive obligation of such Employer, provided, however,
that the foregoing notwithstanding, in the event that such benefits are
not so paid by the Employer, then such benefits shall be paid or caused
to be paid by the Company.
7. Enforcement. In the event the Company or the Employer
shall fail to pay to an Employee or successor any amounts due under
this Plan or under any of the plans, programs or arrangements referred
to herein as they come due, the Company and the Subsidiaries shall pay
interest on such amounts at the prime rate of interest as from time to
time published in The Wall Street Journal (Midwest Edition) until paid.
8. Non-assignment. Except as may be required by applicable
law, the payments which may become due to Employee shall not at any
time be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, charge, garnishment,
execution, or levy of any kind, either voluntary or involuntary,
including any such liability which is for alimony or other payments for
the support of a spouse or former spouse, or for any other relative of
the Employee, prior to actually being received by Employee; and any
attempt to anticipate, alienate, sell, transfer, assign, pledge,
encumber, charge or otherwise dispose of any right to benefits payable
hereunder shall be void.
9. Assumption. This Agreement shall inure to the benefit
of, and be binding upon, the successors and assignees of the Company
and each Employer. The Company and each Employer shall require any
successor or assignee, whether direct or indirect, by purchase, merger,
consolidation or otherwise, to all or substantially all the business or
assets of the Company or any Employer, expressly and unconditionally to
assume and agree to perform the Company's obligations or such
Employer's obligations under this Agreement.
10. Enforcement. The provisions of this Agreement shall be
regarded as divisible, and if any of the provision or any part of the
Agreement is decided invalid or unenforceable by a court of competent
jurisdiction, the validity and enforceability of the remainder of the
provisions or parts of the Agreement and the applicability thereof
shall not be affected.
11. Amendment. This Agreement may not be amended or
modified at any time except by written instrument executed by the
Company and the Employee.
12. Withholding. The Employer shall be entitled to withhold
from amounts to be paid to the Employee hereunder any federal, state or
local withholding or other taxes or charges which it is from time to
time required to withhold. The Company shall be entitled to rely on an
opinion of counsel if any question as to the amount or requirement of
any such withholding shall arise.
13. Governing Law; Arbitration. This Agreement and the
rights and obligations hereunder shall be governed by and construed in
accordance with the laws of the State of Illinois. Any dispute arising
out of this Agreement shall be determined by arbitration under the
commercial arbitration rules of the American Arbitration Association
then in effect and judgment upon any award pursuant to such arbitration
may be enforced in any court having jurisdiction thereof. The place of
arbitration shall be in the city with population of 100,000 or more
nearest to the Employee's place of employment immediately prior to the
Severance Event or in the nearest state or provincial capital if it is
closer to such place of employment than is such city.
14. Notice. Notices given pursuant to this Agreement shall
be in writing and shall be deemed given when received and if mailed,
shall be mailed by registered or certified mail, return receipt
requested, addressee only, postage prepaid, if to the Employer to IMC
Global Inc., 2100 Sanders Road, Northbrook, Illinois 60062, Attention
Marshall I. Smith, Senior Vice President and General Counsel, or if to
the Employee, at the address set forth below the Employee's signature
line of this Agreement, or to such other address as to the party to be
notified shall have given to the other.
15. No waiver. No waiver by either party at any time of any
breach by the other party of, or compliance with, any condition or
provision of this Agreement to be performed by the other party shall be
deemed a waiver of similar or dissimilar provision or condition at the
same time or any prior or subsequent time.
16. Certain Rules of Construction. No party shall be
considered as being responsible for the draft of this Agreement for the
purpose of applying any rule construing ambiguities against the drafter
or otherwise. No draft of this Agreement shall be taken into account
in construing this Agreement. The headings in this Agreement are for
reference only and shall not affect the meaning or interpretation of
any provision of this Agreement.
IN WITNESS WHEREOF, the parties have executed this agreement
as the day and year first written above.
KALIUM CHEMICALS, LTD. IMC GLOBAL INC.
By: _____________________ By:
______________________
Name: Name:
Title: Title:
Attest: ___________________ Attn:
____________________
Name: Name:
Title: Title:
___________________________
John U. Huber
23360 Redwing Place
Barrington, IL 60010
EXHIBIT 10.27
NON-COMPETITION
AGREEMENT
This Agreement made as of the 1st day of March, 1996, between
IMC GLOBAL INC., a Delaware corporation ("Company"), KALIUM CHEMICALS,
LTD., a Delaware corporation and Robert M. VanPatten ("Employee").
WHEREAS, the Company and The Vigoro Corporation, a Delaware
corporation, ("Vigoro") on the date stated above, have completed a
transaction whereby Vigoro has become a wholly-owned subsidiary of the
Company; and
WHEREAS, the Company desires to have the use of and access to
and to protect valuable confidential information relating to the
businesses of the Controlled Group in Employee's possession and other
confidential information which Employee may acquire during employment
by any Employer; and
WHEREAS, the Company has concluded that it is therefore in
the best interest of the Company to provide incentives for Employee to
continue to be employed in the Controlled Group and to secure
Employee's agreement to limitations on Employee's future business
activities in order to protect the Controlled Group from injury that
would occur if the confidential information became available to and
could be used by a competitor of any member of the Controlled Group;
NOW, THEREFORE, for valuable consideration which the parties
acknowledge and in consideration of the mutual covenants and agreements
contained herein, the Employee and the Company agree as follows:
1. Definitions. Each term defined herein shall be given its
defined
meaning wherever used in this Agreement, unless the context requires
otherwise.
"Vigoro" means Vigoro and its Subsidiaries, as they may exist
from time to
time, during Employee's employment with Vigoro or with the Company or
its affiliates in the Controlled Group.
"Cause" means (i) the engaging by the Employee in willful and
intentional conduct which has caused demonstrable and serious injury to
the Company, monetary or otherwise; (ii) conviction of, or plea of nolo
contendere by, the Employee for any felony; (iii) criminal conviction
of, or plea of nolo contendere by, the Employee for any other offense
involving dishonesty, breach of trust or moral turpitude; (iv) a breach
of fiduciary duty by the Employee involving personal profit; or (v)
willful refusal by the Employee to perform his duties or
responsibilities (unless significantly changed without the Employee's
consent), or gross negligence by the Employee in the performance of
such duties: provided, however, that the Employee shall have 30 days,
or such longer period as the Company may determine to be appropriate,
after written notice by the Company, to cure any conduct or act, if
curable, alleged in such notice to provide grounds for termination of
the Employee's employment for Cause.
"Controlled Group" means the Company and all affiliates of
the Company determined under Sections 414(b),(c),(m) and (o) of the
Internal Revenue Code of 1986, as amended.
"Effective Date" means the date first set forth above.
"Employer" means the Company and any Subsidiary or other
member of the Controlled Group which employs Employee on or after the
Effective Date.
"Good Reason" for termination of employment by an Employee
shall mean any of the following:
(a) the failure by the Employer to (i) maintain the
Employee's Base Salary at an annual rate equal to the rate in
effect immediately prior to the Effective Date, or as may be
increased from time to time by the Employer in accordance
with regular practices of the Company thereafter with respect
to employees with comparable duties; provided, however, that
Good Reason shall not exist as the result of any decrease in
Base Salary if such decrease is incident to a general
reduction applied to all senior corporate officers and other
key employees of all members of the Controlled Group on a
proportionate and nondiscriminatory basis; (ii) provide for
continued participation on a comparable basis by the Employee
in an annual bonus plan maintained by the Company or its
Subsidiaries in which employees with comparable duties
participate; (iii) provide for participation in stock option
and other equity incentive plans or programs maintained by
the Company or its Subsidiaries or any other member of the
Controlled Group from time to time in which employees with
comparable duties participate; (iv) provide for participation
in all Company or Subsidiary sponsored group or executive
medical, dental, life, disability, retirement, profit-
sharing, thrift, nonqualified and deferred compensation, and
other plans maintained by the Company or its Subsidiaries to
the same extent as employees with comparable duties
participate; (v) provide vacation and perquisites
substantially equivalent to those provided by the Company or
Subsidiaries to employees with comparable duties; or (vi)
obtain the express unconditional assumption of this Agreement
as required by Section 9; or
(b) any Employer changes the Employee's primary employment
location to a location that is more than 50 miles from the
primary location of such Employee's employment as in effect
immediately prior to the Effective Date; provided, however,
that the relocation of Employee on a nondiscriminatory basis
for bona fide business reasons shall not constitute Good
Reason hereunder; or
(c) a significant adverse change, without the Employee's
written consent, in working conditions or status, including
but not limited to (i) a significant adverse change in the
nature or scope of the Employee's authority, powers,
functions, duties or responsibilities; provided, however, a
change in the Company's status such that it no longer has any
equity securities registered under Section 12(b) or 12(g) of
the Securities Exchange Act of 1934, as amended, or that it
is a subsidiary of another entity and directly results in
changes in the nature or scope of the Employee's authority,
powers, functions, duties or responsibilities shall not in
and of itself constitute Good Reason hereunder, or (ii) a
reduction in the level of support services, staff,
secretarial and other assistance, office space and
accoutrements available to a level below that reasonably
necessary for the performance of such duties.
"Non-Competition Period" shall commence on the date
Employee's employment is terminated and continue for a period of
(a) Three years, if a Severance Event occurs on or before
the first anniversary of the Effective Date;
(b) Two years, if a Severance Event occurs after the first
anniversary of the Effective Date and on or before the second
anniversary thereof; and
(c) One year, if a Severance Event occurs after the second
anniversary of the Effective Date and on or before the third
anniversary thereof or if Employee's employment is terminated for a
reason other than a Severance Event.
"Severance Event" shall be deemed to have occurred if, and
only if, as of or after the Effective Date, but prior to the expiration
of the Severance Period, termination of Employee's employment with the
Company occurs, and such termination is:
(a) Employer-initiated for reasons other than Cause; or
(b) Employee-initiated within ninety (90) days after the
Employee first has or should have knowledge that Good
Reason exists.
"Severance Period" means a period of three (3) years from and
after the Effective Date.
"Subsidiary" means any corporation of which the securities
having a majority of the ordinary voting power in electing the board of
directors are, at the time of such determination, owned by the Company
or another Subsidiary.
2. Proprietary Rights.
(a) Employee acknowledges that each Employer and other
members of the Controlled Group has exclusive ownership of all
information useful in its business (including its dealings with
suppliers, customers and other third parties, whether or not a true
"trade secret"), which at the time or times concerned is not generally
known to persons outside of the Controlled Group engaged in businesses
similar to those conducted by such entities, and which has been or is
from time to time disclosed to, discovered by, or otherwise known by
Employee as a consequence of his employment by the Employer (including
information conceived, discovered or developed by Employee during his
employment) (collectively, "Confidential Information"). Confidential
Information includes, but is not limited to the following especially
sensitive types of information:
(i) The identity, purchase and payment patterns of, and
special relations with, customers;
(ii) The identity, net prices and credit terms of, and
special relations with, the suppliers:
(iii) Inventory selection and management techniques;
(iv) Product development and marketing plans; and
(v) Finances except to the extent publicly disclosed.
(b) The term "Proprietary Materials" shall mean all business
records, documents, drawings, writings, software, programs and other
tangible things which were or are created or received by or for the
Employer and other members of the Controlled Group in furtherance of
its business, including, but not limited to, those which contain
Confidential Information. For example, Proprietary Materials include,
but are not limited to, the following especially sensitive types of
materials: applications software, the data bases of Confidential
Information maintained in connection with such software, and printouts
generated from such data bases; market studies and strategic plans;
customer, supplier and employee lists; contracts and correspondence
with customers and suppliers; documents evidencing transactions with
customers and suppliers, sales calls reports, appointment books,
calendars, expense statements and the like, reflecting conversations
with any company, customer or supplier; architectural and engineering
plans; and purchasing, sales and policy manuals. Proprietary Materials
also include, but are not limited to, any such things which are created
by Employee or with Employee's assistance and all notes, memoranda and
the like prepared using the Proprietary Materials and/or Confidential
Information.
(c) While some of the information contained in Proprietary
Materials may have been known to Employee prior to employment with an
Employer, or may now or in the future be in the public domain, Employee
acknowledges that the compilation of that information contained in the
Proprietary Materials has or will cost the Employer and other members
of the Controlled Group a great effort and expense, and affords persons
to whom Proprietary Materials are disclosed, including Employee, a
competitive, advantage over persons who do not know the information or
have the compilation of the Proprietary Materials. Employee further
acknowledges that Confidential Information and Proprietary Materials
include commercially valuable trade secrets and automatically become
the Company's exclusive property when they are conceived, created or
received.
3. Confidentiality Duties. Employee shall, except as may be
required by law, while an employee of the Company and thereafter for
the longest time permitted by applicable law.
(a) Comply with all instructions of the Company and the
Employer (whether oral or written) for preserving the confidentiality
of Confidential Information and Proprietary Materials.
(b) Use Confidential Information and Proprietary Materials
only at places designated by the Company or the Employer, in
furtherance of businesses of the Employer and other members of the
Controlled Group, and pursuant to directions of the Company or the
Employer.
(c) Exercise appropriate care to advise other employees of
the Company and the Employer (and, as appropriate, subcontractors) of
the sensitive nature of Confidential Information and Proprietary
Materials prior to their disclosure, and to disclose the same only on a
need-to-know basis.
(d) Not copy all or any part of Proprietary Materials,
except as the Company or the Employer directs.
(e) Not sell, give, loan or otherwise transfer any copy of
all or any part of Proprietary Materials to any person who is not an
employee of or otherwise engaged to provide services to the Company or
the Employer, except as the Company directs.
(f) Not publish, lecture on or otherwise disclose to any
person who is not an employee of the Company, except as the Company or
the Employer directs, all or any part of Confidential Information or
Proprietary Materials.
(g) Not use all or any part of any Confidential Information
or Proprietary Materials for the benefit of any third party without the
Company's written consent.
Upon the termination of employment for whatever reason, Employee (or in
the event of death, Employee's personal representative) shall promptly
surrender to the Company the original and all copies of Proprietary
Materials (including all notes, memoranda and the like concerning or
derived therefrom), whether prepared by Employee or others, which are
then in Employee's possession or control. Records of payments made by
the Company or any Employer to or for the benefit of Employee,
Employee's copy of this Agreement and other such things, lawfully
possessed by Employee which relate solely to taxes payable by Employee,
employee benefits due to Employee or the terms of Employee's employment
with the Company or any Employer, shall not be deemed Proprietary
Materials for purposes of this Section 3.
4. Non-Competition.
(a) During Employee's employment with the Company, or any
other members of the Controlled Group, Employee shall not, in any way,
directly or indirectly, manage, operate, control (or participate in any
of the foregoing), accept employment or a consulting position with or
otherwise advise or assist or be connected with or directly or
indirectly own or have any other interest in or right with respect to
(other than through ownership of not more than 5 % of the outstanding
shares of a corporation's stock which is listed on a national
securities exchange) any enterprise (other than for the Company or any
other member of the Controlled Group) which competes with Company or
its affiliates in the Controlled Group.
(b) During the Non-competition Period, Employee shall not
render employment or consulting services to any business enterprise in
North America (except to the Company or any member of its Controlled
Group) in a capacity in which Employee will directly supervise a
business which is directly competitive with the business which Employee
supervised during the one year period preceding the Severance Event.
(c) Employee recognizes that the foregoing limitations are
reasonable and properly required for the adequate protection of the
business of the Company, the Employers and the members of the
Controlled Group. If any such limitations are deemed to be
unreasonable by a court having jurisdiction of the matter and parties,
Employee hereby agrees and submits to the reduction of any such
limitations to such territory or time as to such court shall appear
reasonable.
(d) Employee agrees that the remedy at law for any breach of
the provisions of Sections 2 or 3 or this Section 4 shall be inadequate
and that the Company and any Employer shall be entitled to injunctive
relief in addition to any other remedies it may have.
5. Payments
(a) If Employee's employment is terminated because of a
Severance Event, the Employer shall pay the Employee:
(i) If the Severance Event occurs on or before the
first anniversary of the Effective Date, $1,158,000, in thirty-six (36)
monthly installments;
(ii) If the Severance Event occurs after the first
anniversary of the Effective Date and on or before the second
anniversary, $772,000, in twenty-four (24) monthly installments; and
(iii) If the Severance Event occurs after the second
anniversary of the Effective Date and on or before the third
anniversary, $386,000, in twelve (12) monthly installments.
In each case the first installment shall be due on the first day of the
month following the month in which the Severance Event occurs and
subsequent installments shall be due on the first day of each
succeeding month until all installments have been paid.
(b) The Company has assessed the reasonableness of the
payments provided for herein and believes that the amounts provided are
both reasonable in the light of the benefits secured for the Company by
this Agreement and related to the business of the Company.
6. Obligation of Employer. The Company agrees to cause
Employee's Employer at the time of the Severance Event to make all
payments required hereunder to be made to Employee, and agrees that the
liability for making such payments and providing such benefits shall be
the sole and exclusive obligation of such Employer, provided, however,
that the foregoing notwithstanding, in the event that such benefits are
not so paid by the Employer, then such benefits shall be paid or caused
to be paid by the Company.
7. Enforcement. In the event the Company or the Employer
shall fail to pay to an Employee or successor any amounts due under
this Plan or under any of the plans, programs or arrangements referred
to herein as they come due, the Company and the Subsidiaries shall pay
interest on such amounts at the prime rate of interest as from time to
time published in The Wall Street Journal (Midwest Edition) until paid.
8. Non-assignment. Except as may be required by applicable
law, the payments which may become due to Employee shall not at any
time be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, charge, garnishment,
execution, or levy of any kind, either voluntary or involuntary,
including any such liability which is for alimony or other payments for
the support of a spouse or former spouse, or for any other relative of
the Employee, prior to actually being received by Employee; and any
attempt to anticipate, alienate, sell, transfer, assign, pledge,
encumber, charge or otherwise dispose of any right to benefits payable
hereunder shall be void.
9. Assumption. This Agreement shall inure to the benefit
of, and be binding upon, the successors and assignees of the Company
and each Employer. The Company and each Employer shall require any
successor or assignee, whether direct or indirect, by purchase, merger,
consolidation or otherwise, to all or substantially all the business or
assets of the Company or any Employer, expressly and unconditionally to
assume and agree to perform the Company's obligations or such
Employer's obligations under this Agreement.
10. Enforcement. The provisions of this Agreement shall be
regarded as divisible, and if any of the provision or any part of the
Agreement is decided invalid or unenforceable by a court of competent
jurisdiction, the validity and enforceability of the remainder of the
provisions or parts of the Agreement and the applicability thereof
shall not be affected.
11. Amendment. This Agreement may not be amended or
modified at any time except by written instrument executed by the
Company and the Employee.
12. Withholding. The Employer shall be entitled to withhold
from amounts to be paid to the Employee hereunder any federal, state or
local withholding or other taxes or charges which it is from time to
time required to withhold. The Company shall be entitled to rely on an
opinion of counsel if any question as to the amount or requirement of
any such withholding shall arise.
13. Governing Law; Arbitration. This Agreement and the
rights and obligations hereunder shall be governed by and construed in
accordance with the laws of the State of Illinois. Any dispute arising
out of this Agreement shall be determined by arbitration under the
commercial arbitration rules of the American Arbitration Association
then in effect and judgment upon any award pursuant to such arbitration
may be enforced in any court having jurisdiction thereof. The place of
arbitration shall be in the city with population of 100,000 or more
nearest to the Employee's place of employment immediately prior to the
Severance Event or in the nearest state or provincial capital if it is
closer to such place of employment than is such city.
14. Notice. Notices given pursuant to this Agreement shall
be in writing and shall be deemed given when received and if mailed,
shall be mailed by registered or certified mail, return receipt
requested, addressee only, postage prepaid, if to the Employer to IMC
Global Inc., 2100 Sanders Road, Northbrook, Illinois 60062, Attention
Marshall I. Smith, Senior Vice President and General Counsel, or if to
the Employee, at the address set forth below the Employee's signature
line of this Agreement, or to such other address as to the party to be
notified shall have given to the other.
15. No waiver. No waiver by either party at any time of any
breach by the other party of, or compliance with, any condition or
provision of this Agreement to be performed by the other party shall be
deemed a waiver of similar or dissimilar provision or condition at the
same time or any prior or subsequent time.
16. Certain Rules of Construction. No party shall be
considered as being responsible for the draft of this Agreement for the
purpose of applying any rule construing ambiguities against the drafter
or otherwise. No draft of this Agreement shall be taken into account
in construing this Agreement. The headings in this Agreement are for
reference only and shall not affect the meaning or interpretation of
any provision of this Agreement.
IN WITNESS WHEREOF, the parties have executed this agreement
as the day and year first written above.
KALIUM CHEMICALS, LTD. IMC GLOBAL INC.
By: /s/ James J. Patterson By: /s/ Marschall I. Smith
Name: James J. Patterson Name: Marschall I. Smith
Title: Vice President Title: Senior Vice President
Attest: /s/ Rose Marie Williams Attest: /s/ Lila Fredenburg
Name: Rose Marie Williams Name: Lila Fredenburg
Title: Secretary Title: Asst. Secretary
/s/ Robert M. van Patten
Robert M. van Patten
3003 Sunset Hills Boulevard, S.
Edwardsville, IL 62025
EXHIBIT 10.58
October 30, 1996
Via Telecopy Via Telecopy
NationsBank, N.A. NationsBank, N.A.
NationsBank Plaza Sears Tower
6th Floor 233 South Wacker Drive
NC1-002-06-19 Suite 2800
Charlotte, North Carolina 28255 Chicago, Illinois 60606-6308
Attn: Tracy Crotts Attn: Christopher B. Torie
Telecopy: 704/386-9923 Telecopy: 312/234-5601
Dear Tracy and Chris:
Reference is hereby made to that certain Credit Agreement, dated
as of February 9, 1994, among IMC-Agrico Company, a Delaware general
partnership (the "Borrower"), the financial institutions party thereto
(the "Banks") and NationsBank, N.A. (successor in interest to
NationsBank, N.A. (Carolinas) and NationsBank of North Carolina, N.A.),
as Agent (the "Agent"), as amended by that certain First Amendment to
Credit Agreement, that certain Second Amendment to Credit Agreement,
that certain Third Amendment to Credit Agreement, and that certain
Fourth Amendment and Waiver Agreement, dated as of June 15, 1994,
February 24, 1995, August 1, 1995 and May 14, 1996, respectively (as
amended, the "Credit Agreement"). Terms used but not otherwise defined
herein shall have the meanings assigned in the Credit Agreement.
Pursuant to the terms of Section 2.09 of the Credit Agreement, the
Borrower hereby notifies you, as Agent, that the Borrower is
permanently terminating the Revolving Committed Amount in part
effective Wednesday, October 30, 1996, such that as of October 30, 1996
the aggregate Revolving Committed Amount shall be $45,000,000 and the
Revolving Committed Amount of each Bank to make Revolving Loans shall
be as follows:
Bank Revolving Committed Amount
NationsBank, N.A. 12,750,000
Citibank, N.A. 12,750,000
Cooperatieve Centrale Raiffeisen- 15,000,000
Boerenleenbank, B.A.
Arab Banking Corporation 4,500,000
Please acknowledge your receipt of this letter by executing this
letter in the space provided below and returning the executed copy to
the Borrower at your earliest convenience (by facsimile with hard copy
to follow by mail).
Very truly yours,
IMC-AGRICO COMPANY
By: IMC-AGRICO MP, INC.,
its Managing Partner
By:____________________
Name:
Title:
cc: Mike Zehfuss
Senior Vice President
NationsBank, N.A.
Sears Tower
233 S. Wacker Drive, Suite 2800
Chicago, IL 60606-6308
Receipt acknowledged as of this ___th day of
October, 1996:
NATIONSBANK, N.A.
By:____________________
Name:
Title: IMC GLOBAL INC.
1996 LONG-TERM INCENTIVE PLAN
I. Introduction
1.1 Purpose. The 1996 Long-Term Incentive Plan (the "Plan") of IMC
Global Inc. (the "Company") is intended to operate in conjunction with
the IMC Global Inc. 1988 Stock Option and Award Plan to provide long-
term incentives to officers and other key employees of the Company and
its subsidiaries and thereby advance the interests of the Company by
attracting and retaining officers and other key employees and
motivating such persons to act in the long-term best interests of the
Company's stockholders.
1.2 Certain Definitions.
"Board" shall mean the Board of Directors of the Company.
"Business Unit" shall mean a subsidiary, division, joint venture
or other unit of the Company's business which is designated as such by
the Committee.
"Change in Control" shall have the meaning set forth in Section
3.6(b).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Committee" shall mean the Committee designated by the Board,
consisting of two or more members of the Board, each of whom shall be
(i) a "Non-Employee Director" within the meaning of Rule 16b-3 under
the Exchange Act and (ii) an "outside director" within the meaning of
Section 162(m) of the Code, subject to any transition rules applicable
to the definition of outside director.
"Common Stock" shall mean the common stock, $1.00 par value, of
the Company.
"Company" has the meaning specified in Section 1.1.
"Economic Profit" shall have the meaning specified in Section
2.2(b).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" shall mean the mean between the highest and
lowest prices at which the Common Stock is traded on the date on which
such value is being determined, as reflected on the consolidated tape
of New York Stock Exchange issues, or if such date is not a trading
day, on the first trading day preceding such date. If there are no
such sales of Common Stock on the date on which such value is being
determined (or on the first trading day preceding such date, if
applicable) the mean between the bid and the asked prices as reflected
on the consolidated tape of New York Stock Exchange issues at the close
of the market on such date shall be deemed to be the fair market value
of the Common Stock.
"Incumbent Board" shall have the meaning set forth in Section
3.6(b)(2) hereof.
"Performance Award" shall mean a right, contingent upon the
attainment of specified Performance Measures within a specified
Performance Period, to receive payment in cash or in shares of Common
Stock of a specified amount.
"Performance Measures" shall mean the criteria and objectives,
established by the Committee, which shall be satisfied or met during
the applicable Performance Period as a condition to the holder's
receipt of the payment with respect to a Performance Award. Such
criteria and objectives shall be based on the Economic Profit of a
Business Unit and/or of the Company as a whole. If the Committee
desires that compensation payable pursuant to any award subject to
Performance Measures be "qualified performance-based compensation"
within the meaning of Section 162(m) of the Code, the Performance
Measures (i) shall be established by the Committee no later than 90
days after the beginning of the Performance Period (or such other time
designated by the Internal Revenue Service) and (ii) shall satisfy all
other applicable requirements imposed under Treasury Regulations
promulgated under Section 162(m) of the Code, including the requirement
that such Performance Measures be stated in terms of an objective
formula or standard.
"Performance Period" shall mean the period determined under
Section 2.2(c)during which the Performance Measures applicable to a
Performance Award shall be measured.
"Subsidiary" shall have the meaning set forth in Section 1.4.
"Tax Date" shall have the meaning set forth in Section 3.4.
1.3 Administration. This Plan shall be administered by the Committee.
The Committee shall, subject to the terms of this Plan, select eligible
persons for participation in this Plan and determine the form, amount
and timing of each award to such persons, the time and conditions of
payment of the award and all other terms and conditions of the award.
The Committee may, in its sole discretion and for any reason at any
time, subject to the requirements imposed under Section 162(m) of the
Code and regulations promulgated thereunder in the case of an award
intended to be qualified performance-based compensation, take action
such that all or a portion of the Performance Period applicable to any
outstanding Performance Award shall lapse, and the Performance Measures
applicable to any outstanding Performance Award shall be deemed to be
satisfied at the maximum or any other level. The Committee shall,
subject to the terms of this Plan, interpret this Plan and the
application thereof, establish rules and regulations it deems necessary
or desirable for the administration of this Plan and may impose,
incidental to the grant of an award, conditions with respect to the
award, such as limiting competitive employment or other activities.
All such interpretations, rules, regulations and conditions shall be
final, binding and conclusive.
The Committee may delegate some or all of its power and authority
hereunder to the Chief Executive Officer (the "CEO") or such other
executive officer of the Company as the Committee deems appropriate;
provided, however, that the Committee may not delegate its power and
authority with regard to (i) the grant of an award to any person who is
a "covered employee" within the meaning of Section 162(m) of the Code
or who, in the Committee's judgment, is likely to be a covered employee
at any time during the period an award hereunder to such employee would
be outstanding or (ii) the selection for participation in this Plan of
an officer or other person subject to Section 16 of the Exchange Act or
decisions concerning the timing or amount of an award to such an
officer or other person.
A majority of the Committee shall constitute a quorum. The acts
of the Committee shall be either (i) acts of a majority of the members
of the Committee present at any meeting at which a quorum is present or
(ii) acts approved in writing by all of the members of the Committee
without a meeting.
1.4 Eligibility. Participants in this Plan shall consist of such
officers and other key employees of the Company, and its subsidiaries
(individually a "Subsidiary" and collectively the "Subsidiaries"),
including IMC-Agrico MP, Inc., as the Committee in its sole discretion
may select from time to time. For purposes of this Plan, references to
employment by the Company shall also mean employment by a Subsidiary.
The Committee's selection of a person to participate in this Plan at
any time shall not require the Committee to select such person to
participate in this Plan at any other time.
II. Performance Awards
2.1 Performance Awards. The Committee may, in its discretion, grant
Performance Awards to such eligible persons as may be selected by the
Committee.
2.2 Terms of Performance Awards. Performance Awards shall be subject
to the following terms and conditions and shall contain such additional
terms and conditions, not inconsistent with the terms of this Plan, as
the Committee shall deem advisable.
(a) Amount of Performance Award. The amount of a Performance
Award shall be determined by the Committee; provided, however, that the
maximum amount that may be paid to any individual under any Performance
Award for any Performance Period shall not exceed $3,000,000, adjusted
for increases in the Consumer Price Index between July 1, 1996 and the
beginning of the Performance Period.
(b) Performance Measures. The Performance Measures applicable to
a Performance Award shall be determined by the Committee based upon
the achievement during the applicable Performance Period of the
Economic Profit goals established by the Committee for the Business
Unit in which the holder of the Performance Award is employed and/or
for the Company as a whole.
Economic Profit means "After-Tax Cash Flow" (defined below)
divided by "Capital Employed" (defined below).
"After-Tax Cash Flow" means earnings before interest, taxes,
depreciation, depletion and amortization ("EBITDA") less cash taxes
(i.e. provision for income taxes excluding deferred taxes).
"Capital Employed" means working capital (excluding cash, current
and deferred tax assets and liabilities and short-term debt) plus gross
fixed assets (before accumulated depreciation and depletion and
excluding joint venture step-up) and other assets (before accumulated
amortization of goodwill). Capital Employed will be calculated based
on beginning of month (or quarter) balances resulting in a 12-month (or
4-quarter) average for the year.
(c) Performance Periods. In general, a Performance Period shall
be a period consisting of three consecutive fiscal years of the
Company. The first and second Performance Periods, however, shall
consist of one and two fiscal years of the Company, respectively,
beginning with the fiscal year of the Company beginning July 1, 1996.
(d) Settlement of Performance Awards. A Performance Award may
be settled in shares of Common Stock by means of a restricted stock
award under the terms of the IMC Global Inc. 1988 Stock Option and
Award Plan or cash or a combination thereof, as determined by the
Committee. Prior to the settlement of a Performance Award in shares of
Common Stock, the holder of such award shall have no rights as a
stockholder of the Company with respect to the shares of Common Stock
subject to such award and shall have rights as a stockholder of the
Company in accordance with Section 3.8.
2.3 Termination of Employment or Service. All of the terms relating
to the satisfaction of Performance Measures and the termination of the
Performance Period relating to a Performance Award, or any cancellation
or forfeiture of such Performance Award upon a termination of
employment with the Company of the holder of such Performance Award,
whether by reason of disability, retirement, death or other
termination, shall be determined by the Committee and communicated to
the recipient of a Performance Award at the time the Performance Award
is granted.
III. General
3.1 Effective Date and Term of Plan. This Plan shall be submitted to
the stockholders of the Company for approval and, if approved by the
affirmative vote of a majority of the shares of Common Stock present in
person or represented by proxy at the 1996 annual meeting of
stockholders of the Company, shall become effective on the date of such
approval. This Plan shall terminate ten years after its effective
date, unless terminated earlier by the Board. Termination of this Plan
shall not affect the terms or conditions of any award granted prior to
termination.
3.2 Amendments. The Board may amend this Plan as it shall deem
advisable, subject to any requirement of stockholder approval required
by applicable law, rule or regulation, including Section 162(m) and
Section 422 of the Code; provided, however, that no amendment shall be
made without stockholder approval if such amendment would extend the
term of this Plan. No amendment may impair the rights of a holder of
an outstanding award without the consent of such holder.
3.3 Non-Transferability of Awards. No award shall be transferable
other than by will, the laws of descent and distribution or pursuant to
beneficiary designation procedures approved by the Company. Each award
may be settled during the holder's lifetime only by the holder or the
holder's legal representative or similar person. No award may be sold,
transferred, assigned, pledged, hypothecated, encumbered or otherwise
disposed of (whether by operation of law or otherwise) or be subject to
execution, attachment or similar process. Upon any attempt to so sell,
transfer, assign, pledge, hypothecate, encumber or otherwise dispose of
any such award, such award and all rights thereunder shall immediately
become null and void.
3.4 Tax Withholding. The Company shall have the right to require,
prior to the issuance or delivery of any shares of Common Stock or the
payment of any cash pursuant to an award made hereunder, payment by the
holder of such award of any Federal, state, local or other taxes which
may be required to be withheld or paid in connection with such award.
The Committee may determine that (i) the Company shall withhold whole
shares of Common Stock which would otherwise be delivered to a holder,
having an aggregate Fair Market Value determined as of the date the
obligation to withhold or pay taxes arises in connection with an award
(the "Tax Date"), or withhold an amount of cash which would otherwise
be payable to a holder, in the amount necessary to satisfy any such
obligation or (ii) the holder may satisfy any such obligation by any of
the following means: (A) a cash payment to the Company, (B)
authorizing the Company to withhold whole shares of Common Stock which
would otherwise be delivered having an aggregate Fair Market Value,
determined as of the Tax Date, or withhold an amount of cash which
would otherwise be payable to a holder, equal to the amount necessary
to satisfy any such obligation, (C) any combination of (A) and (B), in
each case to the extent set forth in the Agreement relating to the
award; provided, however, that the Company shall have sole discretion
to disapprove of an election pursuant to any of clauses (B) and (C) and
that in the case of a holder who is subject to Section 16 of the
Exchange Act, the Company may require that the method of satisfying
such an obligation be in compliance with Section 16 and the rules and
regulations thereunder. Any fraction of a share of Common Stock which
would be required to satisfy such an obligation shall be disregarded
and the remaining amount due shall be paid in cash by the holder.
3.5 Adjustment. In the event of any recapitalization, reorganization,
merger, consolidation, combination, exchange of shares, liquidation,
spin-off or other similar change in capitalization or event, or any
distribution to holders of Common Stock other than a regular cash
dividend, the number and class of securities available for the payment
of Performance Awards under this Plan shall be appropriately adjusted
by the Committee. The decision of the Committee regarding any such
adjustment shall be final, binding and conclusive. If any such
adjustment would result in a fractional security being available under
this Plan, such fractional security shall be disregarded.
3.6 Change in Control.
(a) (1) Notwithstanding any provision in this Plan, in the event
of a Change in Control, the Committee may, but shall not be required
to, make such adjustments to outstanding awards hereunder as it deems
appropriate, including, without limitation, causing the Performance
Period applicable to any outstanding Performance Award to lapse,
causing the Performance Measures applicable to any outstanding
Performance Award to be deemed to be satisfied at the minimum, target
or maximum level, or electing that each outstanding award shall be
surrendered to the Company by the holder thereof, and that each such
award shall immediately be canceled by the Company, and that the holder
shall receive, within a specified period of time from the occurrence of
the Change in Control, a cash payment from the Company in an amount
equal to the amount payable with respect to such Performance Award if
the applicable Performance Measures were satisfied at the maximum
level.
(b) "Change in Control" shall mean:
(1) the acquisition by any individual, entity or group (a
"Person"), including any "person" within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act, of beneficial ownership
within the meaning of Rule 13d-3 promulgated under the Exchange Act, of
15% or more of either (i) the then outstanding shares of common stock
of the Company (the "Outstanding Common Stock") or (ii) the combined
voting power of the then outstanding securities of the Company entitled
to vote generally in the election of directors (the "Outstanding Voting
Securities"); excluding, however, the following: (A) any acquisition
directly from the Company (excluding any acquisition resulting from the
exercise of an exercise, conversion or exchange privilege unless the
security being so exercised, converted or exchanged was acquired
directly from the Company), (B) any acquisition by the Company, (C)
any acquisition by an employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by
the Company or (D) any acquisition by any corporation pursuant to a
transaction which complies with clauses (i), (ii) and (iii) of
subsection (3) of this Section 3.6(b);
(2) individuals who, as of the date this Plan is approved by the
Board of Directors constitute the Board of Directors (the "Incumbent
Board") cease for any reason to constitute at least a majority of such
Board; provided that any individual who becomes a director of the
Company subsequent to the date this Plan is approved by the Board of
Directors whose election, or nomination for election by the Company's
stockholders, was approved by the vote of at least a majority of the
directors then comprising the Incumbent Board shall be deemed a member
of the Incumbent Board; and provided further, that any individual who
was initially elected as a director of the Company as a result of an
actual or threatened election contest, as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act, or any
other actual or threatened solicitation of proxies or consents by or on
behalf of any Person other than the Board shall not be deemed a member
of the Incumbent Board;
(3) approval by the stockholders of the Company of a
reorganization, merger or consolidation of the Company or sale or other
disposition of all or substantially all of the assets of the Company (a
"Corporate Transaction"); excluding, however, a Corporate Transaction
pursuant to which (i) all or substantially all of the individuals or
entities who are the beneficial owners, respectively, of the
Outstanding Common Stock and the Outstanding Voting Securities
immediately prior to such Corporate Transaction will beneficially own,
directly or indirectly, more than 60% of, respectively, the outstanding
shares of common stock, and the combined voting power of the
outstanding securities of such corporation entitled to vote generally
in the election of directors, as the case may be, of the corporation
resulting from such Corporate Transaction (including, without
limitation, a corporation which as a result of such transaction owns
the Company or all or substantially all of the Company's assets either
directly or indirectly) in substantially the same proportions relative
to each other as their ownership, immediately prior to such Corporate
Transaction, of the Outstanding Common Stock and the Outstanding Voting
Securities, as the case may be, (ii) no Person (other than: the
Company; any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company;
the corporation resulting from such Corporate Transaction; and any
Person which beneficially owned, immediately prior to such Corporate
Transaction, directly or indirectly, 25% or more of the Outstanding
Common Stock or the Outstanding Voting Securities, as the case may be)
will beneficially own, directly or indirectly, 25% or more of,
respectively, the outstanding shares of common stock of the corporation
resulting from such Corporate Transaction or the combined voting power
of the outstanding securities of such corporation entitled to vote
generally in the election of directors and (iii) individuals who were
members of the Incumbent Board will constitute at least a majority of
the members of the board of directors of the corporation resulting from
such Corporate Transaction; or
(4) the consummation of a plan of complete liquidation or
dissolution of the Company.
3.7 No Right of Participation or Employment. No person shall have any
right to participate in this Plan. Neither this Plan nor any award
made hereunder shall confer upon any person any right to continued
employment by the Company, any Subsidiary or any affiliate of the
Company or affect in any manner the right of the Company, any
Subsidiary or any affiliate of the Company to terminate the employment
of any person at any time without liability hereunder.
3.8 Rights as Stockholder. No person shall have any right as a
stockholder of the Company with respect to any shares of Common Stock
or other equity security of the Company which is subject to an award
hereunder unless and until such person becomes a stockholder of record
with respect to such shares of Common Stock or equity security.
3.9 Governing Law. This Plan, each award hereunder, and all
determinations made and actions taken pursuant thereto, to the extent
not otherwise governed by the Code or the laws of the United States,
shall be governed by the laws of the State of Delaware and construed in
accordance therewith without giving effect to principles of conflicts
of laws.
3.10 Foreign Employees. Without amending this Plan, the Committee may
grant awards to eligible persons who are foreign nationals on such
terms and conditions different from those specified in this Plan as may
in the judgment of the Committee be necessary or desirable to foster
and promote achievement of the purposes of this Plan and, in
furtherance of such purposes the Committee may make such modifications,
amendments, procedures, subplans and the like as may be necessary or
advisable to comply with provisions of laws in other countries or
jurisdictions in which the Company or its Subsidiaries operates or has
employees.
Exhibit 10.62
AMENDMENT NO. 1
TO
CREDIT AGREEMENT
THIS AMENDMENT No. 1 ("Amendment") dated as of September 30,
1996 by and among IMC GLOBAL INC., a Delaware corporation ("Global"),
IMC GLOBAL OPERATIONS INC. ("Global Operations"), a Delaware
corporation, INTERNATIONAL MINERALS & CHEMICAL (CANADA) GLOBAL LIMITED,
a corporation organized under the federal laws of Canada ("IMC
Canada"), KALIUM CANADA, LTD., a corporation organized under the
federal laws of Canada ("Kalium"), and CENTRAL CANADA POTASH, INC., a
Delaware corporation ("CCP"; and, together with Global, Global
Operations, IMC Canada and Kalium, the "Borrowers"), GLOBAL and the
Subsidiary Guarantors (the "Guarantors"), the banks and financial
institutions (the "Lenders") listed on the signature pages hereof,
CITIBANK, N.A. ("Citibank"), as U.S. administrative agent (the "U.S.
Administrative Agent") and documentation agent (the "Documentation
Agent"), CITIBANK CANADA ("Citibank Canada"), as Canadian
administrative agent (the "Canadian Administrative Agent"), NATIONSBANC
CAPITAL MARKETS, INC., as syndication agent (the "Syndication Agent",
and together with the U.S. Administrative Agent, the Documentation
Agent and the Canadian Administrative Agent, the "Agents") and CITICORP
SECURITIES, INC. and NATIONSBANC CAPITAL MARKETS, INC., as Arrangers.
Capitalized terms used in this Amendment which are not otherwise
defined herein, shall have the meanings given such terms in the Credit
Agreement.
WITNESSETH:
WHEREAS, the Borrowers, the Guarantors, the Lenders and the
Agents are parties to that certain Credit Agreement dated as of
February 28, 1996 (as the same may be amended, restated, supplemented
or otherwise modified from time to time, the "Credit Agreement");
WHEREAS, the Borrowers have requested that the Lenders and
the Agents amend the Credit Agreement on the terms and conditions set
forth herein in order to remove Global Operations as a Borrower, modify
certain covenants contained therein and make certain other correlative
changes resulting therefrom;
WHEREAS, the Agents and the Lenders have agreed to enter into
this Amendment on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises set forth
above, the terms and conditions contained herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrowers, the Lenders and the Agents hereby agree as
follows.
1. Amendments to the Credit Agreement. Effective as of the
date hereof and subject to the satisfaction of the conditions precedent
set forth in Section 2 below, the Credit Agreement is hereby amended as
follows:
1.1. Section 1.04 of the Credit Agreement is hereby amended
by striking the phrase "after the Release Date" now contained in the
first sentence therein.
1.2. Section 5.02(b)(ii)(G) of the Credit Agreement is hereby
amended to delete the terms contained therein in their entirety and to
substitute the following therefor:
"(G) Debt (other than intercompany Debt listed on
Schedule 5.02(b)) owing to Global,"
1.3. Section 5.03(c)(ii) of the Credit Agreement is hereby
amended to delete the terms contained therein in their entirety and to
substitute the following therefor:
"(ii) (x) for fiscal year 1996, a Consolidated unaudited balance
sheet of Global Operations, KCL Holdings, IMC Global Potash
Holdings and the Joint Venture Company and its Subsidiaries as of
the end of such fiscal year and Consolidated unaudited statements
of income of such Borrower and its Subsidiaries and of the Joint
Venture Company for such fiscal year and (y) for each fiscal year
thereafter, a Consolidated unaudited statement of income, balance
sheet and cash flow of the Joint Venture Company and its
Subsidiaries as of the end of such fiscal year, together with
(A) a certificate of such accounting firm to the Lenders stating
that in the course of the regular audit of the business of Global
and its Subsidiaries, which audit was conducted by such accounting
firm in accordance with generally accepted auditing standards,
such accounting firm has obtained no knowledge that a Default has
occurred and is continuing, or if, in the opinion of such
accounting firm, a Default has occurred and is continuing, a
statement as to the nature thereof, (B) a schedule in form
satisfactory to the Agents of the computations used by such
accountants in determining, as of the end of such fiscal year,
compliance with the covenants contained in Section 5.04 and
(C) a certificate of the treasurer or chief financial officer of
Global stating that no Default has occurred and is continuing or,
if a default has occurred and is continuing, a statement as to the
nature thereof and the action that Global has taken and proposes
to take with respect thereto."
1.4. Section 5.03(f) of the Credit Agreement is hereby
amended to delete the terms contained therein in their entirety and to
substitute the following therefor: "[INTENTIONALLY OMITTED]."
1.5. Section 5.03(h) of the Credit Agreement is hereby
amended to insert immediately after the phrase "from that described in
Exhibit B to the Disclosure Letter" now occurring therein, the
following: "that could reasonably be expected to have a Material
Adverse Effect".
1.6. Section 5.04(b) of the Credit Agreement is hereby
amended to delete the phase "interest payable" now occurring therein
and to substitute the following therefor: "interest charges".
2. Conditions of Effectiveness of this Amendment. This
Amendment shall become effective and be deemed effective as of the date
hereof (the "Effective Date"), if, and only if the Documentation Agent
shall have received duly executed originals of this Amendment from the
Borrowers, the Guarantors and the Required Lenders.
3. Representations and Warranties of the Borrowers and the
Guarantors. The Borrowers and the Guarantors hereby represent and
warrant as follows:
(a) This Amendment and the Credit Agreement as previously
executed and as amended hereby, constitute legal, valid and binding
obligations of the Borrowers and the Guarantors and are enforceable
against the Borrowers and the Guarantors in accordance with their
terms.
(b) Upon the effectiveness of this Amendment, the Borrowers
and the Guarantors hereby reaffirm all covenants, representations and
warranties made in the Credit Agreement to the extent the same are not
amended hereby, agree that all such covenants, representations and
warranties shall be deemed to have been remade as of the effective date
of this Amendment.
4. Reference to the Effect on the Credit Agreement.
(a) Upon the effectiveness of Section 1 hereof, on and after
the date hereof, each reference in the Credit Agreement to "this Credit
Agreement," "hereunder," "hereof," "herein" or words of like import
shall mean and be a reference to the Credit Agreement as amended
hereby.
(b) Except as specifically amended above, the Credit
Agreement and all other documents, instruments and agreements executed
and/or delivered in connection therewith, shall remain in full force
and effect, and are hereby ratified and confirmed.
(c) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a
waiver of any right, power or remedy of the Agent or the Lenders, nor
constitute a waiver of any provision of the Credit Agreement or any
other documents, instruments and agreements executed and/or delivered
in connection therewith.
5. Headings. Section headings in this Amendment are
included herein for convenience of reference only and shall not
constitute a part of this Amendment for any other purpose.
6. Counterparts. This Amendment may be executed by one or
more of the parties to the Amendment on any number of separate
counterparts and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
7. Entire Agreement. This Amendment, taken together with
the Credit Agreement and all of the other Loan Documents, embodies the
entire agreement and understanding of the parties hereto and supersedes
all prior agreements and understandings, written and oral, relating to
the subject matter hereof.
8. Governing Law. This Amendment shall be governed by and
construed in accordance with the internal laws (without regard to the
conflict of laws provisions) of the State of New York.
9. No Course of Dealing. The Agents and the Lenders have
entered into this Amendment on the express understanding with the
Borrowers that in entering into this Amendment the Agents and the
Lenders are not establishing any course of dealing with the Borrowers.
The Agents' and the Lenders' rights to require strict performance with
all the terms and conditions of the Credit Agreement as amended by this
Amendment and the other Loan Documents shall not in any way be impaired
by the execution of this Amendment.
IN WITNESS WHEREOF, this Amendment has been duly executed as
of the day and year first above written.
IMC GLOBAL INC.,
as Borrower and Guarantor
IMC GLOBAL OPERATIONS, INC.,
as Borrower and Guarantor
INTERNATIONAL MINERALS &
CHEMICAL (CANADA) GLOBAL
LIMITED, as Borrower
By:
Name:
Title:
IMC KALIUM CANADA LTD. (formerly
known as Kalium Canada, Ltd.), as
Borrower and Guarantor
IMC CENTRAL CANADA POTASH INC.
(formerly known as Central Canada
Potash, Inc.), as Borrower and
Guarantor
THE VIGORO CORPORATION,
as Guarantor
VNH, INC., as Guarantor
IMC AGRIBUSINESS INC. (formerly known
as Vigoro Industries, Inc.), as
Guarantor
KCL HOLDINGS, INC.,
as Guarantor
IMC KALIUM LTD. (formerly known as
Kalium Chemicals, Ltd.), as Guarantor
IMC NITROGEN COMPANY (formerly
known as Phoenix Chemical Company),
as Guarantor
By:
Name:
Title:
IMC KALIUM INTANGIBLE HOLDING
COMPANY, as Guarantor
IMC KALIUM CARLSBAD POTASH
COMPANY, as Guarantor
By:
Name:
Title:
CITIBANK, N.A., as
U.S. Administrative Agent and
Documentation Agent
By:
Name:
Title:
CITIBANK CANADA, as
Canadian Administrative Agent
By:
Name:
Title:
NATIONSBANC CAPITAL MARKETS, INC.,
as Syndication Agent
By:
Name:
Title:
Lenders
CITIBANK, N.A.
By:
Name:
Title:
CITIBANK CANADA
By:
Name:
Title:
NATIONSBANK, N.A.
By:
Name:
Title:
ABN AMRO NORTH AMERICA, INC.,
as Agent for ABN AMRO BANK N.V.
By:
Name:
Title:
By:
Name:
Title:
ABN AMRO BANK CANADA
By:
Name:
Title:
By:
Name:
Title:
BANK OF MONTREAL
By:
Name:
Title:
CAISSE NATIONALE DE CREDIT
AGRICOLE
By:
Name:
Title:
CREDIT LYONNAIS CHICAGO BRANCH
By:
Name:
Title:
CREDIT LYONNAIS CANADA
By:
Name:
Title:
CREDIT LYONNAIS CAYMAN ISLAND
BRANCH
By:
Name:
Title:
HARRIS TRUST AND SAVINGS BANK
By:
Name:
Title:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By:
Name:
Title:
THE NORTHERN TRUST COMPANY
By:
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION
By:
Name:
Title:
COOPERATIEVE CENTRALE RAIFFEISEN -
BOERENLEENBANK, B.A."RABOBANK
NEDERLAND", NEW YORK BRANCH
By:
Name:
Title:
ROYAL BANK OF CANADA
By:
Name:
Title:
THE FUJI BANK, LIMITED
By:
Name:
Title:
Exhibit 10.64
AMENDMENT NO. 1
TO
SECOND AMENDED AND RESTATED NOTE PURCHASE AGREEMENT
AND
SECOND AMENDED AND RESTATED RELATED PARTY GUARANTY
THIS AMENDMENT No. 1 ("Amendment") dated as of September 30,
1996 by and among IMC GLOBAL INC., a Delaware corporation ("Global"),
THE VIGORO CORPORATION, a Delaware corporation ("Vigoro"), the
PRUDENTIAL INSURANCE COMPANY OF AMERICA ("Prudential") and PRUCO LIFE
INSURANCE COMPANY ("Pruco"). Capitalized terms used in this Amendment
which are not otherwise defined herein, shall have the meanings given
such terms in each of the "Purchase Agreement" and the "Guaranty" (as
defined below), as applicable.
WITNESSETH:
WHEREAS, Global, Vigoro, Prudential and Pruco are parties to
that certain Second Amended and Restated Note Purchase Agreement dated
as of February 28, 1996 (as the same may be amended, restated,
supplemented or otherwise modified from time to time, the "Purchase
Agreement");
WHEREAS, Global, Vigoro and Prudential are parties to that
certain Second Amended and Restated Related Party Guaranty dated as of
February 28, 1996 (as the same may be amended, restated, supplemented
or otherwise modified from time to time, the "Guaranty") in connection
with that certain Second Amended and Restated Note Purchase Agreement
dated as of February 28, 1996 among Kalium Canada, Ltd. and Prudential;
WHEREAS, Global has requested that Prudential and Pruco amend
the Purchase Agreement and the Guaranty on the terms and conditions set
forth herein in order to modify certain covenants contained therein and
make certain other correlative changes resulting therefrom;
WHEREAS, Prudential and Pruco have agreed to enter into this
Amendment on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises set forth
above, the terms and conditions contained herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Global, Vigoro, Prudential and Pruco hereby agree as
follows.
1. Amendments to the Purchase Agreement. Effective as of
the date hereof and subject to the satisfaction of the conditions
precedent set forth in Section 3 below, the Purchase Agreement is
hereby amended as follows:
1.1. Section 5A(ii)(b) of the Purchase Agreement is hereby
amended to delete the terms contained therein in their entirety and to
substitute the following therefor:
"(b) for fiscal year 1996 only, a Consolidated unaudited balance
sheet of each Borrower and its Subsidiaries as of the end of such
fiscal year and Consolidated unaudited statements of income of
such Borrower and its Subsidiaries for such fiscal year"
1.2. Section 5A(iv) of the Purchase Agreement is hereby
amended to delete the phase "6B(2)(ii)(M)" now occurring therein and to
substitute the following therefor: "6B(2)(ii)(L)"; and to delete the
term "6B(2)(iii)(G)" now occurring therein.
1.3. Section 5K(b) of the Purchase Agreement is hereby
amended to delete the phrase "interest payable" now occurring therein
and to substitute the following therefor: "interest charges".
1.4. Section 6B(2)(ii)(G) of the Purchase Agreement is hereby
amended to delete the phrase ", which, prior to the Release Date, shall
not exceed, in the aggregate, $300,000,000 at any time outstanding" now
occurring therein.
2. Amendments to the Guaranty. Effective as of the date
hereof and subject to the satisfaction of the conditions precedent set
forth in Section 3 below, the Guaranty is hereby amended as follows:
2.1. Section 5A(ii)(b) of the Guaranty is hereby amended to
delete the terms contained therein in their entirety and to substitute
the following therefor:
"(b) for fiscal year 1996 only, a Consolidated unaudited balance
sheet of each Borrower and its Subsidiaries as of the end of such
fiscal year and Consolidated unaudited statements of income of
such Borrower and its Subsidiaries for such fiscal year"
2.2. Section 5A(iv) of the Guaranty is hereby amended to
delete the phrase "6B(2)(ii)(M)" now occurring therein and to
substitute the following therefor: "6B(2)(ii)(L)"; and to delete the
term "6B(2)(iii)(G)" now occurring therein.
2.3. Section 5J(b) of the Guaranty is hereby amended to
delete the phrase "interest payable" now occurring therein and to
substitute the following therefor: "interest charges".
2.4. Section 6B(2)(ii)(G) of the Guaranty is hereby amended
to delete the phrase ", which, prior to the Release Date, shall not
exceed, in the aggregate, $300,000,000 at any time outstanding" now
occurring therein.
3. Conditions of Effectiveness of this Amendment. This
Amendment shall become effective and be deemed effective as of the date
hereof (the "Effective Date"), if, and only if Prudential shall have
received duly executed originals of this Amendment from Global, Vigoro,
Prudential and Pruco.
4. Representations and Warranties of Global and Vigoro.
Global and Vigoro hereby represent and warrant as follows:
(a) This Amendment, the Purchase Agreement and the Guaranty
as previously executed and as amended hereby, constitute legal, valid
and binding obligations of Global and Vigoro and are enforceable
against Global and Vigoro in accordance with their terms.
(b) Upon the effectiveness of this Amendment, Global and
Vigoro hereby reaffirm all covenants, representations and warranties
made in each of the Purchase Agreement and the Guaranty to the extent
the same are not amended hereby, agree that all such covenants,
representations and warranties shall be deemed to have been remade as
of the effective date of this Amendment.
5. Reference to the Effect on the Purchase Agreement.
(a) Upon the effectiveness of Section 1 hereof, on and after
the date hereof, each reference in the Purchase Agreement to "this
Purchase Agreement," "hereunder," "hereof," "herein" or words of like
import shall mean and be a reference to the Purchase Agreement as
amended hereby.
(b) Except as specifically amended above, the Purchase
Agreement and all other documents, instruments and agreements executed
and/or delivered in connection therewith, shall remain in full force
and effect, and are hereby ratified and confirmed.
(c) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a
waiver of any right, power or remedy of Prudential or Pruco, nor
constitute a waiver of any provision of the Purchase Agreement or any
other documents, instruments and agreements executed and/or delivered
in connection therewith.
6. Reference to the Effect on the Guaranty.
(a) Upon the effectiveness of Section 1 hereof, on and after
the date hereof, each reference in the Guaranty to "this Guaranty,"
"hereunder," "hereof," "herein" or words of like import shall mean and
be a reference to the Guaranty as amended hereby.
(b) Except as specifically amended above, the Guaranty and
all other documents, instruments and agreements executed and/or
delivered in connection therewith, shall remain in full force and
effect, and are hereby ratified and confirmed.
(c) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a
waiver of any right, power or remedy of Prudential, nor constitute a
waiver of any provision of the Guaranty or any other documents,
instruments and agreements executed and/or delivered in connection
therewith.
7. Headings. Section headings in this Amendment are
included herein for convenience of reference only and shall not
constitute a part of this Amendment for any other purpose.
8. Counterparts. This Amendment may be executed by one or
more of the parties to the Amendment on any number of separate
counterparts and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
9. Entire Agreement. This Amendment, taken together with
the Purchase Agreement, the Guaranty and all of the other Transaction
Documents, embodies the entire agreement and understanding of the
parties hereto and supersedes all prior agreements and understandings,
written and oral, relating to the subject matter hereof.
10. Governing Law. This Amendment shall be governed by and
construed in accordance with the internal laws (without regard to the
conflict of laws provisions) of the State of Illinois.
11. No Course of Dealing. Prudential and Pruco have entered
into this Amendment on the express understanding with Global and Vigoro
that in entering into this Amendment Prudential and Pruco are not
establishing any course of dealing with Global and Vigoro.
Prudential's and Pruco's rights to require strict performance with all
the terms and conditions of the Purchase Agreement and the Guaranty as
amended by this Amendment and the other Transaction Documents shall not
in any way be impaired by the execution of this Amendment.
IN WITNESS WHEREOF, this Amendment has been duly executed as
of the day and year first above written.
IMC GLOBAL INC.
By:
Name:
Title:
THE VIGORO CORPORATION
By:
Name:
Title:
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By:
Name:
Title:
PRUCO LIFE INSURANCE COMPANY
By:
Name:
Title:
Exhibit 10.66
AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of October 23, 1996
Between
IMC-AGRICO COMPANY
as Borrower
and
NATIONSBANK, N.A.
as Lender
U.S.$50,000,000
TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which it is
attached but is for convenience of reference only.
ARTICLE I
DEFINITIONS
SECTION 1.01. Basic Definitions 1
SECTION 1.02. Additional Definitions 1
SECTION 1.03. Amendment and Restatement of Earlier Credit Agreement 6
ARTICLE II
LOANS
SECTION 2.01. Committed Loans 7
SECTION 2.02. Money Market Loans 7
SECTION 2.03. Note 7
SECTION 2.04. Repayment of Loans 7
SECTION 2.05. Interest 7
SECTION 2.06. Borrowing Procedure 8
SECTION 2.07. Prepayments, Conversions, and Continuations of Loans 8
SECTION 2.08. Minimum Amounts 8
SECTION 2.09. Certain Notices 8
SECTION 2.10. Use of Proceeds 9
SECTION 2.11. Fees 9
SECTION 2.12. Computations 9
SECTION 2.13. Reduction or Termination of Commitment 10
SECTION 2.14. Payments 10
SECTION 2.15. Mandatory Prepayment 10
SECTION 2.16. Letter of Credit Subfacility 10
ARTICLE III
CHANGE IN CIRCUMSTANCES
SECTION 3.01. Increased Cost and Reduced Return 13
SECTION 3.02. Limitation on Types of Loans 14
SECTION 3.03. Illegality 14
SECTION 3.04. Compensation 14
SECTION 3.05 Taxes 14
ARTICLE IV
CONDITIONS
SECTION 4.01. Effectiveness of this Agreement 15
SECTION 4.02. Each Loan and Letter of Credit 15
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.01. Existence 16
SECTION 5.02. Financial Statements 16
SECTION 5.03. Authorization; No Breach 16
SECTION 5.04. Litigation 16
SECTION 5.05. Enforceability 17
SECTION 5.06. Approvals 17
SECTION 5.07. Disclosure 17
ARTICLE VI
COVENANTS
SECTION 6.01. Information 17
SECTION 6.02. Obligations 18
ARTICLE VII
DEFAULT
SECTION 7.01. Events of Default 18
SECTION 7.02. Remedies 20
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Expenses 20
SECTION 8.02. Indemnification 21
SECTION 8.03. Right of Set-off. 21
SECTION 8.04. No Waiver; Cumulative Remedies 21
SECTION 8.05. Successors and Assigns 21
SECTION 8.06. Amendments 21
SECTION 8.07. Notices 22
SECTION 8.08. Counterparts 22
SECTION 8.09. Severability 22
SECTION 8.10. Controlling Agreement 22
SECTION 8.11. Survival 22
SECTION 8.12. Governing Law 22
SECTION 8.13. WAIVER OF JURY TRIAL 23
SECTION 8.14. ENTIRE AGREEMENT 23
Schedule 1.02 - Existing Letters of Credit
Exhibit A - Note
AMENDED AND RESTATED
CREDIT AGREEMENT
AMENDED AND RESTATED CREDIT AGREEMENT (the "Agreement") dated as
of October 23, 1996, between IMC-AGRICO COMPANY, a Delaware general
partnership (the "Borrower"), and NATIONSBANK, N.A., a national banking
association (the "Bank").
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Basic Definitions. As used in this Agreement, the
following terms
have the following meanings:
"Applicable Margin" means:
(i) with respect to Base Rate Loans, zero percent (0%); and
(ii) with respect to Eurodollar Loans, one-half of one
percent (0.5%).
"Commitment" means the obligation of the Bank to make
Committed Loans and to issue Letters of Credit in an aggregate
principal amount at any time outstanding up to but not exceeding
$50,000,000, as the same may be reduced or terminated pursuant to
this Agreement.
"Commitment Fee" means a commitment fee on the daily average
unused amount of the Commitment from and including the date of
this Agreement to but excluding the Termination Date, at the rate
of one-eighth of one percent (0.125%) per annum, payable on each
Quarterly Date. For purposes of this definition, outstanding
Money Market Loans and Letters of Credit shall constitute a
utilization of the Commitment.
"Fees" means the Commitment Fee and the Letter of Credit Fee.
"Letter of Credit Fee" means a fee on the average daily
maximum amount available to be drawn under each Letter of Credit
from the date of issuance to the date of expiration, at the rate
of one-half of one percent (0.5%) per annum, payable on each
Quarterly Date.
"Principal Office" means the office of the Bank located at
100 North Tryon Street, Charlotte, NC 28255.
"Termination Date" means February 28, 1997.
SECTION 1.02. Additional Definitions. As used in this Agreement,
the following terms have the following meanings:
"Adjusted Eurodollar Rate" means, for any Eurodollar Loan for
any Interest Period therefor, the rate per annum (rounded upwards,
if necessary, to the nearest 1/100 of 1%) determined by the Bank
to be equal to the quotient obtained by dividing (a) the
Eurodollar Rate for such Eurodollar Loan for such Interest Period
by (b) 1 minus the Reserve Requirement for such Eurodollar Loan
for such Interest Period.
"Base Rate" means, for any day, the rate per annum equal to
the higher of (a) the Federal Funds Rate for such day plus one-
half of one percent (0.5%) and (b) the Prime Rate for such day.
Any change in the Base Rate due to a change in the Prime Rate or
the Federal Funds Rate shall be effective on the effective date of
such change in the Prime Rate or Federal Funds Rate.
"Base Rate Loans" means Loans that bear interest at rates
based upon the Base Rate.
"Business Day" means any day other than a Saturday, a Sunday,
a legal holiday or a day on which banking institutions are
authorized by law or other governmental action to close in
Charlotte, North Carolina or New York, New York; except that in
the case of Eurodollar Loans, such day is also a day on which
dealings between banks are carried on in U.S. dollar deposits in
the London interbank market.
"Committed Loans" has the meaning specified in Section 2.01.
"Continue", "Continuation", and "Continued" shall refer to a
continuation pursuant to Section 2.07 of a Fixed Rate Loan as a
Loan of the same Type from one Interest Period to the next
Interest Period.
"Convert", "Conversion", and "Converted" shall refer to the
conversion pursuant to Section 2.07 or Article III of one Type of
Loan into another Type of Loan.
"Debtor Relief Laws" means the Bankruptcy Code of the United
States of America and all other applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement,
receivership, insolvency, reorganization, suspension of payments,
or similar debtor relief laws from time to time in effect
affecting the rights of creditors generally.
"Default" means an Event of Default or the occurrence of an
event or condition that with notice or lapse of time or both would
become an Event of Default.
"Default Rate" means, with respect to any principal of any
Loan, any reimbursement obligation in respect of any Letter of
Credit, or any other amount payable by the Borrower under this
Agreement or any other Loan Document that is not paid when due
(whether at stated maturity, by acceleration, or otherwise), a
rate per annum during the period from and including the due date
to but excluding the date on which such amount is paid in full
equal to two percent (2%) plus the Base Rate as in effect from
time to time plus the Applicable Margin for Base Rate Loans
(provided that, if the amount in default is principal of a Fixed
Rate Loan and the due date thereof is a day other than the last
day of the Interest Period therefor, the "Default Rate" for such
principal shall be, for the period from and including the due date
and to but excluding the last day of the Interest Period therefor,
two percent (2%) plus the interest rate for such Loan as provided
in Section 2.05(b) or (c), as the case may be, and, thereafter,
the rate provided for above in this definition).
"Dollars" and "$" mean lawful money of the United States of
America.
"Earlier Credit Agreement" has the meaning assigned to that
term in Section 1.03.
"Effective Date" means October 23, 1996.
"Eurodollar Loans" means Loans that bear interest at rates
based upon the Adjusted Eurodollar Rate.
"Eurodollar Rate" means, for any Eurodollar Loan for any
Interest Period therefor, the rate per annum appearing on Telerate
Page 3750 (or any successor page) as the London interbank offered
rate for deposits in Dollars at approximately 11:00 a.m. (London
time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period. If for any
reason such rate is not available, the term "Eurodollar Rate"
shall mean, for any Eurodollar Loan for any Interest Period
therefor, the rate per annum appearing on Reuters Screen LIBO Page
as the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two Business Days prior to
the first day of such Interest Period for a term comparable to
such Interest Period; provided, however, if more than one rate is
specified on Reuters Screen LIBO Page, the applicable rate shall
be the arithmetic mean of all such rates.
"Event of Default" has the meaning specified in Section 7.01.
"Existing Letters of Credit" means those standby letters of
credit issued by the Bank (formerly known as NationsBank, N.A.
(Carolinas)) for the account of the Borrower and outstanding on
the date hereof, as more particularly identified on Schedule 1.02
hereof, as such letters of credit have been or may hereafter be
amended, modified, extended, renewed or replaced from time to
time.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal
to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged
by Federal funds brokers on such day, as published by the Federal
Reserve Bank of New York on the Business Day next succeeding such
day; provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on
the next succeeding Business Day, and (b) if no such rate is so
published on such next succeeding Business Day, the Federal Funds
Rate for such day shall be the average rate charged to the Bank on
such day on such transactions as determined by the Bank.
"Financial Statements" means the financial statements of the
Borrower and the Subsidiaries dated as of June 30, 1995, and for
the fiscal year then ended, furnished to the Bank prior to the
date of this Agreement.
"Fixed Rate Loans" means Eurodollar Loans and Money Market
Loans.
"Governmental Authority" means any nation or government, any
state or political subdivision thereof, any central bank (or
similar monetary or regulatory authority), and any entity
exercising executive, legislative, judicial, regulatory, or
administrative functions of or pertaining to government.
"Interest Period" means:
(i) with respect to any Eurodollar Loan, each period
commencing on the date such Loan is made or Converted from a Loan
of another Type or the last day of the next preceding Interest
Period with respect to such Loan, and ending on the numerically
corresponding day in the first, second, third, or sixth calendar
month thereafter, as the Borrower may select as provided in
Section 2.09, except that each such Interest Period which
commences on the last Business Day of a calendar month (or on any
day for which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last
Business Day of the appropriate subsequent calendar month; and
(ii) with respect to any Money Market Loan, each period
commencing on the date such Loan is made or Converted from a Loan
of another Type or the last day of the preceding Interest Period
with respect to such Loan, and ending on the number of days
thereafter (but not less than 1 or more than 180 days) as may be
agreed to by the Borrower and the Bank pursuant to Section 2.02.
Notwithstanding the foregoing: (a) each Interest Period which
would otherwise end on a day which is not a Business Day shall end
on the next succeeding Business Day (or, in the case of an
Interest Period for Eurodollar Loans, if such succeeding Business
Day falls in the next succeeding calendar month, on the next
preceding Business Day); (b) any Interest Period which would
otherwise extend beyond the Termination Date shall end on the
Termination Date; (c) no more than 10 Interest Periods for each
Type of Fixed Rate Loan shall be in effect at the same time; and
(d) no Interest Period for any Fixed Rate Loan shall have a
duration of less than 1 month (in the case of Eurodollar Loans) or
1 day (in the case of Money Market Loans) and, if the Interest
Period for any Fixed Rate Loan would otherwise be a shorter
period, such Loan shall not be available hereunder.
"Letter of Credit" means an Existing Letter of Credit or a
standby letter of credit issued pursuant to the provisions of
Section 2.16, as the same may be amended, modified, extended,
renewed or replaced from time to time.
"Loan Documents" means this Agreement, the Note, the LOC
Documents, and all other documents, instruments, and agreements
executed or delivered pursuant to or in connection with this
Agreement, as the same may be amended, modified, renewed,
extended, or supplemented.
"Loan Party" means the Borrower or any Person that guaranties
or secures any or all of the Borrower's obligations under the Loan
Documents.
"Loans" means Committed Loans and Money Market Loans.
"LOC Documents" means, with respect to any Letter of Credit,
such Letter of Credit, any amendments thereto, any documents
delivered in connection therewith, any application therefor, and
any agreements, instruments, guarantees or other documents
(whether general in application or applicable only to such Letter
of Credit) governing or providing for (i) the rights and
obligations of the parties concerned or at risk or (ii) any
collateral security for such obligations.
"LOC Obligations" means, at any time, the sum of (i) the
maximum face amount which is, or at any time thereafter may
become, available to be drawn under Letters of Credit then
outstanding, assuming compliance with all requirements for
drawings referred to in such Letters of Credit plus (ii) the
aggregate face amount of all drawings under Letters of Credit
honored by the Bank but not theretofore reimbursed (whether by
payment in cash or through a Loan), minus (iii) all cash
collateral provided with respect to any Letter of Credit.
"Material Adverse Effect" means a material adverse effect on
(a) the operations or financial condition of the Borrower, (b) the
ability of the Borrower to perform its obligations under this
Agreement, or (c) the validity or enforceability of any Loan
Document or the rights and remedies of the Bank thereunder.
"Money Market Loan" has the meaning specified in Section
2.02.
"Money Market Rate" has the meaning specified in Section
2.02.
"Note" has the meaning specified in Section 2.03.
"Person" means any individual, corporation, company, joint
venture, association, partnership, trust, unincorporated
organization, Governmental Authority, or other entity.
"Prime Rate" means the per annum rate of interest established
from time to time by the Bank as its prime rate, which rate may
not be the lowest rate of interest charged by the Bank to its
customers.
"Quarterly Date" means the last day of each March, June,
September, and December of each year, the first of which shall be
the first such day after the date of this Agreement.
"Regulation D" means Regulation D of the Board of Governors
of the Federal Reserve System, as in effect from time to time.
"Reserve Requirement" means, at any time, the maximum rate at
which reserves (including any marginal, special, supplemental, or
emergency reserves) are required to be maintained under
regulations issued from time to time by the Board of Governors of
the Federal Reserve System (or any successor) by member banks of
the Federal Reserve System in New York City with deposits
exceeding one billion Dollars against "Eurocurrency liabilities"
(as such term is used in Regulation D). Without limiting the
effect of the foregoing, the Reserve Requirement shall reflect any
other reserves required to be maintained by such member banks with
respect to (i) any category of liabilities which includes deposits
by reference to which the Adjusted Eurodollar Rate is to be
determined, or (ii) any category of extensions of credit or other
assets which include Eurodollar Loans. The Adjusted Eurodollar
Rate shall be adjusted automatically on and as of the effective
date of any change in the Reserve Requirement.
"Subsidiary" means, any corporation or other entity of which
securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other
Persons performing similar functions are at the time directly or
indirectly owned by the Borrower.
"Type" means any type of Loan (i.e., Base Rate Loan,
Eurodollar Loan, or Money Market Loan).
SECTION 1.03. Amendment and Restatement of Earlier Credit
Agreement.
(a) This Agreement amends and restates in its entirety that
certain Credit Agreement dated as of May 14, 1996 between the Borrower
and the Bank (the "Earlier Credit Agreement"). The Borrower and the
Bank agree that, upon (i) the execution and delivery by each of the
parties hereto of this Agreement and (ii) satisfaction of the
conditions precedent set forth in Section 4.01, the terms and
provisions of the Earlier Credit Agreement shall, effective as of the
Effective Date, be amended, restated and superseded in their entirety
by the terms and provisions of this Agreement. This Agreement is not
intended to and shall not constitute a novation. All Loans and other
obligations under the Earlier Credit Agreement which are outstanding on
the Effective Date shall continue as Loans and obligations under (and
shall be governed by the terms of) this Agreement. The Note executed
and delivered by the Borrower to the Bank in connection with the
Earlier Credit Agreement shall remain in full force and effect and
shall continue to evidence the Borrower's obligation to pay principal
of and interest on the Loans; provided that, notwithstanding anything
to the contrary contained therein, such Note shall be governed by and
construed in accordance with the laws of the State of New York,
including without limitation Section 5-1401 of the General Obligations
Law, but otherwise without regard to conflicts of law principles, and
the applicable laws of the United States of America.
(b) Upon the effectiveness of this Agreement, each reference to
the Earlier Credit Agreement in any other instrument, document or
agreement executed and/or delivered in connection therewith shall mean
and be a reference to this Agreement.
ARTICLE II
LOANS
SECTION 2.01. Committed Loans. Subject to the terms and
conditions of this Agreement, the Bank agrees to make one or more loans
("Committed Loans") to the Borrower from time to time from and
including the date hereof to but excluding the Termination Date,
provided that the sum of (i) the aggregate principal amount of the
Loans outstanding plus (ii) the aggregate amount of all LOC
Obligations, shall not at any time exceed the amount of the Commitment.
Subject to the foregoing limitations, and the other terms and
provisions of this Agreement, the Borrower may borrow, repay, and
reborrow hereunder within the limits of the Commitment by means of Base
Rate Loans and Eurodollar Loans.
SECTION 2.02. Money Market Loans. In addition to Committed Loans
pursuant to Section 2.01, the Borrower in accordance with the terms
hereof may from time to time to but excluding the Termination Date
request offers from the Bank for loans (each a "Money Market Loan") on
a specific date, at a fixed rate of interest (the "Money Market Rate"),
and for an Interest Period quoted by the Bank. Upon receipt of each
such request for a Money Market Loan offer, the Bank may, but shall
have no obligation to, offer to make such Money Market Loan on such
terms and conditions as the Bank may determine at such time. The
Borrower may accept each such offer for a Money Market Loan by
submitting to the Bank a notice of borrowing pursuant to Section 2.09.
SECTION 2.03. Note. The Loans made by the Bank shall be
evidenced by that certain promissory note of the Borrower in
substantially the form of Exhibit A, dated May 14, 1996 and executed
and delivered pursuant to the Earlier Credit Agreement, payable to the
order of the Bank in a principal amount equal to the Commitment as
originally in effect and otherwise duly completed (as from time to time
amended, modified, renewed, or extended, the "Note").
SECTION 2.04. Repayment of Loans. The Borrower shall pay to the
Bank the outstanding principal amount of the Loans on the Termination
Date.
SECTION 2.05. Interest. The Borrower shall pay to the Bank
interest on the unpaid principal amount of each Loan for the period
commencing on the date of such Loan to but excluding the date such Loan
shall be paid in full, at the following rates per annum:
(a) during the periods such Loan is a Base Rate Loan, the
Base Rate plus the Applicable Margin;
(b) during the periods such Loan is a Eurodollar Loan, the
Adjusted Eurodollar Rate plus the Applicable Margin; and
(c) during the periods such Loan is a Money Market Loan, the
Money Market Rate for such Loan.
Notwithstanding the foregoing, the Borrower shall pay to the Bank
interest at the Default Rate on any principal of any Loan and (to the
fullest extent permitted by law) on any other amount payable by the
Borrower under this Agreement or any other Loan Document which is not
paid in full when due (whether at stated maturity, by acceleration, or
otherwise), for the period from and including the due date thereof to
but excluding the date the same is paid in full. Accrued interest on
the Loans shall be due and payable as follows: (i) in the case of Base
Rate Loans, on each Quarterly Date; (ii) in the case of each Eurodollar
Loan, on the last day of the Interest Period with respect thereto and,
in the case of an Interest Period greater than three months, at
three-month intervals after the first day of such Interest Period;
(iii) in the case of each Money Market Loan, on the last day of the
Interest Period with respect thereto and, in the case of an Interest
Period greater than 90 days, at 90-day intervals after the first day of
such Interest Period; (iv) upon the payment or prepayment of any Loan
or the Conversion of any Loan to a Loan of another Type (but only on
the principal amount so paid, prepaid, or Converted); and (v) on the
Termination Date; provided that interest payable at the Default Rate
shall be payable from time to time on demand.
SECTION 2.06. Borrowing Procedure. The Borrower shall give the
Bank notice of each borrowing hereunder in accordance with Section
2.09. Not later than 2:00 p.m. (at the Principal Office) on the date
specified for each borrowing hereunder, the Bank will make available
the amount of the Loan to be made by it on such date to the Borrower by
depositing the same, in immediately available funds, in an account of
the Borrower (designated by the Borrower) maintained with the Bank at
the Principal Office, or as otherwise directed by the Borrower.
SECTION 2.07. Prepayments, Conversions, and Continuations of
Loans. Subject to Section 2.08, the Borrower shall have the right from
time to time to prepay the Loans, or to Convert all or part of a Loan
of one Type into a Loan of another Type or to Continue Fixed Rate Loans
of one Type as Fixed Rate Loans of the same Type, provided that: (a)
the Borrower shall give the Bank notice of each such prepayment,
Conversion, or Continuation as provided in Section 2.09, (b) Fixed Rate
Loans may only be Converted on the last day of the Interest Period, (c)
the Borrower may not Continue a Money Market Loan or Convert a Loan
into a Money Market Loan unless the Borrower and the Bank shall have
agreed upon the rate of interest and the Interest Period for such Loan
in accordance with Section 2.02, and (d) except for Conversions into
Base Rate Loans, no Conversions or Continuations shall be made while a
Default has occurred and is continuing.
SECTION 2.08. Minimum Amounts. Except for Conversions and
prepayments pursuant to Section 2.15 and Article III and Committed
Loans made pursuant to Section 2.16 to satisfy the Borrower's
reimbursement obligations in respect of a Letter of Credit, each
borrowing, each Conversion, and each prepayment of principal of the
Loans shall be in an amount at least equal to $1,000,000. Anything in
this Agreement to the contrary notwithstanding, the aggregate principal
amount of Fixed Rate Loans of the same Type having the same Interest
Period shall be at least equal to $1,000,000.
SECTION 2.09. Certain Notices. Notices by the Borrower to the
Bank of a termination or reduction of the Commitment, of borrowings,
Conversions, Continuations and optional prepayments of Loans and of the
duration of Interest Periods shall be irrevocable and shall be
effective only if received by the Bank not later than 11:00 a.m. (local
time at the Principal Office) on the number of Business Days prior to
the date of the relevant termination, reduction, borrowing, Conversion,
Continuation, or prepayment or the first day of such Interest Period
specified below:
Number of Business
Notice Days Prior
Termination or reduction of
Commitment 1
Borrowing or prepayment of,
or Conversions into, Base
Rate Loans same day
Borrowing or prepayment of,
Conversions into,
Continuations as, or
duration of Interest Periods
for, Eurodollar Loans 3
Borrowing or prepayment of, or
Conversions into,
Continuations as, or
duration of Interest Periods same day
for,
Money Market Loans
Each such notice of termination or reduction shall specify the amount
of the Commitment to be terminated or reduced. Each such notice of
borrowing, Conversion, Continuation, or optional prepayment shall
specify (a) the amount and Type of the Loan to be borrowed, Converted,
Continued, or prepaid (and, in the case of a Conversion, the Type of
Loan to result from such Conversion), (b) the date of borrowing,
Conversion, Continuation, or prepayment (which shall be a Business
Day), and (c) in the case of a borrowing of a Fixed Rate Loan,
Conversion, or Continuation, the duration of the Interest Period. In
the event the Borrower fails to select the Type of Loan, or the
duration of any Interest Period for any Fixed Rate Loan, within the
time period and otherwise as provided in this Section 2.09, such Loan
(if outstanding as a Fixed Rate Loan) will be automatically Converted
into a Base Rate Loan on the last day of the preceding Interest Period
for such Loan or (if outstanding as a Base Rate Loan) will remain as,
or (if not then outstanding) will be made as, a Base Rate Loan.
SECTION 2.10. Use of Proceeds. The proceeds of the Loans shall
be used by the Borrower for general corporate purposes. The Borrower
will not, directly or indirectly, use any part of such proceeds for the
purpose of purchasing or carrying any margin stock within the meaning
of Regulations G, U, T, or X of the Board of Governors of the Federal
Reserve System.
SECTION 2.11. Fees. The Borrower agrees to pay to the Bank the
Fees as specified herein. In addition, the Borrower shall pay to the
Bank the customary charges from time to time of the Bank with respect
to the issuance, amendment, transfer, administration, cancellation and
conversion of, and drawings under, the Letters of Credit to the extent
set forth in the LOC documents.
SECTION 2.12. Computations. Interest and Fees payable by the
Borrower hereunder and under the other Loan Documents shall be computed
on the basis of a year of 365/366 days and the actual number of days
elapsed (including the first day but excluding the last day) occurring
in the period for which payable, except with respect to Eurodollar
Loans which shall be computed based on a year of 360 days.
SECTION 2.13. Reduction or Termination of Commitment. The
Borrower shall have the right to irrevocably terminate or reduce in
part the unused portion of the Commitment at any time and from time to
time, provided that: (a) the Borrower shall give notice of each such
termination or reduction as provided in Section 2.09; and (b) each
partial reduction shall be in an aggregate amount at least equal to
$1,000,000.
SECTION 2.14. Payments. All payments of principal, interest, and
other amounts to be made by the Borrower under this Agreement and other
Loan Documents shall be made to the Bank at the Principal Office in
Dollars and in immediately available funds, without setoff, deduction,
or counterclaim. Whenever any payment under this Agreement or any
other Loan Document shall be stated to be due on a day that is not a
Business Day, such payment may be made on the next succeeding Business
Day, and such extension of time in such case shall be included in the
computation of interest and Fees, as applicable and as the case may be.
SECTION 2.15. Mandatory. If at any time the sum of (i) the
outstanding principal amount of the Loans plus (ii) the aggregate
amount of LOC Obligations exceeds the Commitment, the Borrower shall
immediately make a prepayment of the Loans and/or provide cash
collateral in respect of the LOC Obligations in an aggregate amount
equal to the excess.
SECTION 2.16. Letter of Credit Subfacility.
(a) Issuance. Subject to the terms and conditions hereof and of
the LOC Documents, if any, and any other terms and conditions which the
Bank may reasonably require, the Bank shall issue from time to time
such Letters of Credit from the date hereof until the Termination Date
as the Borrower may request in a form acceptable to the Bank; provided,
however, that no Letter of Credit will be issued if on the date of
issuance, before and after taking such Letter of Credit into account,
(i) the LOC Obligations at such time would exceed $15,000,000 or (ii)
the principal amount of the Loans outstanding plus the LOC Obligations
would exceed the Commitment. Except for the Existing Letters of Credit
and except as otherwise expressly agreed by the Bank, no Letter of
Credit shall have an original expiry date more than one year from the
date of issuance; provided, however, so long as no Default or Event of
Default has occurred and is continuing and subject to the other terms
and conditions to the issuance of Letters of Credit hereunder and at
the request of the Borrower, the expiry dates of Letters of Credit
may, in the Bank's sole discretion, be extended annually on each
anniversary date of their date of issuance for an additional one year
period. If the Bank elects not to extend any Letter of Credit, it
shall take such action, if any, as is required to be taken by it under
the applicable LOC Documents. Each Letter of Credit shall comply with
the related LOC Documents. The issuance and expiry date of each Letter
of Credit shall be a Business Day.
(b) Request for Issuance. Any request for the issuance of a
Letter of Credit shall be submitted to the Bank at least three (3)
Business Days prior to the requested date of issuance.
(c) Reimbursement. The Borrower shall reimburse the Bank in same
day funds for each drawing made under a Letter of Credit on the day of
such drawing. In the event of any drawing under any Letter of Credit,
the Bank will promptly notify the Borrower. Unless the Borrower shall
immediately notify the Bank of its intent to otherwise reimburse the
Bank, the Borrower shall be deemed to have requested a Committed Loan
in the amount of the drawing, the proceeds of which will be used to
satisfy the reimbursement obligations in respect of such drawing. Each
such Committed Loan will be a Base Rate Loan or, if the Borrower shall
have provided a notice of borrowing requesting that such Committed Loan
be a Eurodollar Loan in accordance with Section 2.09, a Eurodollar
Loan. If the Borrower shall not have arranged for the reimbursement of
the Bank as provided hereinabove and Committed Loans are not available
on such date for the reimbursement of the drawing under the Letter of
Credit, the unreimbursed amount of such drawing shall bear interest
from and after such date until paid in full at the Default Rate. The
Borrower's reimbursement obligations hereunder shall be absolute and
unconditional under all circumstances irrespective of any rights of set-
off, counterclaim or defense to payment the Borrower may claim or have
against the Bank, the beneficiary of the Letter of Credit drawn upon or
any other Person, including without limitation any defense based on any
failure of the Borrower to receive consideration or the legality,
validity, regularity or unenforceability of the Letter of Credit.
(d) Uniform Customs and Practices. The Bank may have the Letters
of Credit be subject to the Uniform Customs and Practice for
Documentary Credits, as published as of the date of issue by the
International Chamber of Commerce (the "UCP"), in which case the UCP
may be incorporated therein and deemed in all respects to be a part
thereof.
(e) Indemnification; Nature of Bank's Duties.
(i) In addition to its other obligations under this
Agreement, the Borrower hereby agrees to protect, indemnify, pay
and save the Bank harmless from and against any and all claims,
demands, liabilities, damages, losses, costs, charges and expenses
(including reasonable attorneys' fees) that the Bank may incur or
be subject to as a direct consequence of (A) the issuance of any
Letter of Credit or (B) the failure of the Bank to honor a drawing
under a Letter of Credit as a result of any act or omission,
whether rightful or wrongful, of any present or future de jure or
de facto government or governmental authority (all such acts or
omissions, herein called "Government Acts").
(ii) As between the Borrower and the Bank, the Borrower shall
assume all risks of the acts, omissions or misuse of any Letter of
Credit by the beneficiary thereof. The Bank shall not be
responsible: (A) for the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any party
in connection with the application for and issuance of any Letter
of Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged;
(B) for the validity or sufficiency of any instrument transferring
or assigning or purporting to transfer or assign any Letter of
Credit or the rights or benefits thereunder or proceeds thereof,
in whole or in part, that may prove to be invalid or ineffective
for any reason; (C) for failure of the beneficiary of a Letter of
Credit to comply fully with conditions required in order to draw
upon a Letter of Credit; (D) for errors, omissions, interruptions
or delays in transmission or delivery of any messages, by mail,
cable, telegraph, telex or otherwise, whether or not they be in
cipher; (E) for any loss or delay in the transmission or otherwise
of any document required in order to make a drawing under a Letter
of Credit or of the proceeds thereof; and (F) for any consequences
arising from causes beyond the control of the Bank, including,
without limitation, any Government Acts. None of the above shall
affect, impair, or prevent the vesting of the Bank's rights or
powers hereunder.
(iii) In furtherance and extension and not in limitation
of the specific provisions hereinabove set forth, any action taken
or omitted by the Bank, under or in connection with any Letter of
Credit or the related certificates, if taken or omitted in good
faith, shall not put such Bank under any resulting liability to
the Borrower. It is the intention of the parties that this
Agreement shall be construed and applied to protect and indemnify
the Bank against any and all risks involved in the issuance of the
Letters of Credit, all of which risks are hereby assumed by the
Borrower, including, without limitation, any and all risks of the
acts or omissions, whether rightful or wrongful, of any present or
future Government Acts. The Bank shall not, in any way, be liable
for any failure by the Bank or anyone else to pay any drawing
under any Letter of Credit as a result of any Government Acts or
any other cause beyond the control of the Bank.
(iv) The obligations of the Borrower under this Section 2.16
shall survive the termination of this Agreement. No act or
omissions of any current or prior beneficiary of a Letter of
Credit shall in any way affect or impair the rights of the Bank to
enforce any right, power or benefit under this Agreement.
(v) Notwithstanding anything to the contrary contained in
this Section 2.16, the Borrower shall have no obligation to
indemnify the Bank pursuant to this or any other section of this
Agreement in respect of any liability incurred by the Bank arising
directly out of the gross negligence or willful misconduct of the
Bank.
(f) Termination Date. If any Letter of Credit remains
outstanding upon the occurrence of the Termination Date, the Borrower
shall, upon demand by the Bank provide one or more of the following to
the Bank (such election being at the Borrower's option):
(i) to the extent not already provided to the Bank, provide
cash collateral to the Bank on such Termination Date in an amount
equal to the maximum amount available to be drawn under such
Letter of Credit,
(ii) cause the original of such Letter of Credit to be
returned to the Bank, or
(iii) deliver to the Bank a letter of credit,
indemnification or other comparable form of credit enhancement
acceptable to the Bank, in support of the Borrower's reimbursement
obligations in respect of such Letter of Credit, which letter of
credit, indemnification or other credit enhancement shall (i) have
a stated amount equal to the maximum amount available to be drawn
under such Letter of Credit, (ii) not expire prior to the tenth
Business Day following the expiry date of such Letter of Credit,
(iii) be issued by an issuer reasonably acceptable to the Bank and
(iv) otherwise be in form and substance reasonably satisfactory to
the Bank.
ARTICLE III
CHANGE IN CIRCUMSTANCES
SECTION 3.01. Increased Cost and Reduced Return.
(a) If the Bank shall have determined that the adoption of any
applicable law, rule, or regulation, or any change in any applicable
law, rule, or regulation, or any change in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by the Bank
with any request or directive (whether or not having the force of law)
of any such Governmental Authority:
(i) shall change the basis of taxation of any amounts
payable to the Bank under this Agreement or the Note in respect of
any Fixed Rate Loans or LOC Obligations (other than taxes imposed
on the overall net income of the Bank by the jurisdiction in which
the Bank has its Principal Office);
(ii) shall impose or modify any reserve, special
deposit, or similar requirement (other than the Reserve
Requirement utilized in the determination of the Adjusted
Eurodollar Rate) relating to any extensions of credit or other
assets of, or any deposits with or other liabilities or
commitments of, the Bank (including the Commitment); or
(iii) shall impose on the Bank or on the London interbank
market any other condition affecting this Agreement or the Note or
any of such extensions of credit or liabilities or commitments;
and the result of any of the foregoing is to increase the cost to the
Bank of making or maintaining any Fixed Rate Loans or of issuing and
maintaining Letters of Credit or to reduce any sum received or
receivable by the Bank under this Agreement, the Note or any LOC
Document, then the Borrower shall pay to the Bank on demand such amount
or amounts as will compensate the Bank for such increased cost or
reduction.
(b) If the Bank shall have determined that the adoption of any
applicable law, rule, or regulation regarding capital adequacy or any
change therein or in the interpretation or administration thereof by
any Governmental Authority charged with the interpretation or
administration thereof, or any request or directive regarding capital
adequacy (whether or not having the force of law) of any such
Governmental Authority, has or would have the effect of reducing the
rate of return on the capital of the Bank as a consequence of the
Bank's obligations hereunder to a level below that which the Bank could
have achieved but for such adoption, change, request, or directive
(taking into consideration its policies with respect to capital
adequacy) by an amount deemed by the Bank to be material, then from
time to time upon demand the Borrower shall pay to the Bank such
additional amount or amounts as will compensate the Bank for such
reduction.
(c) A certificate of the Bank claiming compensation under this
Section and setting forth the additional amount or amounts to be paid
to it hereunder shall be conclusive in the absence of clearly
demonstrable error. In determining such amount, the Bank may use any
reasonable averaging and attribution methods.
SECTION 3.02. Limitation on Types of Loans. If on or prior to
the first day of any Interest Period for any Eurodollar Loan:
(a) the Bank determines (which determination shall be
conclusive) that by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for such Interest Period; or
(b) the Bank determines (which determination shall be
conclusive) that the Adjusted Eurodollar Rate will not adequately
and fairly reflect the cost to the Bank of funding Eurodollar
Loans for such Interest Period;
then the Bank shall give the Borrower prompt notice thereof specifying
the relevant Type of Loans and the relevant amounts or periods, and so
long as such condition remains in effect, the Bank shall be under no
obligation to make additional Eurodollar Loans, Continue Eurodollar
Loans, or to Convert Loans of any other Type into Eurodollar Loans and
the Borrower shall, on the last day(s) of the then current Interest
Period(s) for the outstanding Eurodollar Loans, either prepay such
Loans or Convert such Loans into another Type of Loan in accordance
with the terms of this Agreement.
SECTION 3.03. Illegality. Notwithstanding any other provision of
this Agreement, in the event that it becomes unlawful for the Bank to
make, maintain, or fund Eurodollar Loans hereunder, then the Bank shall
promptly notify the Borrower thereof and the Bank's obligation to make
or Continue Eurodollar Loans and to Convert other Types of Loans into
Eurodollar Loans shall be suspended until such time as the Bank may
again make, maintain, and fund Eurodollar Loans and the Borrower shall,
on the last day of the Interest Period for each outstanding Eurodollar
Loan (or earlier, if required by law), either prepay such Loans or
Convert such Loans into Base Rate Loans in accordance with the terms of
this Agreement.
SECTION 3.04. Compensation. Upon the request of the Bank, the
Borrower shall pay to the Bank such amount or amounts as shall be
sufficient (in the reasonable opinion of the Bank) to compensate it for
any loss, cost, or expense incurred by it as a result of:
(a) any payment, prepayment or Conversion of a Fixed Rate
Loan for any reason (including, without limitation, the
acceleration of the Loans pursuant to Section 7.02) on a date
other than the last day of an Interest Period for such Loan; or
(b) any failure by the Borrower for any reason (including,
without limitation, the failure of any conditions precedent
specified in Article IV to be satisfied) to borrow, Convert,
Continue, or prepay a Fixed Rate Loan on the date for such
borrowing, Conversion, Continuation, or prepayment specified in
the relevant notice of borrowing, prepayment, Continuation, or
Conversion under this Agreement.
Without limiting the effect of the preceding sentence, such
compensation shall include any loss incurred in obtaining, liquidating,
or employing deposits from third parties.
SECTION 3.05 Taxes. (a) Any and all payments by the Borrower
to or for the account of the Bank hereunder or under any other Loan
Document shall be made free and clear of and without deduction for any
and all present or future taxes, duties, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of the Bank, taxes imposed on its income, and
franchise taxes imposed on it, by the jurisdiction under the laws of
which the Bank is organized or any political subdivision thereof (all
such non-excluded taxes, duties, levies, imposts, deductions, charges,
withholdings, and liabilities being hereinafter referred to as
"Taxes"). If the Borrower shall be required by law to deduct any Taxes
from or in respect of any sum payable hereunder or under any Loan
Document to the Bank, (i) the sum payable shall be increased as
necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section
3.05) the Bank receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrower shall make
such deductions, (iii) the Borrower shall pay the full amount deducted
to the relevant taxation authority or other authority in accordance
with applicable law, and (iv) the Borrower shall furnish to the Bank,
at its address referred to in Section 8.07, the original or a certified
copy of a receipt evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any and all present
or future stamp or documentary taxes and any other excise or property
taxes or charges or similar levies which arise from any payment made
hereunder or under any other Loan Document or from the execution or
delivery of, or otherwise with respect to, this Agreement or any other
Loan Document (hereinafter referred to as "Other Taxes").
(c) The Borrower agrees to indemnify the Bank for the full amount
of Taxes and Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed or asserted by any jurisdiction on amounts payable
under this Section 3.05) paid by the Bank and any liability (including
penalties, interest and expenses) arising therefrom or with respect
thereto.
ARTICLE IV
CONDITIONS
SECTION 4.01. Effectiveness of this. This Agreement shall become
effective as of the Effective Date subject to the condition precedent
that the Bank shall have received duly executed counterpart signature
pages to this Agreement on or prior to such date.
SECTION 4.02. Each Loan and Letter of Credit. The obligation of
the Bank to make any Loan or to issue any Letter of Credit is subject
to the satisfaction of the following conditions precedent:
(a) receipt by the Bank of (i) in the case of a Loan, a
notice of borrowing in accordance with Section 2.06 and (ii) in
the case of a Letter of Credit, a request for the issuance thereof
in accordance with Section 2.16(b);
(b) the fact that immediately after the making of such Loan
or the issuance of such Letter of Credit, as applicable, the sum
of (i) the aggregate outstanding principal amount of the Loans
plus (ii) the aggregate amount of the LOC Obligations, will not
exceed the amount of the Commitment;
(c) the fact that, immediately before and after such Loan or
the issuance of such Letter of Credit, as applicable, no Default
shall have occurred and be continuing; and
(d) the fact that the representations and warranties of the
Borrower contained in this Agreement and the other Loan Documents
shall be true and correct on and as of the date such Loan is made
or such Letter of Credit is issued, as applicable.
Each borrowing hereunder and each issuance of a Letter of Credit shall
be deemed to be a representation and warranty by the Borrower on the
date of such borrowing or such issuance, as applicable, that the
conditions precedent specified in clauses (b), (c), and (d) of this
Section have been satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
To induce the Bank to enter into this Agreement, the Borrower
represents and warrants to the Bank that:
SECTION 5.01. Existence. The Borrower and each Subsidiary (a) is
duly organized, validly existing, and in good standing under the laws
of the jurisdiction of its organization; and (b) has the requisite
power and authority and legal right to own its assets and carry on its
business as now being or as proposed to be conducted. The Borrower has
the power, authority, and legal right to execute, deliver, and perform
its obligations under the Loan Documents.
SECTION 5.02. Financial Statements. The Financial Statements are
complete and correct, have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis, and
fairly and accurately present the financial condition of the Borrower
and the Subsidiaries as of the respective dates indicated therein and
the results of operations for the respective periods indicated therein.
Since the date of the Financial Statements, no event or condition has
occurred that could have a Material Adverse Effect.
SECTION 5.03. Authorization; No Breach. The execution, delivery,
and performance by the Borrower of the Loan Documents to which it is a
party and compliance with the terms and provisions thereof have been
duly authorized by all requisite action on the part of the Borrower and
do not and will not (a) violate or conflict with, or result in a breach
of, or require any consent under (i) the articles of incorporation,
bylaws, or other organizational documents of the Borrower or any of the
Subsidiaries, (ii) any applicable law, rule, or regulation or any
order, writ, injunction, or decree of any Governmental Authority or
arbitrator, or (iii) any agreement or instrument to which the Borrower
or any of the Subsidiaries is a party or by which any of them or any of
their property is bound or subject, or (b) constitute a default under
any such agreement or instrument.
SECTION 5.04. Litigation. Except as previously disclosed to the
Bank in a Disclosure Letter dated March 1, 1996, provided by IMC Global
Inc., et al., there is no action, suit, investigation, or proceeding
before or by any Governmental Authority or arbitrator pending, or to
the knowledge of the Borrower, threatened against or affecting the
Borrower or any Subsidiary, that could, if adversely determined, have a
Material Adverse Effect.
SECTION 5.05. Enforceability. This Agreement, the Note and all
other Loan Documents executed and delivered by the Borrower on or prior
to the date hereof constitute, and the other Loan Documents when
executed and delivered by the Borrower shall constitute, the legal,
valid, and binding obligations of the Borrower, enforceable against the
Borrower in accordance with their respective terms, except as limited
by applicable Debtor Relief Laws and general principles of equity.
SECTION 5.06. Approvals. No authorization, approval, or consent
of, and no filing or registration with, any Governmental Authority or
third party is or will be necessary for the execution, delivery, or
performance by the Borrower of any of the Loan Documents to which it is
a party or for the validity or enforceability thereof.
SECTION 5.07. Disclosure. No statement, information, report,
representation, or warranty made by the Borrower in any Loan Document
or furnished to the Bank in connection with any Loan Document contains
any untrue statement of a material fact or omits to state any material
fact necessary to make the statements herein or therein not misleading.
ARTICLE VI
COVENANTS
The Borrower agrees that, so long as the Bank has any Commitment
hereunder or any amount payable under the Note or any LOC Obligation
remains unpaid:
SECTION 6.01. Information. The Borrower shall deliver to the
Bank:
(a) as soon as available and in any event within 90 days
after the end of each fiscal year of the Borrower a consolidated
balance sheet of the Borrower and the Subsidiaries as of the end
of such fiscal year and the related consolidated statements of
income and cash flows for such fiscal year, setting forth in each
case in comparative form the figures for the previous fiscal year,
all prepared in accordance with generally accepted accounting
principles applied on a consistent basis and certified by
independent public accountants of nationally recognized standing;
(b) as soon as available and in any event within 45 days
after the end of each of the first three quarters of each fiscal
year of the Borrower a consolidated balance sheet of the Borrower
and the Subsidiaries as of the end of such quarter and the related
consolidated statements of income and cash flows for such quarter
and for the portion of the Borrower's fiscal year ended at the end
of such quarter, setting forth in each case in comparative form
the figures for the corresponding quarter and the corresponding
portion of the Borrower's previous fiscal year, all in reasonable
detail and duly certified (subject to normal year-end adjustments)
by the chief financial officer or treasurer of the Borrower as
having been prepared in accordance with generally accepted
accounting principles applied on a consistent basis;
(c) within three (3) days after any officer of the Borrower
obtains knowledge of any Default, a certificate of the chief
financial officer or treasurer of the Borrower setting forth the
details thereof and any action which the Borrower is taking or
proposes to take with respect thereto; and
(d) from time to time such additional information regarding
the financial condition or business of the Borrower and the
Subsidiaries as the Bank may reasonably request.
SECTION 6.02. Obligations. The Borrower shall, and shall cause
each of the Subsidiaries to:
(a) preserve and maintain all of its rights, privileges, and
franchises necessary or desirable in the normal conduct of its
business;
(b) comply with all applicable laws, rules, regulations and
orders of, and all applicable restrictions imposed by all
applicable Governmental Authorities applicable to it and its
property (including applicable statutes, regulations, orders and
restrictions relating to environmental standards and controls) if
noncompliance with any such law, rule, regulation or restriction
would have a Material Adverse Effect;
(c) pay and discharge when due all taxes, assessments, and
governmental charges or levies imposed on it or on its income or
profits or any of its property, except for any such tax,
assessment, charge, or levy the payment of which is being
contested in good faith and by proper proceedings and against
which adequate reserves are being maintained;
(d) subject to prudent business management, maintain and
preserve its properties and equipment used or useful in its
business (in whomsoever's possession as they may be) in good
repair, working order and condition, normal wear and tear
excepted, and make, or cause to be made, in such properties and
equipment from time to time all repairs, renewals, replacements,
extensions, additions, betterments and improvements thereto as may
be needed or proper, to the extent and in the manner customary for
companies in similar businesses.
(e) permit representatives of the Bank, during normal
business hours, to examine, copy, and make extracts from its books
and records, to inspect its properties, and to discuss its
business and affairs with its officers, directors, and
accountants; and
(f) maintain insurance in such amounts, with such
deductibles, and against such risks as is customary for similarly
situated businesses.
ARTICLE VII
DEFAULT
SECTION 7.01. Events of. Each of the following shall constitute
an "Event of Default":
(a) (i) The Borrower shall fail to pay when due any
principal of any Loan or any reimbursement obligation arising from
a drawing under a Letter of Credit, or (ii) the Borrower shall
fail to pay when due any interest on any Loan, or any Loan Party
shall fail to pay when due any other amount payable under any Loan
Document and any such default specified in this clause (ii) shall
continue for five or more days.
(b) Any representation, warranty, certification, or
statement made or deemed made by any Loan Party (or any of its
officers) in any Loan Document or in any certificate, financial
statement, or other document delivered pursuant thereto shall be
false, misleading, or incorrect in any material respect when made
or deemed made.
(c) The Borrower shall fail to perform, observe, or comply
with any covenant, agreement, or term contained in Section 6.01 of
this Agreement; or any Loan Party shall fail to perform, observe,
or comply with any other covenant, agreement, or term contained in
any Loan Document (other than a failure covered elsewhere in this
Section 7.01) and such failure shall continue for a period of
thirty (30) days after notice thereof to such Loan Party by the
Bank.
(d) Any Loan Party or any Subsidiary shall admit in writing
its inability to, or be generally unable to, pay its debts as such
debts become due.
(e) Any voluntary or involuntary proceeding under any Debtor
Relief Law shall be commenced by or against any Loan Party or any
Subsidiary or any of their respective assets, and if an
involuntary proceeding is commenced, such proceeding shall not be
dismissed within thirty (30) days after the commencement thereof.
(f) Any Loan Party or any Subsidiary shall fail to pay when
due any principal of or interest on any indebtedness for borrowed
money (other than the Note) having an outstanding principal amount
greater than $5,000,000, whether as principal obligor, guarantor,
or otherwise, or the maturity of any such indebtedness shall have
been accelerated, or any event shall have occurred that permits
(or, with the giving of notice or lapse of time or both, would
permit) any holder or holders of such indebtedness or any Person
acting on behalf of such holder or holders to accelerate the
maturity thereof.
(g) Any judgment or order for the payment of money in excess
of $500,000 shall be rendered against any Loan Party or any
Subsidiary and either (i) enforcement proceedings shall have been
commenced by any creditor upon such judgment or order or (ii)
there shall be any period of 10 consecutive days during which a
stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect.
(h) Any Loan Party shall dissolve, liquidate, or terminate
its legal existence or shall convey, transfer, lease, or dispose
of (whether in one transaction or a series of transactions) all or
substantially all of its assets to any Person.
(i) IMC Global Inc. 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, or (C) appoint and control, directly or
indirectly, at least 50% of the members of the Policy Committee
(or other governing body) of the Borrower.
(j) Any event or condition shall occur that could reasonably
be expected to have a Material Adverse Effect.
SECTION 7.02. Remedies. If any Event of Default shall occur and
be continuing, the Bank may do any one or more of the following:
(a) Acceleration. Declare all outstanding principal of and
accrued and unpaid interest on the Note and all other amounts
payable by the Borrower under the Loan Documents immediately due
and payable, and the same shall thereupon become immediately due
and payable, without presentment, demand, protest, notice of
acceleration, notice of intent to accelerate, or other notices or
formalities of any kind, all of which are hereby expressly waived
by the Borrower.
(b) Termination of Commitment. Terminate the Commitment
without notice to the Borrower.
(c) Rights. Exercise any and all rights and remedies
afforded by applicable law or otherwise.
(d) Cash Collateral. Direct the Borrower to pay (and the
Borrower agrees that upon receipt of such notice or the occurrence
of an Event of Default under Section 7.01(e), it will immediately
pay) to the Bank additional cash, to be held by the Bank in a cash
collateral account as additional security for the LOC Obligations
for subsequent drawings under all then outstanding Letters of
Credit in an amount equal to the maximum aggregate amount which
may be drawn under all Letters of Credit then outstanding.
Notwithstanding the foregoing, upon the occurrence of an Event of
Default under Section 7.01(e), the Commitment shall automatically
terminate, and the outstanding principal of and accrued and unpaid
interest on the Note and all other amounts payable by the Borrower
under the Loan Documents shall thereupon become immediately due and
payable without presentment, demand, protest, notice of acceleration,
notice of intent to accelerate, or other notices or formalities of any
kind, all of which are hereby expressly waived by the Borrower.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Expenses. The Borrower shall on demand pay or
reimburse the Bank for paying (a) all reasonable costs and expenses of
the Bank, including the fees and disbursements of counsel for the Bank
(including the allocated cost of internal counsel), in connection with
the administration of the Loan Documents, the preparation of any waiver
or consent thereunder or any amendment thereof or any Default or
alleged Default and (b) if an Event of Default occurs, all costs and
expenses incurred by the Bank, including the fees and disbursements of
counsel (including the allocated cost of internal counsel), in
connection with such Event of Default and any collection, bankruptcy,
insolvency, and other enforcement proceedings resulting therefrom.
SECTION 8.02. Indemnification. The Borrower agrees to indemnify
the Bank and each affiliate thereof and their respective officers,
directors, employees, attorneys, and agents (each an "Indemnified
Person") from, and hold each of them harmless against, any and all
losses, liabilities, claims, damages, penalties, judgments,
disbursements, costs, and expenses, including all fees and
disbursements of counsel (including the allocated cost of internal
counsel) (collectively the "Indemnified Liabilities"), which directly
or indirectly arise from or relate to any Loan Document or any of the
transactions contemplated thereby, but excluding any of the foregoing
to the extent caused by the gross negligence or willful misconduct of
the Indemnified Person. Without limiting any provision of any Loan
Document, it is the express intention of the parties hereto that each
Indemnified Person shall be indemnified from and held harmless against
any and all Indemnified Liabilities arising out of or resulting from
the sole or contributory negligence of the Indemnified Person.
SECTION 8.03. Right of Set-off. Upon the occurrence and during
the continuance of any Event of Default, the Bank is hereby authorized
at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other
indebtedness at any time owing by the Bank (or any of its affiliates)
to or for the credit or the account of the Borrower against any and all
of the obligations of the Borrower now or hereafter existing under the
Loan Documents, irrespective of whether the Bank shall have made any
demand under the Loan Documents and although such obligations may be
unmatured. The Bank agrees promptly to notify the Borrower after any
such set-off and application made by the Bank; provided, however, that
the failure to give such notice shall not affect the validity of such
set-off and application. The rights of the Bank under this Section are
in addition to other rights and remedies (including, without
limitation, other rights of set-off) that the Bank may have.
SECTION 8.04. No Waiver; Cumulative Remedies. No failure on the
part of the Bank to exercise and no delay in exercising, and no course
of dealing with respect to, any right, power, or privilege under any
Loan Document shall operate as a waiver thereof, nor shall any single
or partial exercise of any right, power, or privilege under any Loan
Document preclude any other or further exercise thereof or the exercise
of any other right, power, or privilege. The rights and remedies
provided for in the Loan Documents are cumulative and not exclusive of
any rights and remedies provided by law.
SECTION 8.05. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Borrower may not
assign or transfer any of its rights or obligations hereunder without
the prior written consent of the Bank. The Bank may at any time and
from time to time (a) grant participating interests in the Commitment
and the Loans to any Person(s), and (b) assign all or any portion of
its rights and/or obligations under the Loan Documents to any
Person(s); provided, that the Bank may not assign its Commitment to any
Person (other than an affiliate of the Bank) without the prior written
consent of the Borrower. All information provided by the Borrower to
the Bank may be furnished by the Bank to its affiliates and to any
actual or proposed assignee or participant.
SECTION 8.06. Amendments. No amendment or waiver of any
provision of any Loan Document to which the Borrower is a party, nor
any consent to any departure by the Borrower therefrom, shall be
effective unless the same shall be agreed or consented to in writing by
the Bank and the Borrower, and each such waiver or consent shall be
effective only in the specific instance and for the specific purpose
for which given.
SECTION 8.07. Notices. All notices, requests, and other
communications to either party hereunder shall be in writing (including
bank wire, facsimile transmission, or similar writing) and shall be
given to such party at its address or facsimile number set forth on the
signature pages hereof. Each such notice, request, or other
communication shall be effective (i) if given by facsimile
transmission, when transmitted to the facsimile number referred to in
this Section and confirmation of receipt is received, (ii) if given by
mail, three (3) Business Days after such communication is deposited in
the mails with first class postage prepaid, addressed as aforesaid, or
(iii) if given by any other means, when delivered at the address
referred to in this Section; provided that notices to the Bank shall
not be effective until received.
SECTION 8.08. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
SECTION 8.09.. Any provision of this Agreement held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Agreement and the effect thereof
shall be confined to the provision held to be invalid or illegal.
SECTION 8.10. Controlling Agreemen. Notwithstanding anything to
the contrary contained in any Loan Document, the interest paid or
agreed to be paid under the Loan Documents shall not exceed the maximum
rate of non-usurious interest permitted by applicable law (the "Maximum
Rate"). If the Bank shall receive interest in an amount that exceeds
the Maximum Rate, the excessive interest shall be applied to the
principal of the Loans or, if it exceeds the unpaid principal, refunded
to the Borrower. In determining whether the interest contracted for,
charged, or received by the Bank exceeds the Maximum Rate, the Bank
may, to the extent permitted by applicable law, (a) characterize any
payment that is not principal as an expense, fee, or premium rather
than interest, (b) exclude voluntary prepayments and the effects
thereof, and (c) amortize, prorate, allocate, and spread in equal or
unequal parts the total amount of interest throughout the contemplated
term of the Loans.
SECTION 8.11. Survival. All representations and warranties made
or deemed made by the Borrower in the Loan Documents shall survive the
execution and delivery thereof and the making of the Loans and the
issuance of the Letters of Credit, and no investigation by the Bank or
any closing shall affect the representations and warranties by the
Borrower or the right of the Bank to rely upon them. Without prejudice
to the survival of any other obligation of the Borrower hereunder, the
obligations of the Borrower under Article III and Sections 8.01 and
8.02 shall survive repayment of the Note and termination of the
Commitment.
SECTION 8.12. Governing Law. This Agreement and the other Loan
Documents shall be governed by and construed in accordance with the
laws of the State of New York, including without limitation Section 5-
1401 of the General Obligations Law, but otherwise without regard to
conflicts of law principles, and the applicable laws of the United
States of America. The Borrower hereby submits to the nonexclusive
jurisdiction of the United States District Court and each state court
in the city where the Principal Office is located for the purposes of
all legal proceedings arising out of or relating to any of the Loan
Documents or the transactions contemplated thereby. The Borrower
irrevocably consents to the service of any and all process in any such
action or proceeding by the mailing of copies of such process to the
Borrower at its address set forth underneath its signature hereto. The
Borrower irrevocably waives, to the fullest extent permitted by law,
any objection which it may now or hereafter have to the laying of the
venue of any such proceeding brought in such a court and any claim that
any such proceeding brought in such a court has been brought in an
inconvenient forum.
SECTION 8.13. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT,
OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT OR ANY OF
THE TRANSACTIONS CONTEMPLATED THEREBY OR THE ACTIONS OF THE BANK IN THE
NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT THEREOF.
SECTION 8.14. ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT AND THE
OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
BORROWER:
IMC-AGRICO COMPANY
By: IMC-Agrico MP, Inc., a
Delaware corporation
By:
Title
Address for Notices:
2100 Sanders Road
Northbrook, IL 60062
Facsimile No.: (847) 205-4803
Attention: Karen N. Latham
Assistant Treasurer
BANK:
NATIONSBANK, N.A.
By:
Title:
Address for Notices:
Sears Tower
233 S. Wacker Drive, Ste. 2800
Chicago, IL 60606-6306
Facsimile No.: (312) 234-5601
Attention: Wallace Harris
SCHEDULE 1.02
EXISTING LETTERS OF CREDIT
Letter of Credit No. Expiry Date Amount
39829 May 31, 1997 $2,832,500
40790 May 31, 1997 $570,000
41265-A December 31, 1996 $6,000,000
(evergreen with final expiry
date of December 30, 2002)
EXHIBIT A
PROMISSORY NOTE
$50,000,000 May 14, 1996
FOR VALUE RECEIVED, the undersigned, IMC-AGRICO COMPANY, a
Delaware general partnership (the "Borrower"), hereby promises to pay
to the order of NATIONSBANK, N.A., (the "Bank"), at the Principal
Office, in lawful money of the United States of America and in
immediately available funds, the principal amount of Fifty Million
Dollars ($50,000,000) or such lesser amount as shall equal the
aggregate unpaid principal amount of the Loans made by the Bank to the
Borrower under the Credit Agreement referred to below, on the dates and
in the principal amounts provided in the Credit Agreement, and to pay
interest on the unpaid principal amount of each such Loan, at such
office, in like money and funds, for the period commencing on the date
of such Loan until such Loan shall be paid in full, at the rates per
annum and on the dates provided in the Credit Agreement.
The books and records of the Bank shall be prima facie evidence of
all amounts outstanding hereunder.
This Note is the Note referred to in the Credit Agreement of even
date herewith, between the Borrower and the Bank (such Credit
Agreement, as the same may be amended, modified, or supplemented from
time to time, being referred to herein as the "Credit Agreement"), and
evidences Loans made by the Bank thereunder. The Credit Agreement,
among other things, contains provisions for acceleration of the
maturity of this Note upon the happening of certain stated events and
for prepayments of Loans prior to the maturity of this Note upon the
terms and conditions specified in the Credit Agreement. Capitalized
terms used in this Note have the respective meanings assigned to them
in the Credit Agreement.
This Note shall be governed by and construed in accordance with
the laws of the State where the Principal Office is located and the
applicable laws of the United States of America.
IMC-AGRICO COMPANY
By: IMC-Agrico MP, Inc., a
Delaware corporation
By:
Title:
EXHIBIT 10.67
EXHIBIT E
SECOND AMENDED AND RESTATED RELATED PARTY GUARANTY
THIS SECOND AMENDED AND RESTATED PARTY GUARANTY, dated as of
February 28, 1996 (the "Guaranty Agreement"), is made by IMC GLOBAL
INC., a Delaware corporation ("IMC") and The Vigoro Corporation, a
Delaware corporation ("Vigoro") in favor of THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA, a New Jersey mutual insurance company
("Prudential"), each "Prudential Affiliate" (as defined in the Note
Agreement referred to below) which is a holder of a Note (as defined in
the Note Agreement referred to below) and each "Transferee" (as defined
in the Note Agreement referred to below). Prudential, each such
Prudential Affiliate and each such Transferee are collectively referred
to herein as the "Purchasers." Reference is made to paragraph 9B hereof
for definitions of certain capitalized terms used herein and not
otherwise defined herein.
RECITALS:
A. Kalium Canada, Ltd., a corporation organized under the
federal laws of Canada ("Kalium"), is a party to that certain Second
Amended and Restated Note Purchase Agreement dated as of the date
hereof between Kalium and Prudential (as amended, restated, extended,
renewed, supplemented or otherwise modified from time to time, the
"Note Agreement").
B. Kalium is an indirect wholly-owned subsidiary of Vigoro.
Vigoro has heretofore guaranteed all of the obligations of Kalium under
the Note Agreement pursuant to that certain Amended and Restated
Related Party Guaranty dated as of December 22, 1994 made by Vigoro in
favor of the Purchasers (as heretofore amended, restated, extended,
renewed, supplemented and otherwise modified from time to time, the
"Existing Guaranty").
C. Vigoro is a party to that certain Agreement and Plan of
Merger dated as of November 13, 1995 among Vigoro, IMC and Bull Merger
Company, a Delaware corporation and wholly-owned subsidiary of IMC
("Bull"), pursuant to which it is intended that Bull merge with and
into Vigoro (the "Merger"). After giving effect to the Merger, Kalium
will be an indirect wholly-owned subsidiary of IMC.
D. IMC and Vigoro desire that the Merger be consummated and
that the Purchasers give their requisite consent thereto.
E. The Purchasers' willingness to consent to the Merger
is conditioned upon, among other things, the execution and delivery of
this Guaranty Agreement.
F. In addition, IMC and Vigoro desire hereby to amend and
restate the Existing Guaranty in order to make certain changes therein
in light of the facts set forth in the foregoing recitals.
NOW, THEREFORE, in consideration of the foregoing and other
benefits accruing to IMC and Vigoro, the receipt and sufficiency of
which are hereby acknowledged, IMC and Vigoro hereby make the following
representations and warranties to the Purchasers and hereby covenant
and agree with each Purchaser as follows:
1. AMENDMENT AND RESTATEMENT ASSUMPTION; GUARANTY.
1A. AMENDMENT AND RESTATEMENT. Subject to the satisfaction
(or express written waiver by the Purchasers) of all of the conditions
of effectiveness contained in paragraph 3 of the Note Agreement, this
Guaranty Agreement amends and restates in its entirety the Existing
Guaranty, and the Existing Guaranty is fully superseded hereby;
provided, however, that this Guaranty Agreement shall not constitute a
novation of any debts, liabilities or obligations under the Existing
Guaranty. Without limiting the foregoing, notwithstanding that certain
provisions in the Existing Guaranty have been deleted in this Guaranty
Agreement, the Purchasers are not waiving any of their respective
rights, powers or remedies with respect to any misrepresentation,
breach or fraud by Vigoro in connection with the Existing Guaranty.
1B. ASSUMPTION. Each of IMC and Vigoro hereby represents,
warrants and agrees that the Existing Guaranty is presently in full
force and effect and that it is enforceable in accordance with its
terms. IMC hereby irrevocably, absolutely, unconditionally and
expressly assumes all debts, liabilities, and obligations of Vigoro
arising under and otherwise relating to the Existing Guaranty
(collectively, the "Vigoro Obligations"). Notwithstanding the foregoing
assumption, Vigoro shall continue to be liable, jointly and severally
with IMC, for the Vigoro Obligations until the "Change Date", (as
defined below). On the Change Date, Vigoro shall be permanently
released (automatically and without the need for any further action)
from all of the Vigoro Obligations hereunder (including, without
limitation, any obligations arising under paragraph 4A hereof). The
term "Change Date" shall mean the date (if any) designated as the
"Change Date" for purposes of this Guaranty Agreement in a written
notice given to Vigoro by the Purchasers in substantially the form of
Annex I hereto or such other form as the Purchasers may reasonably
choose (it being acknowledged and agreed that the Purchasers shall be
under no obligation to give any such notice, and the Purchasers may or
may not do so as determined by them in their sole discretion).
1C. GUARANTY. The Guarantor (as defined below in
paragraph 9B) irrevocably and unconditionally guarantees to each
Purchaser, as primary obligor and not merely as surety, the full and
prompt payment of (i) the principal of, premium, if any, and interest
on, and any other amounts due under, the Notes (including obligations
which, but for the automatic stay under Section 362 (a) of the
Bankruptcy Code would become due) when and as the same shall become due
and payable (whether at stated maturity or by required or optional
prepayment or by acceleration or otherwise) and (ii) any other sums now
existing or hereafter incurred under, arising out of or in connection
with the Note Agreement and the Notes (all such obligations described
in clauses (i) and (ii) above are herein called the "Guaranteed
Obligations"). The guaranty in the preceding sentence is an absolute,
present and continuing guaranty of payment and not of collectibility
and is in no way conditional or contingent upon any attempt to collect
from Kalium or any other guarantor of the Notes or upon any other
action, occurrence or circumstance whatsoever. In the event that
Kalium shall fail so to pay any of such Guaranteed Obligations, the
Guarantor agrees to pay the same when due to the holders of the Notes
entitled thereto, without demand, presentment, protest or notice of any
kind. Each default in payment of principal of, premium, if any, or
interest on any Note shall give rise to a separate cause of action
hereunder and separate suits may be brought hereunder as each cause of
action arises. The Guarantor hereby agrees to pay and to indemnify and
save the holders of the Notes harmless from and against any damage,
loss, cost or expense (including reasonable attorneys' fees) which such
holder may incur or be subject to as a consequence, direct or indirect,
of (i) any breach by the Guarantor or by Kalium of any warranty,
covenant, term or condition in, or the occurrence of any default under,
this Guaranty Agreement, the Notes or the Note Agreement, together with
all expenses resulting from the compromise or defense of any claims or
liabilities arising as a result of any such breach or default, and (ii)
any legal action commenced to challenge the validity of this Guaranty
Agreement, the Notes or the Note Agreement.
2. OBLIGATIONS ABSOLUTE. The obligations of the Guarantor
hereunder shall be primary, absolute, irrevocable and unconditional,
irrespective of the validity, regularity or enforceability of the Notes
or of the Note Agreement, shall not be subject to any counterclaim,
setoff, deduction or defense based upon any claim the Guarantor may
have against Kalium or any holder of the Notes or otherwise, and shall
remain in full force and effect without regard to, and shall not be
released, discharged or in any way affected by, any circumstance or
condition whatsoever (whether or not the Guarantor shall have any
knowledge or notice thereof), including, without limitation: (a) any
amendment, restatement, modification of or supplement to the Note
Agreement, the Notes or any other instrument referred to therein
(except that the obligations of the Guarantor hereunder shall apply to
the Note Agreement, the Notes or such other instruments as so amended,
restated, modified or supplemented) or any assignment or transfer of
any thereof or of any interest therein, or any furnishing, acceptance
or release of any security for the Notes; (b) any waiver, consent,
extension, indulgence or other action or inaction under or in respect
of the Notes or in respect of the Note Agreement; (c) any bankruptcy,
insolvency, readjustment, composition, liquidation or similar
proceeding with respect to Kalium or its property; (d) any merger,
amalgamation or consolidation of the Guarantor or of Kalium into or
with any other corporation or any sale, lease or transfer of any or all
of the assets of the Guarantor or of Kalium to any Person; (e) any
failure on the part of Kalium for any reason to comply with or perform
any of the terms of any other agreement with the Guarantor; or (f) any
other circumstance which might otherwise constitute a legal or
equitable discharge or defense of a guarantor. The Guarantor covenants
that its obligations hereunder will not be discharged except as
expressly provided herein.
3. WAIVER; OBLIGATIONS UNIMPAIRED; DUTY TO STAY INFORMED.
3A. WAIVER. The Guarantor unconditionally waives to the
fullest extent permitted by law, (a) notice of acceptance hereof, of
any action taken or omitted in reliance hereon and of any defaults by
Kalium in the payment of any amounts due under the Notes or the Note
Agreement, and of any of the matters referred to in paragraph 2 hereof,
(b) all notices which may be required by statute, rule of law or
otherwise to preserve any of the rights of each holder from time to
time of the Notes against the Guarantor, including, without limitation,
presentment to or demand for payment from Kalium or the Guarantor with
respect to any Note, notice to Kalium or to the Guarantor of default or
protest for nonpayment or dishonor and the filing of claims with a
court in the event of the bankruptcy of Kalium, (c) any right to the
enforcement, assertion or exercise by any holder of the Notes of any
right, power or remedy conferred in this Guaranty Agreement, the Note
Agreement, the Notes or any other guaranty, (d) any requirement of
diligence on the part of any holder of the Notes and (e) any other act
or omission or thing or delay to do any other act or thing which night
in any manner or to any extent vary the risk of the Guarantor or which
might otherwise operate as a discharge of the Guarantor.
3B. OBLIGATIONS UNIMPAIRED. The Guarantor authorizes the
holders of the Notes, without notice or demand to the Guarantor and
without affecting its obligations hereunder, from time to time (a) to
renew, compromise, extend, accelerate or otherwise change the time for
payment of, or otherwise change the terms (including, without
limitation, the interest rate on or the Yield-Maintenance Amount with
respect to the Notes) of, all or any part of the Notes, the Note
Agreement or any other instrument referred to therein; (b) to take and
hold security for the payment of the Notes, for the performance of this
Guaranty Agreement or otherwise for the indebtedness guaranteed hereby
and to exchange, enforce, waive and release any such security; (c) to
apply any such security and to direct the order or manner of sale
thereof as the holders of the Notes in their sole discretion may
determine; (d) to obtain additional or substitute endorsers or
guarantors; (e) to release and discharge any Guarantor or all or any
additional guarantor or endorser of the Guaranteed Obligations
(including, without limitation, to release and discharge Vigoro as a
Guarantor on the Change Date) (f) to exercise or refrain from
exercising any rights against Kalium and others; and (g) to apply any
sums, by whomsoever paid or however realized, to the payment of the
principal of, premium, if any, and interest on the Notes ad any other
Guaranteed Obligation hereunder. The Guarantor waives any right to
require the holders of the Notes to proceed against any Guarantor or
any additional or substitute endorsers or guarantors or to pursue or
exhaust any security provided by Kalium, the Guarantor or any other
Person or to pursue any other remedy available to such holders.
3C. DUTY TO STAY INFORMED. The Guarantor assumes all
responsibility for being and keeping itself informed of Kalium's
financial condition and assets, and of all other circumstances bearing
upon the risk of non-payment of the Guaranteed Obligations and the
nature, scope and extent of the risks which the Guarantor assumes and
incurs hereunder, and agrees that the Purchasers shall have no duty to
advise the Guarantor of information known to them regarding such
circumstances or risks.
4. REINSTATEMENT OF GUARANTY; PAYMENTS; RANK OF GUARANTY.
4A. REINSTATEMENT OF GUARANTY. This Guaranty Agreement shall
continue to be effective, or be reinstated, as the case may be, if and
to the extent at any time payment, in whole or in part, of any of the
sums due to any holder of the Notes for principal, premium, if any, or
interest on the Notes or any of the other Guaranteed Obligations is
rescinded or must otherwise be restored or returned by such holder upon
the insolvency, bankruptcy, dissolution, liquidation or reorganization
of Kalium, or upon or as a result of the appointment of a custodian,
receiver, trustee or other officer with similar powers with respect to
Kalium or any substantial part of its property, or otherwise, all as
though such payments had not been made. If an event permitting the
acceleration of the maturity of the principal amount of the Notes shall
at any time have occurred and be continuing and such acceleration shall
at such time be prevented or the right of any holder of a Note to
receive any payment under any Note shall at such time be delayed or
otherwise affected by reason of the pendency against Kalium of a case
or proceeding under a bankruptcy or insolvency law, the Guarantor
agrees that, for purposes of this Guaranty Agreement and its
obligations hereunder, the maturity of such principal amount shall be
deemed to have been accelerated with the same effect as if the
holders of the Notes had accelerated the same in accordance with the
terms of the Note Agreement, and the Guarantor shall forthwith pay such
accelerated principal amount, accrued interest and premium, if any,
thereon and any other amounts guaranteed hereunder.
4B. PAYMENTS. The Guarantor hereby guarantees that the
Guaranteed Obligations will be paid to each holder of the Notes in
lawful currency of the United States of America and in immediately
available funds, at the times and places provided in, and otherwise
strictly in accordance with the terms and provisions of, the Note
Agreement and the Notes (regardless of any law, regulation or decree
now or hereafter in effect which might in any manner affect the
Guaranteed Obligations, or the rights of any such holder with respect
thereto as against Kalium, or cause or permit to be invoked any
alteration in the time, amount or manner of payment by Kalium of any or
all of the Guaranteed Obligations), without set-off or counterclaim and
free and clear of, and without reduction for or on account of, any
present or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions, withholdings now or hereafter
imposed, levied, collected, withheld or assessed by any country (or by
any political subdivision or taxing authority thereof or therein)
excluding income and franchise taxes of the United States of America or
any political subdivision, state or taxing authority thereof or therein
such non- excluded taxes being called "Foreign Taxes") . If any Foreign
Taxes are required to be withheld from any amount payable to any such
holder under this Guaranty Agreement or under the Notes, the amounts so
payable to such holder shall be increased to the extent necessary to
yield to such-holder (after payment of all Foreign Taxes) interest or
any such other amounts at the rates or in the amounts specified in the
Note Agreement and the Notes.
4C. RANK OF GUARANTY. The Guarantor agrees that its
obligations under this Guaranty Agreement shall rank at least pari
passu with all other unsecured senior obligations of the Guarantor now
or hereafter existing.
5. AFFIRMATIVE COVENANTS.
5A. Financial Statements. The Guarantor covenants that it
will cause to be delivered to each Significant Holder of any Notes in
triplicate:
(i) as soon as practicable and in any event within
50 days after the end of each quarterly period (other than
the last quarterly period) in each fiscal year, Consolidated
statements of income and cash flows of IMC and its
Subsidiaries for the period from the beginning of the current
fiscal year to the end of such quarterly period, and a
Consolidated balance sheet of IMC and its Subsidiaries as at
the end of such quarterly period, setting forth in each case
in comparative form figures for the corresponding period in
the preceding fiscal year, all in reasonable detail and
certified by an authorized financial officer of IMC, subject
to changes resulting from year-end adjustments;
(ii) as soon as practicable and in any event within 95
days after the end of each fiscal year, (a) Consolidated
statements of income and cash flows and a Consolidated
statement of shareholders' equity of IMC and its Subsidiaries
for such year, and a Consolidated balance sheet of IMC and
its Subsidiaries as at the end of such year, setting forth in
each case in comparative form corresponding Consolidated
figures from the preceding annual audit, reported on by
independent public accountants of recognized national
standing selected by IMC whose report shall be without
limitation as to scope of the audit and shall not be
qualified in any respect, and (b) a Consolidated unaudited
balance sheet of each Borrower and its Subsidiaries as of the
end of such fiscal year and Consolidated unaudited statements
of income and cash flows of such Borrower and its
Subsidiaries for such fiscal year;
(iii) promptly upon transmission thereof,
copies of all such financial statements, proxy statements,
notices and reports as it shall send to its public
stockholders and copies of all registration statements
(without exhibits) and all reports which it files with the
Securities and Exchange Commission (or any governmental body
or agency succeeding to the functions of the Securities and
Exchange Commission) , other than any such reports to which
the Securities and Exchange Commission accords confidential
treatment; and
(iv) with reasonable promptness, such other
information respecting the business, condition (financial or
otherwise), operations, performance, properties or prospects
of IMC or any of its Subsidiaries as such Significant Holder
may from time to time reasonably request.
Together with each delivery of financial statements required by clauses
(i) and (ii) above, the Guarantor will cause to be delivered to each
holder of any Notes an Officer's Certificate demonstrating (with
computations in reasonable detail) compliance by IMC and its
Subsidiaries with the provisions of paragraphs 5J, 6B(l)(iii),
6B(l)(vii), 6B(l)(x), 6B(2)(i), 6B(2)(ii)(F), 6B(2)(ii)(G),
6B(2)(ii)(J), 6B(2)(ii)(K), 6B(2)(ii)(M), 6B(2)(iii)(F), 6B(2)(iii)(G),
6B(3)(xiv), 6B(6)(ix) and stating that there exists no Event of Default
or Default, or, if any Event of Default or Default exists, specifying
the nature and period of existence thereto and what action the
Guarantor proposes to take with respect thereto. Together with each
delivery of financial statements required by clause (ii) above, the
Guarantor will cause to be delivered to each holder of any Notes a
certificate of such accountants stating that, in making the audit
necessary for their report on such financial statements, they have
obtained no knowledge of any Event of Default or Default, or, if they
have obtained knowledge of any Event of Default or Default, specifying
the nature and period of existence thereof. Such accountants, however,
shall not be liable to anyone by reason of their failure to obtain
knowledge of any Event of Default or Default which would not be
disclosed in the course of an audit conducted in accordance with
generally accepted auditing standards.
The Guarantor also covenants that immediately after any
Responsible Officer obtains actual knowledge of an Event of Default or
Default, it will cause to be delivered to each holder of any Notes an
Officer's Certificate specifying the nature and period of existence
thereof and what action the Guarantor proposes to take with respect
thereto.
5B. Inspection of Property. The Guarantor covenants that it
will permit any Person designated by any Significant Holder in writing,
at such Significant Holder's expense, under guidance of officers of the
Guarantor or its Subsidiaries, to visit and inspect any of the
properties of the Guarantor and its Subsidiaries, to examine the
corporate books and financial records of the Guarantor and its
Subsidiaries and make copies thereof and extracts therefrom and to
discuss the affairs, finances and accounts of any of such corporations
with the principal officers of the Guarantor, all at such reasonable
times and as often as such Significant Holder may reasonably request.
Notwithstanding anything to the contrary in paragraph 5A or 5B or
elsewhere in this Guaranty Agreement, unless and until an Event of
Default shall have occurred and be continuing, the Guarantor and its
Subsidiaries shall have no obligation to disclose to any Purchaser or
Transferee, or any representative or agent of any Purchaser or
Transferee, any confidential non-public proprietary information
relating to operational technology, including, without limitation,
information relating to the process of solution mining of potash (when
there is an Event of Default, to the extent practicable and to the
extent consistent with such Significant Holder's objectives, such
Person shall use reasonable efforts to inspect such confidential non-
public proprietary information on-site without making copies thereof).
If any such information does become known to any such Person, it shall
use its best efforts to keep such information confidential in
accordance with the requirements of this Guaranty Agreement.
5C. Covenant to Secure Notes Equally. The Guarantor
covenants that, if it or any Subsidiary shall create or assume any Lien
upon any of its property or assets, whether now owned or hereafter
acquired, other than Liens permitted by the provisions of paragraph
6B(l) (unless prior written consent to the creation or assumption
thereof shall have been obtained pursuant to paragraph (10A), it will
make or cause to be made effective provision whereby the Notes will be
secured by such Lien equally and ratably with any and all other Debt
thereby secured so long as any such other Debt shall be so secured.
5D. Maintenance of Insurance. The Guarantor covenants that
it and each Subsidiary shall maintain, with financially sound and
reputable insurers, insurance in such amounts and against such
liabilities and hazards as ordinarily carried by companies similarly
situated in the same or similar lines of business; provided, however,
that the Guarantor and its Subsidiaries may self-insure to the same
extent as other companies similarly situated in the same or similar
lines of business. The Guarantor has delivered to the Purchasers a
summary of the insurance plans set forth the Disclosure Letter and such
summary and the coverage described therein is satisfactory to the
Purchasers as of the date hereof.
5E. Agreement Assuming Liability on Notes. The Guarantor
covenants that, if at any time any Person should become liable (as co-
obligor, endorser, guarantor or surety) on any other obligation for
borrowed money of the Guarantor or on any obligation for borrowed money
of any Subsidiary (other than obligations incurred by such Subsidiary
in the ordinary course of its business in connection with take-or-pay
contracts, chemical supply contracts or other similar ordinary course
agreements or arrangements), the Guarantor will, at the same time,
cause such Person to deliver to the holders of the Notes an agreement
pursuant to which such Person becomes similarly liable on the Notes.
5F. Compliance with Laws. Except as to environmental
matters, the Guarantor covenants that it and each Subsidiary shall
comply with all applicable laws, rules, regulations, decrees and orders
of all Federal, state, local or foreign courts or governmental
agencies, authorities, instrumentalities or regulatory bodies
noncompliance with which could be reasonably expected to result in a
Material Adverse Effect. With respect to environmental matters, the
Guarantor covenants that it and each Subsidiary shall comply with all
applicable laws, rules, regulations, decrees and orders of all federal,
state, local or foreign courts or governmental agencies, authorities,
instrumentalities or regulatory bodies relating to the protection of
the environment ("Environmental Laws") noncompliance with which could
be reasonably expected to have a material adverse effect on the ability
of the Guarantor and its Subsidiaries to perform and comply with all of
their obligations under this Guaranty Agreement and the documents
delivered in connection herewith. Notwithstanding any other provision
contained in this Guaranty Agreement to the contrary, the provisions of
the immediately preceding sentence of this paragraph 5F shall be the
only covenant applicable to compliance with Environmental Laws.
5G. Payment of Taxes, Etc. The Guarantor covenants that it
will pay and discharge, and cause the Subsidiaries to pay and
discharge, before the same shall become delinquent, (i) all income and
other material taxes, assessments and governmental charges or levies
imposed upon it or upon its property and (ii) all lawful claims that,
if unpaid, might by law become a Lien upon its property; provided,
however, that neither the Guarantor nor any Subsidiary shall be
required to pay or discharge any such tax, assessment, charge, levy or
claim that is being contested in good faith and by proper proceedings
and as to which adequate reserves are being maintained, unless and
until any Lien attaches with respect thereto which is not a Lien
permitted under paragraph 6B(l).
5H. Performance of Related Documents. The Guarantor
covenants that it will, and will cause each Subsidiary (as applicable)
to, perform and observe all of the terms and provisions of each Related
Document to be performed or observed by it, maintain each such Related
Document in full force and effect, enforce such Related Document in
accordance with its terms, take all such action to such end as may be
from time to time reasonably requested by any Significant Holder and,
upon the reasonable request of any Significant Holder, make to each
other party to each such Related Document such demands and requests for
information and reports or for action as such Person is entitled to
make under such Related Document, in each case except to the extent
that the failure to do so could not be reasonably likely to materially
impair the value of the interests or materially impair the rights of
the Guarantor or any Subsidiaries and could not be reasonably likely to
materially impair the interests or materially impair the rights of any
holder of Notes.
5I. Transactions with Affiliates. The Guarantor covenants
that it will conduct, and cause the Subsidiaries to conduct, all
transactions otherwise permitted under this Guaranty Agreement with any
of their Affiliates on terms that are fair and reasonable and no less
favorable to the Guarantor or such Subsidiary (as applicable) than it
would obtain in a comparable arm's-length transaction with a Person not
an Affiliate, other than: (i) the marketing and administrative services
agreement between Global Operations and the Managing Partner, (ii) the
employee leasing agreement between Global Operations and the Managing
Partner, (iii) transactions between the Joint Venture Company and (A)
Global Operations' railcar repair business located at Fitzgerald,
Georgia, (B) Global Operations' "Rainbow" Division, (C) Vigoro's and
its Subsidiaries, "FarMarkets" Divisions pursuant to the arrangements
set forth in the Partnership Agreement as in effect on the date hereof
and (D) IMC Canada and (iv) Investments and other transactions between
or among the Guarantor and its Subsidiaries to the extent expressly
permitted by paragraphs 6B(2), 6B(3), 6B(5) or 6B(6).
5J. Financial Covenants. The Guarantor covenants that there
shall be:
(a) Tangible Net Worth. Maintained at the end of each
fiscal quarter of IMC Adjusted Tangible Net Worth in an amount equal at
least to the sum of (i) $900,000,000, (ii) an amount equal to 40% of
cumulative Consolidated net income (calculated with the payment of
dividends on the Vigoro Series E Preferred Stock being treated as
interest payments) of IMC and its Subsidiaries for each fiscal quarter
of IMC commencing April 1, 1996 and (iii) the amount, if any, of equity
resulting from the conversion of IMC's 6.25% Convertible Subordinated
Notes due 2001 into equity.
(b) Interest Coverage Ratio. Maintained at the end of each
fiscal quarter of IMC a ratio of (x) an amount equal to (i)
Consolidated EBITDA of IMC and its Subsidiaries less (ii) income from
minority interests held by IMC or any of its Subsidiaries to (y) the
sum of (A) interest payable on, and amortization of debt discount in
respect of, all Debt of IMC and its Subsidiaries (excluding, to the
extent included therein, interest in respect of the Chemical Supplier
Debt and contingent obligations in respect of Membership Debt) and (B)
cash dividends on the Vigoro Series E Preferred Stock of not less than
3.25:1 for the four consecutive fiscal quarters of the Guarantor then
ended.
(c) Leverage Ratio. Maintained at all times a ratio of (i)
the sum of (A) Consolidated Funded Debt and (B) the average (calculated
as at the end of each of the twelve most recently ended months)
outstanding Consolidated short-term Debt with a maturity of less than
one year from the date of the creation of such liabilities (excluding,
to the extent included therein, Debt in respect of Hedge Agreements,
the Chemical Supplier Debt and contingent obligations in respect of
Membership Debt) and (C) the book value of the Vigoro Series E
Preferred Stock minus (D) cash and Cash Equivalents in excess of
$15,000,000 of IMC and its Subsidiaries on hand at such time to (ii)
Capitalization, in each case, of IMC and its Subsidiaries of not more
than 0.55:1.
6. NEGATIVE COVENANTS. Unless the Required Holder(s) shall
otherwise consent in writing, the Guarantor agrees to observe and
perform and to cause its Subsidiaries to observe and perform each of
the negative covenants set forth below so long as any Note shall remain
outstanding.
6A. [INTENTIONALLY OMITTED]
6B. Credit and other Restrictions. The Guarantor covenants
that it will not and will not permit any Subsidiary to:
6B(l). Lien Restrictions. Create, incur, assume or suffer
to exist any Lien on or with respect to any of its properties of any
character (including, without limitation, accounts) whether now owned
or hereafter acquired, or sign or file under the Uniform Commercial
Code or other applicable personal property security legislation of any
jurisdiction, a financing statement that names the Guarantor or any
Subsidiary as debtor, or sign any security agreement authorizing any
secured party thereunder to file such financing statement, or assign
any accounts or other right to receive income, excluding, however, from
the operation of the foregoing restrictions the following:
(i) Permitted Liens;
(ii) Liens in existence on the date hereof which are
specifically described on Schedule 6B(l) of the IMC Agreement;
(iii) (A) Liens arising in connection with Capitalized
Leases, provided that no such Lien shall extend to or cover any
property or assets other than the assets subject to such
Capitalized Leases, and (B) Liens upon or in real property or
equipment acquired or held by the Guarantor or any of its
Subsidiaries in the ordinary course of business after the date
hereof to secure the purchase price of such property or equipment
or to secure Debt incurred or assumed solely for the purpose of
financing the acquisition, construction or improvement of any such
property or equipment to be subject to such Liens, or Liens
existing on any such property or equipment at the time of
acquisition (other than any such Liens created in contemplation of
such acquisition that do not secure the purchase price), or
extensions, renewals or replacements of any of the foregoing for
the same or a lesser amount as at the time of such acquisition,
construction or improvement; provided, however, that no such Lien
shall extend to or cover any property other than the property or
equipment being acquired, constructed or approved and no such
extension, renewal or replacement shall extend to or cover any
property not theretofore subject to the Lien being extended,
renewed or replaced; provided further that such Lien shall be
incurred within 180 days after such acquisition, construction or
improvement; and provided still further that the aggregate
principal amount of the Debt secured by Liens permitted by this
clause (iii) shall not exceed $25,000,000 at any time outstanding
and that any such Debt shall not otherwise be prohibited by the
terms of this Guaranty Agreement;
(iv) Liens arising by reason of customary deposits necessary
to qualify the Guarantor or any of its Subsidiaries to maintain
self-insurance, to the extent such self-insurance is permitted
hereunder;
(v) security deposits customarily required in connection with
leases of real property entered into in the ordinary course of
business;
(vi) any interest or title of a lessor under any operating
lease and liens arising from precautionary filings of UCC
financing statements regarding leases;
(vii) attachment, judgment and other similar Liens arising in
connection with court proceedings; provided that the execution or
other enforcement of such Liens is effectively stayed within ten
days after the Guarantor or one of its Subsidiaries receives
notice thereof and the claims secured thereby are being actively
contested in good faith by appropriate proceedings and against
which an adequate reserve has been established, and Provided
further that the aggregate amount secured by such Liens does not
exceed $15,000,000;
(viii) Liens on accounts receivable and other related assets
(including the taking of possession of chattel paper) arising
solely in connection with the sale, assignment or other
disposition of such accounts receivable permitted under paragraph
6B(7);
(ix) The replacement, extension or renewal of any Lien
permitted by clause (ii) above upon or in the same property
theretofore subject thereto (provided there is no increase in the
amount, nor any change in any direct or contingent obligor, of the
Debt secured thereby); and
(X) Liens not otherwise covered in (i) through (ix) of this
paragraph 6B(l) which Liens do not secure obligations in an amount
exceeding $25,000,000 in the aggregate.
6B(2). Debt Restriction. Create, incur, assume or suffer to
exist any Debt other than:
(i) in the case of IMC, unsecured Debt, provided that
immediately after giving effect thereto, IMC shall be in pro forma
compliance (calculated based on historical financial statements
most recently furnished or required to be furnished pursuant to
paragraph 5A(i) or (ii) as though such Debt had been incurred at
the beginning of the period covered thereby, adjusted to account
for the refinancing or replacement of Debt by such Debt being
incurred and for any permanent repayments of Debt) with the
covenants set forth in paragraph 5J, provided further, that with
respect to any Debt arising under Hedge Agreements, such Hedge
Agreements shall be designed to hedge against fluctuations in
interest rates, commodity prices or foreign exchange rates
incurred in the ordinary course of business, shall be consistent
with prudent business practices, and shall be non-speculative in
nature (including, without limitation, with respect to the term
and purpose thereof);
(ii) in the case of IMC's Subsidiaries (other than the Joint
Venture Company),
(A) Membership Debt with respect to (i) Canpotex
incurred in the ordinary course of business and consistent
with prudent business practices or (ii) SKMG incurred in the
ordinary course of business and consistent with past business
practices,
(B) Debt existing on the date hereof, as set forth on
Part I of Schedule 6B(2) of the IMC Agreement (such Debt,
other than Debt consisting of Intercompany Debt, being the
"Existing Subsidiary Debt"), and any Debt extending the
maturity of, or refunding or refinancing, in whole or in
part, any Existing Subsidiary Debt, provided that the terms
of any such extending, refunding or refinancing Debt, and of
any agreement entered into and of any instrument issued in
connection therewith, are no more restrictive in any material
respects than the terms of the Existing Subsidiary Debt being
extended, refunded or refinanced thereby (it being understood
that Debt being refinanced at maturity may bear interest at
then-market rates) and provided further that the principal
amount of such Existing Subsidiary Debt shall not be
increased above the principal amount thereof outstanding
immediately prior to the Restatement Date and the direct and
contingent obligors therefor shall not be changed (other than
the addition of the guaranty of such Debt by IMC) to the
extent such guarantee is otherwise permitted under paragraph
6B(2)(i) , as a result of or in connection with such
extension, refunding or refinancing,
(C) Debt arising under Hedge Agreements designed
to hedge against fluctuations in interest rates, commodity
prices or foreign exchange rates incurred in the ordinary
course of business and consistent with prudent business
practices, provided that such Hedge Agreements shall be non-
speculative in nature (including, without limitation, with
respect to the term and purpose thereof),
(D) indorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course
of business,
(E) Debt owing from a Subsidiary Guarantor to another
Subsidiary Guarantor,
(F) (i) prior to the Release Date, (x) Debt owing
from a Subsidiary Guarantor to a Non-Guarantor Subsidiary (y)
Debt owing from a Non-Guarantor Subsidiary to any other Non-
Guarantor Subsidiary, and (z) Debt owing from a Non-Guarantor
Subsidiary to a Subsidiary Guarantor, which, shall not
exceed, in the aggregate, $25,000,000 at any time
outstanding, and (ii) after the Release Date, Debt owing from
any Subsidiary of IMC to any other Subsidiary of IMC,
(G) (i) Debt in an amount of $300,000,000 in
connection with the reinstatement of the Subordinated
Intercompany Notes, and (ii) other Debt owing to IMC, which,
prior to the Release Date, shall not exceed, in the
aggregate, $300,000,000 at any time outstanding,
(H) Chemical Supplier Debt incurred in the ordinary
course of business and consistent with past business
practices,
(I) Debt of any Subsidiary arising in connection with
the redemption of the Vigoro Series E Preferred Stock
outstanding on the date hereof upon exercise of any mandatory
redemption right; provided, however, that the provisions of
the documents governing or evidencing the same are, in the
good faith determination of the Required Holder(s), not
materially more restrictive than the provisions in this
Guaranty Agreement and not materially adverse to the
interests of the holders of the Notes,
(J) in the case of Global Operations only and
only during such time as Global Operations is a party to the
Subsidiary Guaranty as a "Guarantor" (as such term is defined
therein) and the Subsidiary Guaranty is in full force and
effect, Debt constituting money borrowed by Global Operations
under the New Credit Agreement; provided, however, that the
aggregate outstanding principal amount thereof at no time
exceeds $405,000,000 minus the aggregate outstanding
principal amount of money borrowed by IMC under the New
Credit Agreement; provided further, that in the event any
Default or Event of Default shall occur and be continuing
Global Operations shall not, during such time, be permitted
by reason of this clause (J) to incur Debt (as opposed to
permitting to exist Debt theretofore incurred) constituting
money borrowed under the New Credit Agreement,
(K) in the case of Kalium only, Funded Debt
constituting money borrowed by Kalium under the New Credit
Agreement; provided, however, that the aggregate principal
amount borrowed shall not exceed $50,000,000,
(L) other Debt not to exceed in the aggregate
$120,000,000 outstanding at any time;
(iii) in the case of the Joint Venture Company,
(A) Debt existing on the date hereof, as set forth
on Part II of Schedule 6B (2) of the IMC Agreement (the
"Existing JV Debt"), and any Debt extending the maturity of,
or refunding or refinancing, in whole or in part, any JV
Existing Debt, provided that the terms of any such extending,
refunding or refinancing Debt, and of any agreement entered
into and of any instrument issued in connection therewith,
are no more restrictive in any material respects than the
terms of the Existing Debt being extended, refunded or
refinanced thereby (it being understood that Debt being
refinanced at maturity may bear interest at then-market
rates) and provided further that the principal amount of such
JV Existing Debt shall not be increased above the principal
amount thereof outstanding immediately prior to the
Restatement Date and the direct and contingent obligors
therefor shall not be changed as a result of or in connection
with such extension, refunding or refinancing,
(B) indorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary
course of business,
(C) Debt arising under Hedge Agreements designed
to hedge against fluctuations in interest rates, commodity
prices or foreign exchange rates incurred in the ordinary
course of business and consistent with prudent business
practices, provided that such Hedge Agreements shall be non-
speculative in nature (including, without limitation, with
respect to the term and purpose thereof),
(D) Membership Debt with respect to PhosChem or
Phosrock incurred in the ordinary course of business and
consistent with past business practices,
(E) Chemical Supplier Debt incurred in the ordinary
course of business and consistent with past business
practices, and
(F) other Debt not to exceed in the aggregate
$50,000,000 outstanding at any time; and
(iv) notwithstanding the foregoing provisions of this
paragraph 6B(2), the Guarantor shall at all times be in compliance
with the provisions of paragraph 5J.
6B(3). Investments. Make or hold any Investment in any
Person other than:
(i) the Guarantor and its Subsidiaries may acquire and hold
receivables owing to them, if created or acquired in the ordinary
course of business and payable or dischargeable in accordance with
prudent business practices;
(ii) Investments by the Guarantor or any of its Subsidiaries
in Cash Equivalents;
(iii)Investments by the Guarantor or any of its Subsidiaries
resulting from Hedge Agreements permitted under paragraph 6B(2)(i)
or (ii)(C);
(iv) Investments (a) by Global Operations and the Managing
Partner in the Joint Venture Company in accordance with the terms
of the Partnership Agreement and (b) by Global Operations in IMC
Partner, the Managing Partner and the Joint Venture Company, in
each case pursuant to and in accordance with the Partnership
Agreement or as otherwise permitted under paragraph 6B(2)(iii)(A);
(v) Equity investments by the Guarantor or any of its
Subsidiaries in any of its Subsidiaries made prior to the date
hereof;
(vi) Investments by the Guarantor or any of its Subsidiaries
in any third party made prior to the date hereof and set forth on
Schedule 6B(3) of the IMC Agreement;
(vii) Investments in connection with the acquisition of
all or a material part of the assets or capital stock or other
equity interest of any Person provided, however, that in
connection with any such acquisition for which the aggregate
consideration payable in connection therewith is in excess of 5%
of Adjusted Tangible Net Worth (calculated as at the end of the
most recent fiscal quarter for which financial statements have
been furnished to the Significant Holders pursuant to paragraph
5A(i) or (ii)), the Guarantor shall cause to be delivered to each
holder of Notes an officer's certificate executed by the chief
financial officer or treasurer of IMC which certificate shall (a)
demonstrate that on a pro forma basis determined as if such
acquisition had been consummated on the date occurring 12 months
prior to the last day of the most recently ended fiscal quarter
for which financial statements have been furnished pursuant to
paragraph 5A(i) or (ii), IMC and its Subsidiaries would have been
in compliance with paragraph 5J(b) for the relevant period ended
on the last day of such fiscal quarter, (b)demonstrate compliance
with paragraph 5J(a) and paragraph 5J(c) after giving effect to
such acquisition, and (c) state that no Default or Event of
Default then exists or would result therefrom;
(viii) the Guarantor or any of its Subsidiaries may acquire
and hold promissory notes received in connection with any asset
sale permitted pursuant to paragraph 6B(6)(ix);
(ix) Equity Investments made after the date hereof by the
Guarantor and its Subsidiaries in any of its Subsidiaries;
(x) Investments consisting of Debt owing to the Guarantor or
any of its Subsidiaries permitted under paragraph 6B(2)(i) or
(ii)(E), (F) or (G);
(xi) Investments consisting of guaranties by the Guarantor of
Debt of its Subsidiaries to the extent permitted under paragraph
6B(2);
(xii) Investments consisting of the purchase, repurchase,
self-tender or redemption of capital stock of IMC;
(xiii) Investments in special purpose vehicles on a basis'
consistent with the securitization program for the Joint Venture
Company in effect on the date hereof in connection with
securitizations, to the extent otherwise permitted hereunder; and
(xiv) other Investments having an aggregate cost at any time
not to exceed $35,000,000.
6B(4). Sale of Stock of Subsidiaries. Sell or otherwise
dispose of any shares of Voting Stock of any Relevant Subsidiary (other
than (i)the contribution of the Voting Stock of Kalium and/or CCP to
IMC Global Potash Holdings and (ii) the sale or other disposition by
Kalium of 10 shares of Preferred Stock owned by it in KCL Holdings,
Inc.) or any warrants, rights or options to acquire such Voting Stock
or permit any Relevant Subsidiary to issue, sell or otherwise dispose
of any shares of its Voting Stock or the Voting Stock of any other
Relevant Subsidiary (other than the issuance of Preferred Stock of IMC
Global Potash Holdings in an amount not to exceed $10,000,000) or any
warrants, rights or options to acquire such Voting Stock.
6B(5). Mergers, Etc. Merge into, amalgamate or consolidate
with any Person or permit any Person to merge into it, or permit any of
its Subsidiaries to do so, or enter into any contract or arrangement
that, upon consummation, will result in any Person or two or more
Persons acquiring control over Voting Stock of the Company (or other
securities convertible into such securities) representing 35% or more
of the combined voting power of all Voting Stock of the Company, except
that (i) IMC, Bull and Vigoro may consummate the Merger, (ii) any Non-
Guarantor subsidiary may merge into, amalgamate or consolidate with any
other Non-Guarantor Subsidiary, (iii) any Subsidiary Guarantor may
merge into, amalgamate or consolidate with any other Subsidiary
Guarantor, (iv) any Subsidiary Guarantor may merge into, amalgamate or
consolidate with any Non-Guarantor Subsidiary, provided, however, that
in the case of any such merger, amalgamation or consolidation prior to
the Release Date, such Subsidiary Guarantor is the surviving
corporation and (v) after the Release Date, (x) any of IMC's wholly
owned Subsidiaries may merge into IMC and (y) any of IMC's Subsidiaries
may merge into any other of IMC's Subsidiaries; provided further that
in each case, immediately after giving effect thereto, no event shall
occur and be continuing that constitutes a Default or an Event of
Default and, in the case of any such merger to which IMC is a party,
IMC is the surviving corporation.
6B(6). Sales, Etc. of Assets. Sell, lease, transfer or
otherwise dispose of any assets, including, without limitation, any
manufacturing plant or substantially all assets constituting the
business of a division, branch or other unit operation, or grant any
option or other right to purchase, lease or otherwise acquire any
assets other than inventory to be sold in the ordinary course of its
business, except:
(i) sales of assets in the ordinary course of its business
(whether to a to a third party or to any other Subsidiary);
(ii) in a transaction authorized by paragraph 6B(5);
(iii) the sale of IMC's 50% interest in Chinhae Chemical
Company, Ltd., a Korean Chemical Company, for cash and for fair
value;
(iv) the limited recourse sale of accounts receivable
permitted under paragraph 6B(7);
(v) the lease (as lessee) by the Guarantor or any of
its Subsidiaries of real or personal property in the ordinary
course of business (as long as such lease does not create Debt
under Capitalized Leases not permitted under paragraph 6B(2));
(vi) prior to the Release Date, any sale of assets by
(A) any Subsidiary Guarantor to any Non-Guarantor Subsidiary, (B)
the Guarantor to any of its Subsidiaries, and (C) any Subsidiary
Guarantor to the Guarantor in an aggregate amount under this
subclause (vi) not to exceed $25,000,000, from the date hereof to
the Release Date;
(vii) after the Release Date, any sale or other disposition
of assets (A) made by the Guarantor to a Subsidiary of the
Guarantor for fair value (including by way of liquidation or
dissolution of such Subsidiary) and (B) made by a Subsidiary of
the Guarantor to any other Subsidiary of the Guarantor or to the
Guarantor;
(viii) sale, discount, or transfer of (a) delinquent accounts
receivable in the ordinary course of business for purposes of
collection or (b) receivables arising in connection with credit
card purchases sold or transferred, in each case, in the ordinary
course of business and consistent with past practices; and
(ix) other sales of assets (except as set forth below) and
for fair value in an amount not to exceed (A) an aggregate
purchase price of $50,000,000 for any consecutive twelve-month
period or (B) an aggregate of $150,000,000 from the date hereof
until all Notes are fully paid.
6B(7). Sale or Discount of Receivables. Notwithstanding any
other provision herein, sell with recourse, or discount or otherwise
sell, assign or dispose for less than the fact value thereof, any of
its notes or accounts receivable, provided that IMC and its
Subsidiaries may sell with recourse or discount or otherwise sell,
assign or dispose for less than face value thereof notes or accounts
receivable having a face value that does not exceed an aggregate
outstanding amount of $150,000,000 at any time.
6C. Business. The Guarantor covenants that it will not, and
will not permit any of its Subsidiaries to, engage (directly or
indirectly) in any business other than lines of business in which IMC
or its Subsidiaries was engaged on the date hereof and other reasonably
related business incidental to such lines of business.
6D. Charter Amendments. IMC covenants that it will not
amend, or permit any of its Subsidiaries to amend, its charter or
bylaws in any manner that could be reasonably expected to be adverse to
any holder of Notes.
6E. Accounting Changes. IMC covenants that it will not make
or permit, or permit any of its Subsidiaries to make or permit, any
change in accounting policies or reporting practices, except as
required or permitted (with the consent of the Guarantor's independent
public accountants), by U.S. or Canadian generally accepted accounting
principles or make more than two changes in its fiscal year, provided
that the Guarantor shall promptly provide written notice to the holders
of Notes of any change in its fiscal year; provided further, however,
that if any changes in U.S. GAAP or Canadian GAAP are hereafter
required or permitted and are adopted by the Guarantor or any of its
Subsidiaries and such changes result in a material change in the method
of calculation of any of the financial covenants contained in paragraph
5J or the restrictions contained in paragraph 6B or in the related
definitions or terms used in either of such Sections ("Material
Accounting Changes"), the parties hereto agree to enter into
negotiations, in good faith, in order to amend such provisions in a
credit neutral manner so as to reflect equitably such changes with the
desired result that the criteria for evaluating IMC and its
Subsidiaries, financial condition shall be the same after such changes
as if such changes had not been made; provided, however, that no
Material Accounting Change shall be given effect in such calculations
until such provisions are amended, in a manner reasonably satisfactory
to IMC and the Required Holders.
6F. Amendment, Etc. of Related Documents. The Guarantor
covenants that it will not cause the cancellation of or termination of
any Related Document or consent to or accept any cancellation or
termination thereof, amend or otherwise modify any Related Document or
give any consent, waiver or approval thereunder, waive any default
under or breach of any Related Document, agree in any manner to any
other amendment, modification or change of any term or condition of any
Related Document or take any other action in connection with any
Related Document or permit any of its Subsidiaries to do any of the
foregoing, in each case, that would materially impair or reduce the
value of the interests or materially impair the rights of the Guarantor
or any Subsidiary or that would materially impair the interests or
materially impair the rights of any holder of Notes.
6G. Partnerships. The Guarantor covenants that it will not
become a general partner in any general or limited partnership, or
permit any of its Subsidiaries to do so, other than (i) any Subsidiary
the sole assets of which consist of its interest in such partnership,
(ii) as contemplated by, and in accordance with the terms of, the
Partnership Agreement and (iii) other partnerships so long as before
and after giving effect thereto, no Default or Event of Default shall
have occurred and be continuing.
7. [Intentionally Left Blank]
8. REPRESENTATIONS, COVENANTS AND WARRANTIES. The Guarantor
represents, covenants and warrants as follows:
8A. Organization, Etc.
(a) The Guarantor (i) is a corporation duly organized,
validly existing and good standing under the laws of the
jurisdiction of its incorporation, (ii) is duly qualified and in
good standing as a foreign corporation in each other jurisdiction
in which it owns or leases property or in which the conduct of its
business requires it to so qualify or be licensed except where the
failure to so qualify or be licensed could not be reasonably
likely to have a Material Adverse Effect and (iii) has all
requisite corporate power and authority to own or lease and
operate its properties and to carry on its business as now
conducted and as proposed to be conducted.
(b) Set forth on Schedule 8A(b) of the IMC Agreement is a
complete and accurate list of all Relevant Subsidiaries as of the
Restatement Date, showing as of the Restatement Date (as to each
such Subsidiary) the jurisdiction of its incorporation, as of the
Restatement Date, the number of shares of each class of capital
stock authorized, and the number outstanding, on the Restatement
Date and the percentage of the outstanding shares of each such
class owned (directly or indirectly) by IMC and its Subsidiaries
and the number of shares covered by all outstanding options,
warrants, rights of conversion or purchase and similar rights at
the date hereof. All of the outstanding capital stock of all of
such Subsidiaries has been validly issued, is fully paid and non-
assessable and is owned as of the Restatement Date by the
Guarantor or one or more of its Subsidiaries free and clear of all
Liens. Each such Subsidiary (i) is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation, (ii) is duly qualified and in
good standing as a foreign or extra-provincial corporation in each
other jurisdiction in which it owns or leases property or in which
the conduct of its business requires it to so qualify or be
licensed except where the failure to so qualify or be licensed
could not be reasonably likely to have a Material Adverse Effect
and (iii) has all requisite corporate power and authority to own
or lease and operate its properties and to carry on its business
as now conducted and as proposed to be conducted.
(c) The execution, delivery and performance by the Guarantor
of this Guaranty Agreement, is within the Guarantor's corporate
powers, and has been duly authorized by all necessary corporate
action.
(d) All applicable waiting periods in connection with the
Merger and the other transactions contemplated hereby have expired
and no action has been taken by any competent authority
restraining, preventing or imposing materially adverse conditions
upon the transactions contemplated hereby.
(e) This Guaranty Agreement has been duly executed and
delivered by the Guarantor. This Guaranty Agreement is the legal,
valid and binding obligation of the Guarantor enforceable against
the Guarantor in accordance with its terms subject to the effect
of any applicable bankruptcy, insolvency, reorganization,
moratorium or similar law affecting creditors, rights generally.
8B. Financial Statements.
(a) The Consolidated balance sheets of IMC and its
Subsidiaries as at June 30, 1995, and the related Consolidated
statement of operations of IMC and its Subsidiaries for the fiscal
year then ended, accompanied by an opinion of IMC's independent
public accountants, and the Consolidated balance sheets of IMC and
its Subsidiaries as at September 30, 1995, and the related
Consolidated statement of operations of IMC and its Subsidiaries
for the three months then ended, duly certified by the treasurer
or chief financial officer of IMC, copies of which have been
furnished to the Purchasers, fairly present, subject, in the case
of said balance sheets as at September 30, 1995, and said
statement of operations for the three months then ended, to year-
end audit adjustments, the Consolidated financial condition of IMC
and its Subsidiaries as at such dates and the Consolidated results
of the operations of IMC and its Subsidiaries for the periods
ended on such dates, all in accordance with generally accepted
accounting principles applied on a consistent basis, and since
June 30, 1995, there has been no Material Adverse Change.
(b) The Consolidated balance sheets of Vigoro and its
Subsidiaries as at December 31, 1994, and the related Consolidated
statements of income and cash flows of Vigoro and its Subsidiaries
for the fiscal year then ended, accompanied by an opinion of
Vigoro's independent public accountants, and the Consolidated
balance sheets of Vigoro and its Subsidiaries as at December 31,
1995, and the related Consolidated statements of income and cash
flows of Vigoro and its Subsidiaries for the twelve months then
ended, duly certified by the treasurer or chief financial officer
of Vigoro, copies of which have been furnished to you, fairly
present, subject, in the case of said balance sheets as at
December 31, 1995, and said statements of income and cash flows
for the twelve months then ended, to year-end audit adjustments,
the Consolidated financial condition of Vigoro and its
Subsidiaries as at such dates and the Consolidated results of the
operations of Vigoro and its Subsidiaries for the periods ended on
such dates, all in accordance with generally accepted accounting
principles applied on a consistent basis, and since December 31,
1994, there has been no Material Adverse
Change.
(c) The unaudited Consolidated pro forma condensed
combined financial information of IMC and its Subsidiaries
consisting of the unaudited Consolidated pro forma combined
statement of operations for the one-year period ending June 30,
1995 and the unaudited pro forma condensed Consolidated pro forma
combined balance sheet at September 30, 1995, certified by the
treasurer or chief financial officer of IMC and the treasurer or
chief financial officer of Vigoro, copies of which have been
furnished to you, fairly present the Consolidated pro forma
financial condition of IMC and its Subsidiaries at September 30,
1995 and the Consolidated pro forma results of operations of IMC
and its Subsidiaries for the one-year period ended on June 30,
1995, in each case giving effect to the Merger all in accordance
with U.S. GAAP.
(d) The Consolidated forecasted balance sheets, income
statements and cash flows statements of IMC and its Subsidiaries
delivered to you in connection herewith were prepared in good
faith on the basis of the assumptions stated therein, which
assumptions were fair in the light of conditions existing at the
time of delivery of such forecasts, and represented, at the time
of delivery, IMC's and Vigoro's, as applicable, good faith
estimate of its and its applicable Subsidiaries, future financial
performance, it being understood that uncertainty is inherent in
any forecasts or projections and that no assurances can be given
by IMC or Vigoro of the future achievement of such performance.
8C. Actions Pending. Except as to environmental matters (which
are addressed solely by paragraph 8L) and litigation set forth in the
Disclosure Letter, there is no action, suit, investigation or
proceeding pending or, to the actual knowledge of the Responsible
Officers of IMC, threatened against the Guarantor or any Subsidiary or
any properties or rights of the Guarantor or any Subsidiary, by or
before any court, arbitrator or administrative or governmental body
which could be reasonably expected to have a Material Adverse Effect,
and there has been no material change in the status, or financial
effect on IMC or any Subsidiary, of the litigation and environmental
matters referenced in the Disclosure Letter from that described therein
that could reasonably be expected to have a Material Adverse Effect.
With respect to the litigation set forth in the Disclosure Letter, to
the actual knowledge of the Responsible Officers of IMC, there have
been no actions taken by IMC or any of its Subsidiaries that are the
subject of such litigation that could be reasonably expected to have a
material adverse effect on the ability of IMC and its Subsidiaries to
perform and comply with all their respective obligations under this
Guaranty Agreement and the other Transaction Documents.
8D. Outstanding Indebtedness. Neither the Guarantor nor any
Subsidiary has any Debt outstanding except as permitted by paragraph
6B(2). There exists no default under the provisions of any instrument
evidencing such Debt or of any agreement relating thereto.
8E. Title to Properties. IMC has, and each Subsidiary has, good
and indefeasible title to its respective real properties(other than
properties which it leases)and good title to all of its other
properties and assets, including the properties and assets reflected in
the most recent audited balance sheet of IMC referred to in paragraph
8B (other than properties and assets disposed of in the ordinary course
of business), subject to no Lien of any kind except Liens permitted by
paragraph 6B(l). IMC and each Subsidiary enjoys peaceful an undisturbed
possession of all leases necessary in any material respect for the
conduct of their respective businesses, none of which contains any
unusual or burdensome provisions which could be reasonably expected to
materially affect or impair the operation of such businesses. All such
leases are valid and subsisting and are in full force and effect.
8F. Taxes. IMC has, and each Subsidiary has, filed all federal,
state, provincial, local and foreign income and other material tax
returns which are required to be filed, and each has paid all income
and other material taxes as shown on such returns and on all
assessments received by it to the extent that such taxes have become
due, except for such taxes for which valid extensions have been filed
and not denied and for such other taxes as are being contested in good
faith by appropriate proceedings for which adequate reserves have been
established in accordance with generally accepted accounting
principles, unless and until any Lien resulting therefrom attaches
which is not a Lien permitted under paragraph 6(B)(1).
8G. Conflicting Agreements and Other Matters. As of the
Restatement Date, neither the Guarantor nor any of its Subsidiaries is
a party to any contract or agreement or subject to any charter or other
corporate restriction which materially and adversely affects its
business, property or assets, or financial condition. Neither the
execution nor delivery of this Guaranty Agreement or any other
Transaction Document, nor the offering, issuance and sale of the Notes,
nor fulfillment of nor compliance with the terms and provisions hereof
and thereof will conflict with, or result in a breach of the terms,
conditions or provisions of, or constitute a default under, or result
in any violation of, or result in the creation of any Lien upon any of
the properties or assets of the Guarantor or any of its Subsidiaries
pursuant to, the charter or by-laws of the Guarantor or any of its
Subsidiaries, any award of any arbitrator or any agreement (including
any agreement with stockholders) , instrument, order, judgment, decree,
statute, law, rule or regulation to which IMC or any of its
Subsidiaries is subject.
8H. [INTENTIONALLY OMITTED.]
8I. Regulation G, Etc. The proceeds of sale of the Vigoro Notes
were used primarily to refinance certain existing Debt of Vigoro and
for its working capital purposes. None of such proceeds were used,
directly or indirectly, for the purpose whether immediate, incidental
or ultimate, of purchasing or carrying any margin stock or for the
purpose of maintaining, reducing or retiring any Debt which was
originally incurred to purchase or carry any stock that is currently a
margin stock or for any other purpose which might constitute this
transaction a "purpose credit" within the meaning of Regulation G.
Neither the Guarantor nor any of its Subsidiaries is engaged
principally, or as one of their important activities, in the business
of extending credit for the purpose of purchasing or carrying margin
stock, and less than twenty-five percent (25%) of the assets of the
Guarantor and its Subsidiaries subject to any arrangement (as such term
is used in Section 207.2(f) of Regulation G) hereunder consists of
margin stock. Neither the Guarantor nor any agent acting on its behalf
has taken or will take any action which might cause this Guaranty
Agreement to violate Regulation G, Regulation T or any other regulation
of the Board of Governors of the Federal Reserve System or to violate
the Securities Exchange Act of 1934, as amended, in each case as in
effect now or as the same may hereafter be in effect.
8J. ERISA. No accumulated funding deficiency (as defined in
section 302 of ERISA and section 412 of the Code), whether or not
waived, exists with respect to any Plan (other than a Multiemployer
Plan). No liability to the Pension Benefit Guaranty Corporation has
been or is expected by IMC or any ERISA Affiliate to be incurred with
respect to any Plan (other than a Multiemployer Plan) by IMC, any
Subsidiary or any ERISA Affiliate which is or would be materially
adverse to the performance, business, assets, operations, properties,
condition (financial or otherwise) or prospects of IMC and its
Subsidiaries taken as a whole. Neither IMC, any Subsidiary or any
ERISA Affiliate has incurred or presently expects to incur any
withdrawal liability under Title IV of ERISA with respect to any
Multiemployer Plan which is or would be materially adverse to IMC and
its Subsidiaries taken as a whole.
8K. Governmental Consent. Neither the nature of the Guarantor or
of any Subsidiary, nor any of their respective businesses or
properties, nor any relationship between the Guarantor or any
Subsidiary and any other Person, is such as to require any
authorization, consent, approval, exemption or other action by or
notice to or filing with any court or administrative or governmental
body (other than routine filings after the date of closing with the
Securities and Exchange Commission and/or state Blue Sky authorities)
in connection with the execution and delivery of this Guaranty
Agreement, or the fulfillment of or compliance with the terms and
provisions of this Guaranty Agreement.
8L. Environmental Compliance. To the best knowledge of the
Responsible Officers of IMC and except as disclosed in the Disclosure
Letter, IMC and its Subsidiaries and all of their respective properties
and facilities have complied at all times and in all respects with all
applicable Environmental Laws except, in any such case, where failure
to comply either individually or in the aggregate could not reasonably
be expected to have a material adverse effect on the ability of the
Guarantor and its Subsidiaries to perform and comply with all of their
respective obligations under this Guaranty Agreement. Notwithstanding
any other provision contained in paragraph 8, the provisions of this
paragraph 8L shall be the only representations and warranties
applicable to compliance with Environmental Laws
8M. Disclosure. Other than projections and forecasts as to which
no representation under this paragraph 8M is made, neither this
Guaranty Agreement nor any other document, certificate or statement
furnished to any holder of any Note by or on behalf of the Guarantor in
connection herewith (taken as a whole) contains any untrue statement of
a material fact or omits to state a material fact necessary in order to
make the statements contained herein and therein not misleading at the
time and in light of the circumstances under which such information was
provided. There is no fact peculiar to the Guarantor or any of its
Subsidiaries which materially adversely affects or in the future may
(so far as the Guarantor can now reasonably foresee) materially
adversely affect the business, property or assets, or financial
condition of the Guarantor and its Subsidiaries taken as a whole and
which has not been set forth in this Guaranty Agreement or in the other
documents, certificates and statements furnished to the Purchasers by
the Guarantor prior to the date hereof in connection with the
transactions contemplated hereby.
9. DEFINITIONS. For the purpose of this Guaranty Agreement, the
following terms shall have the meanings specified with respect thereto
below:
9A. [Intentionally Left Blank]
9B. DEFINED TERMS.
"Adjusted Tangible Net Worth" shall mean, at any time of
determination, an amount equal to the amount by which (a) Consolidated
total shareholders' equity (excluding the aggregate liquidation
preference of the Vigoro Series E Preferred Stock) in IMC and its
Subsidiaries exceeds (b) Consolidated total intangible assets of IMC
and its Subsidiaries; provided, however, that in calculating Adjusted
Tangible Net Worth, the one time and ongoing impact of the change in
the functional currency of any foreign Subsidiary for purposes of the
consolidation of their accounts with those of IMC and its other
Subsidiaries in the financial statements of IMC recorded as the foreign
currency translation adjustment in the equity accounts of the
Consolidated financial statements of IMC shall be excluded.
"Agreement Accounting Principles" shall mean U.S. GAAP or Canadian
GAAP, as the case may be, as applied in the preparation of the
financial statements referred to in paragraph 8B, applied in all
material respects on a consistent basis, together with any changes in
U.S. GAAP or Canadian GAAP, as the case may be, after the date hereof
or any inconsistent applications by IMC or any of its Subsidiaries
arising as a result of the Merger, in each case, which are not Material
Accounting Changes, to the extent permitted under paragraph 6E. In the
event an amendment is entered into pursuant to paragraph 6E, all
references in this Guaranty Agreement to Agreement Accounting
Principles, U.S. GAAP or Canadian GAAP shall mean U.S. GAAP or Canadian
GAAP, as applicable, as in effect from time to time after the date of
such amendment, applied in all material respects thereafter on a
consistent basis taking into account such amendment, together with any
changes in U.S. GAAP or Canadian GAAP, as applicable, or any
inconsistent applications by IMC or any of its Subsidiaries arising as
a result of the Merger after the date of such amendment in each case
which are not Material Accounting Changes, to the extent permitted
under paragraph 6E.
"Bankruptcy Code" shall mean Title 11 of the United States Code
(11 U.S.C. 101 et. seq.) , as amended from time to time, or any
successor statute.
"Bankruptcy Law" shall have the meaning specified in clause (viii)
of paragraph 7A of the IMC Agreement.
"Borrower" shall mean Global Operations, KCL Holdings, Inc. and
IMC Global Potash Holdings.
"Canadian GAAP" shall mean, at any time, accounting principles
generally accepted in Canada as recommended in the Handbook of the
Canadian Institute of Chartered Accountants, applied, except as
otherwise provided in paragraph 6E, on a consistent basis.
"Canpotex" shall mean Canpotex Limited, a corporation organized
under the federal laws of Canada.
"Canpotax Debt" shall mean all Debt of IMC Canada and Kalium or
any other Subsidiary of IMC arising out of or related to their
membership in Canpotex, including all Debt under (i) the Ground Lease
and the Facilities Lease with the Port of Portland and related
documents in connection with the issuance by the Port of Portland of
$48,000,000 in aggregate principal amount of its Special Obligation
Revenue Bonds, Series 1996 (Portland Bulk Terminals, L.L.C. Project and
(ii) the Loan Agreement with London Life Insurance Company and the
corresponding Neptune Port Expansion Loan Agreement with Neptune Bulk
Terminal (Canada) LTD and related documents in the aggregate principal
amount of Canadian $30,000,000.
"Capitalization" shall mean the sum of (a) Adjusted Tangible Net
Worth plus (b) Consolidated Funded Debt.
"Capitalized Leases" has the meaning specified in clause
(e) of the definition of Debt.
"Cash Equivalents" shall mean, as to any Person, (i)
securities issued or directly and fully guaranteed or insured by the
United States, or Canada or any province thereof, or any agency or
instrumentality thereof (provided that the full faith and credit of the
United States, or Canada or any province thereof, is pledged in support
thereof) having maturities of not more than six months from the date of
acquisition, (ii) time deposits and certificates of deposit of any
commercial bank incorporated in the United States or Canada of
recognized standing having capital and surplus in excess of
$250,000,000 having, or which is the principal banking subsidiary of a
bank holding company having, a long-term unsecured debt rating of at
least "A" or the equivalent thereof from S&P or "A-2" or the equivalent
thereof from Moody's or at least A or the equivalent thereof by
Canadian Bond Rating Service Limited or at least A Middle or the
equivalent thereof by Dominion Bond Rating Service Limited with
maturities of not more than six months from the date of acquisition by
such Person, (iii) repurchase obligations with a term of not more than
seven days for underlying securities of the types described in clause
(i) above entered into with any bank meeting the qualifications
specified in clause (ii) above, (iv) commercial paper issued by any
Person incorporated in the United States, or Canada or any province
thereof, rated at least A-1 or the equivalent thereof by S&P or at
least P-1 or the equivalent thereof by Moody's or at least A-l or the
equivalent thereof by Canadian Bond Rating Service Limited or at least
R-1 (Middle or High) or the equivalent thereof by Dominion Bond Rating
Service Limited and in each case maturing not more than six months
after the date of acquisition by such Person, (v) investments in money
market funds substantially all of whose assets are comprised of
securities of the types described in clauses (i) through (iv) above and
(vi) investments in funds substantially all of whose assets are
comprised of securities of the types described in clauses (i) through
(v) above in an aggregate principal amount not to exceed $5,000,000 at
any one time outstanding without regard to the credit rating
qualifications set forth in any of such clauses.
"CCP" shall mean Central Canada Potash, Inc., a Delaware
corporation.
"Chemical Supplier Debt" shall mean indebtedness incurred in the
ordinary course of business owing by IMC or any of its Subsidiaries to
chemical suppliers, which indebtedness represents a financing of the
purchase price of such goods.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Consolidated" refers to the consolidation of accounts in
accordance with Agreement Accounting Principles.
"Consolidated Funded Debt" as of any date means the aggregate
amount of the Consolidated Funded Debt of IMC and its Consolidated
Subsidiaries outstanding on that date (but excluding, to the extent
otherwise included therein, Excluded Debt).
"Current Interest" has the meaning specified in Section 4.01 of
the Partnership Agreement.
"Debt" of any Person shall mean, without duplication, (a)
all indebtedness of such Person for borrowed money, (b) all payment
obligations of such Person for the deferred purchase price of property
or services (other than trade payables and other accrued expenses not
overdue by more than 180 days incurred in the ordinary course of such
Person's business and other than Obligations of such Person arising in
connection with take-or-pay contracts not overdue by more than 180 days
with suppliers of ammonia, phosphate, natural gas or other fertilizer,
or for transport of such products to meet its normal raw material
supply requirements in the ordinary course of business) such as take-or-
pay and similar obligations, (c) all obligations of such Person
evidenced by notes, bonds, debentures or other similar instruments, (d)
all Obligations of such Person created or arising under any conditional
sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are
limited to repossession or sale of such property), (e) all Obligations
of such Person as lessee under leases that have been or should be, in
accordance with Agreement Accounting Principles, recorded as capital
leases ("Capitalized Leases"), (f) all Obligations, contingent or
otherwise, of such Person under acceptance, letter of credit or similar
facilities, (g) all Obligations of such Person to purchase, redeem,
retire, defease or otherwise make any payment in respect of any capital
stock of or other ownership or profit interest in such Person or any of
its Affiliates or any warrants, rights or options to acquire such
capital stock, valued, in the case of Redeemable Preferred Stock, at
the greater of its voluntary or involuntary liquidation preference plus
accrued and unpaid dividends, (h) all Obligations of such Person for
production payments from property operated by or on behalf of such
Person and other similar arrangements with respect to natural
resources, (i) all Obligations of such Person in respect of Hedge
Agreements, (j) all Debt of others referred to in clauses (a) through
(i) above guaranteed directly or indirectly in any manner by such
Person, or in effect guaranteed directly or indirectly by such Person
through an agreement (i) to pay or purchase such Debt or to advance or
supply funds for the payment or purchase of such Debt, (ii) to
purchase, sell or lease (as lessee or lessor) property, or to purchase
or sell services, primarily for the purpose of enabling the debtor to
make payment of such Debt or to assure the holder of such Debt against
loss, (iii) to supply funds to or in any other manner invest in the
debtor (including any agreement to pay for property or services
irrespective of whether such property is received or such services are
rendered) or (iv) otherwise to assure a creditor against loss, and (k)
all Debt referred to in clauses (a) through (j) above secured by (or
for which the holder of such Debt has an existing right, contingent or
otherwise, to be secured by) any Lien on property (including, without
limitation, accounts and contract rights) owned by such Person, even
though such Person has not assumed or become liable for the payment of
such Debt. For purposes only of paragraph 6B(2), the term Debt shall
include obligations incurred in connection with the limited recourse
sale of accounts receivable. For all other purposes, including,
without limitation, for purposes of the financial covenants in
paragraph 5J, Debt shall not be interpreted to include any such
obligations incurred in connection with the sales of receivables
permitted under paragraph 6B(7).
"Disclosure Letter" shall mean that certain letter dated February
28, 1996 from IMC to the Purchasers in which disclosures of certain
litigation and environmental matters regarding IMC and its
Subsidiaries, certain insurance matters and certain joint venture
accounting matters are set forth.
"EBITDA" shall mean, for any period, net income (or net loss)
(calculated prior to giving effect to any dividends on the Vigoro
Series E Preferred Stock) plus the sum of (a) interest expense, (b)
income tax expense, (c) the "JV Consolidation Adjustment" (calculated
on substantially the same basis as set forth in the Disclosure Letter,
(d) depreciation, amortization and depletion expense (including,
without limitation, depreciation, amortization and depletion expense
relating to oil and gas-producing properties but excluding
depreciation, amortization and depletion expense included in the "JV
Consolidation Adjustment" referred to in clause (c) above), (e) any non-
cash foreign exchange losses, (f) extraordinary losses (other than
extraordinary losses realized in cash from the utilization of net
operating loss carry forwards) and (g) any income, loss or expense of
the Joint Venture Company attributable to Freeport (calculated based on
the Current Interest then held by it in the Joint Venture Company), in
each case determined in accordance with Agreement Accounting Principles
for such period minus (i) any non-cash foreign exchange gains and (ii)
extraordinary gains (other than extraordinary gains realized in cash
from the utilization of net operating loss carry forwards).
"Environmental Laws" has the meaning specified in paragraph 5F.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" shall mean any corporation which is a member of
the same controlled group of corporations as IMC within the meaning of
section 414(b) of the Code, or any trade or business which is under
common control with IMC within the meaning of section 414(c) of the
Code.
"Event of Default" shall mean any of the events specified in
paragraph 7A of the IMC Agreement, provided that there has been
satisfied any requirement in connection with such event for the giving
of notice, or the lapse of time, or the happening of any further
condition, event or act, and "Default" shall mean any of such events,
whether or not any such requirement has been satisfied.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Excluded Debt" means Chemical Supplier Debt, Debt consisting of
obligations in respect of Hedge Agreements and contingent obligations
in respect of Membership Debt.
"Freeport" shall mean Freeport-McMoRan Resource Partners, Limited
Partnership, a Delaware limited partnership.
"Funded Debt" shall mean, with respect to any Person, all Debt of
such Person which by its terms or by the terms of any instrument or
agreement relating thereto matures, or which is otherwise payable or
unpaid, more than one year from, or is directly or indirectly renewable
or extendible at the option of the debtor to a date more than one year
(including an option of the debtor under a revolving credit or similar
agreement obligating the lender or lenders to extend credit over a
period of more than one year) from, the date of the creation thereof
(except Debt in respect of Hedge Agreements) and shall include, without
limitation, the current portion of Funded Debt.
"Guarantor" shall mean each of IMC and Vigoro, jointly and
severally; provided, however, that on and after the Change Date,
Guarantor shall mean only IMC.
"Global Operations" shall mean IMC Global Operations Inc.
"Global Operations Credit Agreement" means the Amended and
Restated Credit Agreement dated as of July 31, 1995, as amended, among
Global Operations, as borrower, IMC, as guarantor, the banks parties
thereto, Citibank, as administrative agent, co-agent and swing line
bank and NationsBank and Cooperative Centrale Raiffeissen-
Boerenleenbank B.A., as co-agents.
"Hedge Agreements" shall mean interest rate swap, cap or collar
agreements, interest rate future or option contracts, foreign exchange
contracts, currency swap agreements, currency future or option
contracts, commodity contracts (including, without limitation, options,
forwards, futures and similar agreements) and other similar agreements.
"IMC Agreement" shall mean that Secured Amended and Restated Note
Purchase Agreement dated February 28, 1996 between IMC and Prudential
as amended, restated, extended, renewed, supplemented or otherwise
modified from time to time in accordance with the terms thereof.
"INC Canada" shall mean International Minerals & Chemical (Canada)
Global Limited, a corporation organized under the federal laws of
Canada.
"IMC Global Potash Holdings" shall mean IMC Global Potash Holdings
Inc., a Delaware corporation.
"IMC Partner" shall mean IMC-Agrico GP Company, a Delaware
corporation, or any successor corporation otherwise permitted
hereunder.
"Institutional Investor" shall mean Prudential, any Prudential
Affiliate or any bank, bank affiliate, financial institution, insurance
company, pension fund, endowment or other organization which regularly
acquires debt instruments for investment.
"Investment" in any Person shall mean any loan or advance to such
Person, any purchase or other acquisition of any capital stock,
warrants, rights, options, obligations or other securities of such
Person, any capital contribution to such Person or any other investment
in such Person, including, without limitation, any arrangement pursuant
to which the investor incurs Debt of the types referred to in clauses
(i) and (j) of the definition of "Debt" in respect of such Person.
"Joint Venture Company" shall mean IMC-Agrico Company, a
Delaware general partnership established pursuant to the terms of the
Partnership Agreement.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien (statutory or otherwise) or charge of any kind
(including any agreement to give any of the foregoing, any conditional
sale or other title retention agreement, any lease in the nature
thereof, and the filing of or agreement to give any financing statement
under the Uniform Commercial Code of any jurisdiction) or any other
type of preferential arrangement for the purpose, or having the effect,
of protecting a creditor against loss or securing the payment or
performance of an obligation.
"Managing Partner" shall mean IMC-Agrico MP, Inc., a Delaware
corporation.
"Margin Stock" shall have the meaning specified in Regulation G.
"Material Accounting Changes" has the meaning specified in
paragraph 6E.
"Material Adverse Change" means any material adverse change in the
business, condition (financial or otherwise), operations, performance,
properties or prospects of IMC and its Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a)
the business, condition (financial or otherwise), operations,
performance, properties or prospects of IMC and its Subsidiaries taken
as a whole, (b) the rights and remedies of any holder of any Note under
any Transaction Document or (c) the ability of IMC or any Subsidiary to
perform its Obligations under any Transaction Document or Related
Document to which it is or is to be a party.
"Membership Debt" shall mean, with respect to IMC or any of its
Subsidiaries, (a) Canpotex Debt and (b) all Debt arising out of or
related to its membership in SKMG, PhosChem or Phosrock.
"Moody's" shall mean Moody's Investors Service, Inc.
"Multiemployer Plan" shall mean any Plan which is a "multiemployer
plan" (as such term is defined in section 4001(a)(3) of ERISA).
"New Credit Agreement" shall mean that certain Credit
Agreement dated as of February 28, 1996 among IMC, Kalium, certain
other Subsidiaries, certain financial institutions, Citibank, N.A., as
U.S. administrative agent, Citibank Canada, as Canadian administrative
agent, and certain other parties, as amended, restated, extended,
renewed, supplemented or otherwise modified from time to time in
accordance with the terms thereof.
"Non-Guarantor Subsidiary" means any Subsidiary of IMC other than
a Subsidiary Guarantor.
"Notes" shall have the meaning specified in the Note Agreement.
"Obligation" shall mean any obligation of any kind, including,
without limitation, any liability on any claim, whether or not the
right of any creditor to payment in respect of such claim is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured,
disputed, undisputed, legal, equitable, secured or unsecured, and
whether or not such claim is discharged, stayed or otherwise affected
by any proceeding under any Bankruptcy Law.
"Officer's Certificate" shall mean a certificate signed in the
name of IMC by an Responsible Officer of IMC.
"Partnership Agreement" shall mean the Amended and Restated
Partnership Agreement dated as of July 1, 1993 (as further amended and
restated as of May 26, 1995, as further amended as of January 25, 1996)
among IMC Partner, Agrico, Limited Partnership, the Managing Partner
and Global Operations, together with all schedules and exhibits
thereto, as amended, supplemented or otherwise modified from time to
time in accordance with its terms to the extent permitted in accordance
with the IMC Agreement.
"Permitted Liens" means such of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding
shall have been commenced or as to which such enforcement, collection,
execution, levy or foreclosure proceeding is being contested in good
faith in a proper proceeding, and is not reasonably likely to have a
Material Adverse Effect: (a) liens imposed by law, such as suppliers',
vendors', carriers', landlords', warehousemen's, workmen's,
materialmen's and mechanics' liens and other similar liens arising in
the ordinary course of business which secure obligations other than for
money borrowed and that are not more than 60 days past due or which are
being contested in good faith by appropriate proceedings and for which
adequate reserves shall have been set aside on the Guarantor's books;
(b) easements, building restrictions, zoning restrictions,
reservations, exceptions, encroachments, rights of way, covenants
running with the land, encumbrances or charges against real property as
are of a nature generally existing with respect to properties of a
similar character and which do not materially affect the marketability
of such real property or interfere in any material respect with the
ordinary conduct of the Guarantor or its Subsidiaries; (c) liens
securing the performance of any contract or undertaking made in the
ordinary course of business (as such business is currently conducted)
other than for the borrowing of money; (d) deposits or pledges under
worker's compensation, unemployment insurance, social security and
other similar laws, or to secure the performance of bids, tenders or
contracts (other than for the repayment of borrowed money) or to secure
indemnity, performance or other similar bonds for the performance of
bids, tenders or contracts (other than for the repayment of borrowed
money) or to secure statutory obligations or surety or appeal bonds, or
to secure indemnity, performance or other similar bonds in the ordinary
course of business; (e) liens which arise by operation of law under
Article 4 of the Uniform Commercial Code in favor of a collecting bank;
and (f) liens with respect to the payment of taxes, assessments or
governmental charges in all cases which are not yet due or which are
being contested in good faith by appropriate proceedings and with
respect to which adequate reserves have been established.
"Person" shall mean an individual, partnership, corporation
(including a business trust), limited liability company, joint stock
company, trust, unincorporated association, joint venture or other
entity, or a government or any political subdivision or agency thereof.
"PhosChem" shall mean The Phosphate Chemicals Export Association.
"Phosrock" shall mean The Phosphate Rock Export Association.
"Plan" shall mean any "employee pension benefit plan" (as such
term is defined in section 3 of ERISA) which is or has been established
or maintained, or to which contributions are or have been made, by IMC
or any ERISA Affiliate.
"Preferred Stock" shall mean, with respect to any corporation,
capital stock issued by such corporation that is entitled to a
preference or priority over any other capital stock issued by such
corporation upon any distribution of such corporation's assets, whether
by dividend or upon liquidation.
"Purchaser" shall mean any Note holder identified on the Purchaser
Schedule of the Note Agreement.
"Redeemable" shall mean, with respect to any capital stock, Debt
or other right or Obligation, any such right or obligation that(a) the
issuer has undertaken to redeem at a fixed or determinable date or
dates, whether by operation of a sinking fund or otherwise, or upon the
occurrence of a condition not solely within the control of the issuer
or (b) is redeemable at the option of the holder.
"Regulation G" shall mean Regulation G of the Board of Governors
of the Federal Reserve System.
"Related Documents" shall mean the Merger Agreement and the
Partnership Agreement.
"Release Date" shall mean the date on which IMC shall have
received a rating of BBB- or above from S&P or Baa3 or above from
Moody's on any class of IMC's non-credit enhanced long-term senior
unsecured Debt, provided that no Default or Event of Default shall have
occurred and shall be continuing on such date.
"Relevant Subsidiary" shall mean, at any time, a Subsidiary
of IMC having (a) at least 5% of the total Consolidated assets of IMC
and its Subsidiaries (determined as of the last day of the most recent
fiscal quarter of such Person) or (b) at least 5% of the Consolidated
EBITDA of IMC and its Subsidiaries for the four consecutive fiscal
quarters most recently ended, in each case as shown in a certificate of
the treasurer or chief financial officer of IMC.
"Required Holder(s)" shall mean, at any time, the holder or
holders of at least 51% of the aggregate principal amount of the Notes
outstanding at such time.
"Responsible Officer" shall mean the chief executive officer,
chief operating officer, chief financial officer, treasurer, or chief
accounting officer of IMC or any other officer of IMC involved
principally in its financial administration or its controllership
function.
"Restatement Date" shall mean March 1, 1996, or such other date as
the parties hereto may agree in writing.
"S&P" shall mean Standard & Poor's Ratings Group, a division of
McGraw-Hill, Inc.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Significant Holder" shall mean (i) Prudential or any Prudential
Affiliate, so long as Prudential or any Prudential Affiliate shall hold
any Note or (ii) any other holder of at least 10% of the aggregate
principal amount of any Series of Notes from time to time outstanding.
To the extent that any notice or document is required to be delivered
to the Significant Holders under this Guaranty Agreement, such
requirement shall be satisfied with respect to Prudential and all
Prudential Affiliates by giving notice, or delivery of a copy of any
such document, to Prudential (addressed to Prudential and each such
Prudential Affiliate).
"SKMG" shall mean The Sulphate of Potash Magnesia Export
Association.
"Subordinated Intercompany Notes" shall mean (i) the Substitute
Subordinated Intercompany Promissory Note dated March 1, 1996 in the
principal amount of $215,000,000 issued by Global Operations to the
Company, (ii) the Substitute Subordinated Intercompany Promissory Note
dated March 1, 1996 in the principal amount of $260,000,000 issued by
Global Operations to the Company, and (iii) the Substitute Subordinated
Intercompany Note dated March 1, 1996 in the principal amount of
$160,000,000 issued by Global Operations to the Company.
"Subsidiary" of any Person shall mean any corporation,
partnership, joint venture, limited liability company, trust or estate
of which (or in which) more than 50% of (a) the issued and outstanding
capital stock having ordinary voting power to elect a majority of the
Board of Directors of such corporation (irrespective of whether at the
time capital stock of any other class or classes of such corporation
shall or might have voting power upon the occurrence of any
contingency), (b) the interest in the capital or profits of such
limited liability company, partnership or joint venture or (c) the
beneficial interest in such trust or estate is at the time directly or
indirectly owned or controlled by such Person, by such Person and one
or more of its other Subsidiaries or by one or more of such Person's
other Subsidiaries; provided that in any event, (i) the Joint Venture
Company shall be deemed to be a Subsidiary of Global Operations and IMC
and (ii) the term "Subsidiary" shall be determined after giving effect
to the Merger. Unless otherwise expressly provided, all references
herein to "Subsidiary" shall mean a Subsidiary of IMC.
"Subsidiary Guarantors" means the Subsidiaries listed on Schedule
8A(b) to the IMC Agreement hereto and any other Relevant Subsidiaries
(other than IMC Canada, IMC Global Potash Holdings and the Joint
Venture Company) that shall be required to execute and deliver a
guaranty or otherwise become a guarantor hereunder pursuant to
paragraph 5J.
"Subsidiary Guaranty" shall mean that certain Amended and Restated
Affiliate Guaranty dated as of the date hereof made by the Subsidiary
Guarantors in favor of Prudential and certain other Persons
substantially in the form of Exhibit G attached to the IMC Agreement,
as amended, restated, extended, renewed, supplemented or otherwise
modified from time to time in accordance with the terms thereof.
"U.S. GAAP" shall mean, at any time, accounting principles
generally accepted in the United States of America as recommended by
the Financial Accounting Standards Board, applied, except as otherwise
provided in paragraph 6E on a consistent basis.
"Vigoro Credit Agreement" means the Amended and Restated Credit
Agreement dated as of December 22, 1994 by and among Vigoro, Kalium,
CCP, the banks parties thereto, Bankers Trust Company, as
Administrative Agent and Harris Trust and Savings Bank, as Paying
Agent.
"Vigoro Series E Preferred Stock" shall mean the shares of
preferred stock of Vigoro, par value $100 per share, designated Series
E.
"Voting Stock" shall mean capital stock issued by a corporation,
or equivalent interests in any other Person, the
holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors(or
persons performing similar functions) of such Person, even if the right
so to vote has been suspended by the happening of such a contingency.
10. MISCELLANEOUS.
10A. CONSENT TO AMENDMENTS. This Guaranty Agreement may be
amended, and the Guarantor may take any action herein prohibited, or
omit to perform any act herein required to be performed by it, if the
Guarantor shall obtain the written consent to such amendment, action or
omission to act, of the Required Holder(s) of the Notes.
10B. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
AGREEMENT. All representations and warranties contained herein or made
in writing by or on behalf of the Guarantor in connection herewith
shall survive the execution and delivery of this Guaranty Agreement,
the transfer by any Purchaser of any Note or portion thereof or
interest therein and the payment of any Note, and may be relied upon by
any Transferee, regardless of any investigation made at any time by or
on behalf of any Purchaser or any Transferee. Subject to the preceding
sentence, this Guaranty Agreement embodies the entire agreement and
understanding between the Guarantor and the Purchasers with respect to
the subject matter hereof and supersede all prior agreements and
understandings relating to such subject matter.
10C. SUCCESSORS AND ASSIGNS. All covenants and other agreements
in this Guaranty Agreement shall bind and inure to the benefit of the
respective successors and assigns of the Purchasers whether so
expressed or not.
10D. NOTICES. All written communications provided for hereunder
shall be deemed to have been duly given if sent by first class mail,
nationwide overnight delivery service (with charges prepaid) or
personal delivery and (i) if to any Purchaser, addressed to such
Purchaser at the address specified for such communications pursuant to
the Note Agreement or at such other address as any Purchaser shall have
specified in writing to the Guarantor, and (ii) if to any other holder
of any Note, addressed to such other holder at such address as such
other holder shall have specified in writing to the Guarantor or, if
any such other holder shall not have so specified an address to the
Guarantor, then addressed to such other holder in care of the last
holder of such Note which shall have so specified an address to the
Guarantor, (iii) if to IMC, addressed to it at IMC Global Inc., 2100
Sanders Road, Northbrook, Illinois 60062, Attention: Treasurer, or at
such other address as IMC shall have specified to the holder of each
Note in writing, and (iv) if to Vigoro, addressed to it at The Vigoro
Corporation, c/o IMC Global Inc., 2100 Sanders Road, Northbrook,
Illinois 60062, Attention: Treasurer, or at such other address as
Vigoro shall have specified to the holder of each Note in writing.
10E. DISCLOSURE TO OTHER PERSONS. By its acceptance of any Note,
each Purchaser agrees to use its best efforts to hold in confidence and
not disclose any written information (other than information (a) which
was publicly known or otherwise known to such Person, at the time of
disclosure (except pursuant to disclosure in connection with this
Guaranty Agreement), (b) which subsequently becomes publicly known
through no act or omission by such Person, or (c) which otherwise
becomes known to such Person, other than through disclosure by the
Guarantor) delivered or made available by or on behalf of the Guarantor
or any Subsidiary to such Person (including, without limitation, any
non-public information obtained pursuant to paragraph 5A or 5B) in
connection with or pursuant to this Guaranty Agreement which is
proprietary in nature; provided, however, that nothing herein shall
prevent the holder of any Note from disclosing any information
disclosed to such holder to (i) its directors, officers, employees,
agents and professional consultants, (ii) any Institutional Investor
which holds any Note, (iii) any Institutional Investor to which it
offers to sell any Note or any part thereof, (iv) any Institutional
Investor to which it sells or offers to sell a participation in all or
any part of any Note, (v) any Institutional Investor from which it
offers to purchase any security of the Guarantor, (vi) any federal or
state regulatory authority having jurisdiction over it, (vii) the
National Association of Insurance Commissioners or any similar
organization, or (viii) any other Person to which such delivery or
disclosure may be necessary or appropriate (1) in compliance with any
law, rule, regulation or order applicable to it, (2) in response to any
subpoena or other legal process or informal investigative demand, (3)
in connection with any litigation to which it is a party or (4) in
order to protect its investment and enforce the rights of any holder in
any Note; provided, further, that -in regard to any such disclosure to
a Person described in clause (ii), (iii), (iv) or (v), such Person
agrees in writing to be bound by the provisions of this paragraph.
10F. SEVERABILITY. Any provision of this Guaranty Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof,
and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other
jurisdiction.
10G. DESCRIPTIVE HEADINGS. The descriptive headings of the
several paragraphs of this Guaranty Agreement are inserted for
convenience only and do not constitute a part of this Guaranty
Agreement.
1OH. SATISFACTION REQUIREMENTS. If any agreement, certificate or
other writing, or any action taken or to be taken, is by the terms of
this Guaranty Agreement required to be satisfactory to any Purchaser,
to any holder of Notes or to the Required Holder(s), the determination
of such satisfaction shall be made by such Purchaser, such holder or
the Required Holder(s), as the case may be, in the sole and exclusive
judgment (exercised in good faith) of the Person or Persons making such
determination.
10I. GOVERNING LAW. THIS GUARANTY AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE
GOVERNED BY, THE LAW OF THE STATE OF ILLINOIS.
10J. COUNTERPARTS. This Guaranty Agreement may be executed in
any number of counterparts, each of which shall be an original, but all
of which together shall constitute one instrument.
10K. TERM OF GUARANTY AGREEMENT. The Guaranty Agreement and all
guarantees, covenants and agreements of the Guarantor contained herein
shall continue in full force and effect and shall not be discharged
until such time as all of the Guaranteed obligations shall be paid or
otherwise discharged in full, subject in the case of Vigoro to the
terms of paragraph 1B above.
10L. FURTHER ASSURANCES. The Guarantor hereby agrees to execute
and deliver all such instruments and take all such action as the
holders of the Notes may from time to time reasonably request in order
to effectuate fully the purposes of this Guaranty Agreement.
* * * * *
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty
Agreement to be duly executed and delivered as of the date and year
first above written.
IMC GLOBAL INC.
By:
Title:
THE VIGORO CORPORATION
By:
Title:
Agreed and accepted:
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By:
Vice President
EXHIBIT 10.68
THIRD AMENDMENT TO CREDIT AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AGREEMENT dated as of August 1,
1995 (the "Third 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 , 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 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. (CAROLINAS) (successor in interest to 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, the Borrower has requested a modification to the negative
covenant relating to Indebtedness contained therein; and
WHEREAS, the Required Banks have agreed to 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. Section 6.01 of the Credit Agreement entitled "Indebtedness"
is amended to include a new subsection "(k)" to read as follows:
"(k) For the period from August 1, 1995 to June 30, 1996,
additional Indebtedness for borrowed money in an aggregate amount
not to exceed $50,000,000."
2. In connection with this Third Amendment, the Borrower hereby
represents and warrants that as of the date hereof (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.
3. Except as expressly modified hereby, all of the terms and
provisions of the Credit Agreement remain in full force and effect.
4. The Borrower agrees to pay all reasonable costs and expenses
in connection with the preparation, execution and delivery of this
Third Amendment, including the reasonable fees and expenses of the
Agent's legal counsel.
5. This Third 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
Third Amendment to produce or account for more than one such
counterpart.
6. This Third 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 Third 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, (CAROLINAS) N.A.
individually in its capacity as a
Bank and in its capacity as Agent
By
Christopher B. Torie
Senior Vice President
CITIBANK, N.A.
By
Title
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK, B.A.
By
Title
By:__________________________________
Title:_______________________________
ARAB BANKING CORPORATION
By___________________________________
Title________________________________
EXHIBIT 10.69
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 10.70
FIFTH AMENDMENT TO CREDIT AGREEMENT
THIS FIFTH AMENDMENT TO CREDIT AGREEMENT dated as of February 4,
1997 (the "Fifth 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"), and as further amended by that certain
Fourth Amendment to Credit Agreement dated as of May 14, 1996 (the
"Fourth 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"), 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"). Terms used but not otherwise defined herein shall have the
meanings assigned in the Credit Agreement.
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
(the "Facility");
WHEREAS, the Banks and the Borrower have agreed, pursuant to a
letter agreement dated October 30, 1996, to a permanent reduction in
the maximum amount available under the Facility from $75,000,000 to
$45,000,000, effective as of November 4, 1996;
WHEREAS, the Borrower has requested (i) that the Termination Date
of the Facility be extended for a period of one year, (ii) that the
Banks agree to an adjustment of the interest rate of the Revolving
Loans and (iii) that the Banks agree to an adjustment of the Commitment
Fee;
WHEREAS, the Banks have agreed 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 are
hereby acknowledged, the parties hereto agree as follows:
1. The definition of "Applicable Margin" in Section 1.01 of the
Credit Agreement is hereby amended and modified to read as follows:
"Applicable Margin" means (i) in the case of Base Rate Loans,
0%, and (ii) in the case of Eurodollar Loans, .425%.
2. Section 2.01 of the Credit Agreement is hereby amended by
substituting the first sentence thereof with the following:
"Revolving Loan Commitment. Subject to and upon the terms
and conditions and relying upon the representations and warranties
herein set forth, each Bank severally agrees, from time to time
from the Closing Date until February 9, 1998 (such date, as it may
be extended, from time to time, in the sole discretion of the
Banks as hereinafter provided, is hereinafter referred to as the
"Termination Date") to make revolving credit loans (each a
"Revolving Loan" and, collectively, the "Revolving Loans") to the
Borrower for the purposes hereinafter set forth; provided,
however, that (i) with regard to the Banks collectively, the
principal amount of Revolving Loans outstanding shall not at any
time exceed FORTY-FIVE MILLION DOLLARS ($45,000,000) in the
aggregate (as such aggregate maximum amount may be reduced from
time to time as hereinafter provided, the "Revolving Committed
Amount"), and (ii) with regard to each Bank individually, each
such Bank's pro rata share of outstanding principal amount of
Revolving Loans and LOC Obligations shall not at any time exceed
such Bank's Revolving Committed Amount; provided, further, that
notwithstanding anything herein to the contrary, the sum of the
principal amount of Revolving Loans plus LOC Obligations shall not
at any time exceed the aggregate Revolving Committed Amount; and
provided, further, still, that notwithstanding anything to the
contrary contained herein, for a period of 30 consecutive days
during each calendar year, the Borrower will pay the Revolving
Loans down to, and maintain for such period, a zero outstanding
balance."
3. Subsection (a) of Section 2.10 of the Credit Agreement is
hereby amended and modified to read as follows:
"(a) Commitment Fee. In consideration for the Commitments by
the Banks hereunder, the Borrower agrees to pay to the Agent
quarterly in arrears on the 15th day following the last day of
each of the Borrower's fiscal quarters for the ratable benefit of
the Banks a commitment fee (the "Commitment Fee") of one-eighth of
one percent (1/8%) per annum on the average daily unused amount of
the Revolving Committed Amount for such prior fiscal quarter."
4. In connection with this Fifth Amendment, the Borrower hereby
represents and warrants that as of the date hereof (before 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.
5. Except as expressly modified hereby, all of the terms and
provisions of the Credit Agreement remain in full force and effect.
6. The Borrower agrees to pay all reasonable costs and expenses
in connection with the preparation, execution and delivery of this
Fifth Amendment, including the reasonable fees and expenses of the
Agent's legal counsel.
7. This Fifth 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
Fifth Amendment to produce or account for more than one such
counterpart.
8. This Fifth 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.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Fifth 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:__________________________________
Name:________________________________
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:__________________________________
Name:________________________________
Title:_______________________________
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK, B.A.
By:__________________________________
Name:________________________________
Title:_______________________________
By:__________________________________
Name:________________________________
Title:_______________________________
ARAB BANKING CORPORATION
By:__________________________________
Name:________________________________
Title:_________________________________
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Fifth 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:__________________________________
Name:________________________________
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:__________________________________
Name: Mary W. Corcoran
Title: Vice President
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK, B.A.
By:__________________________________
Name:________________________________
Title:_______________________________
By:__________________________________
Name:________________________________
Title:_______________________________
ARAB BANKING CORPORATION
By:__________________________________
Name:________________________________
Title:_________________________________
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Fifth 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:__________________________________
Name:________________________________
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:__________________________________
Name:________________________________
Title:_______________________________
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK, B.A., "RABOBANK
NEDERLAND",
NEW YORK BRANCH
By:__________________________________
Name:________________________________
Title:_______________________________
By:__________________________________
Name: Dana W. Hemenway
Title: Vice President
ARAB BANKING CORPORATION
By:__________________________________
Name:________________________________
Title:_______________________________
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Fifth 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:__________________________________
Name:________________________________
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:__________________________________
Name:________________________________
Title:_______________________________
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK, B.A.
By:__________________________________
Name:________________________________
Title:_______________________________
By:__________________________________
Name:________________________________
Title:_______________________________
ARAB BANKING CORPORATION
By:__________________________________
Name: Grant E. McDonald
Title: Vice President
EXHIBIT 10.71
SIXTH AMENDMENT, CONSENT AND WAIVER
THIS SIXTH AMENDMENT, CONSENT AND WAIVER dated as of May, 1997
(the "Amendment") relating to the Credit Agreement referenced below, by
and among IMC-AGRICO COMPANY, a Delaware general partnership, the Banks
identified therein and NATIONSBANK, N.A. (formerly known as NationsBank
of North Carolina, N.A.), as Agent. Terms used but not otherwise
defined shall have the meanings provided in the Credit Agreement.
W I T N E S S E T H
WHEREAS, a $45 million credit facility has been extended to IMC-
Agrico Company pursuant to the terms of that Credit Agreement dated as
of February 9, 1994, as amended by those First through Fifth Amendments
dated as of June 4, 1994, February 24, 1995, August 5, 1995, May 14,
1996 and February 4, 1997, respectively, (as amended and modified, the
"Credit Agreement") among IMC-Agrico Company, the Banks identified
therein and NationsBank of North Carolina, N.A. (now known as
NationsBank, N.A.), as Agent;
WHEREAS, the Borrower has requested modification of the way in
which the Fixed Charge Coverage Ratio under Section 5.11(b) of the
Credit Agreement is calculated, and a waiver in connection therewith;
WHEREAS, such modification and waiver requires the consent of the
Required Banks;
WHEREAS, the Required Banks have consented to the requested
modifications and waiver on the terms and conditions set forth herein;
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. Section 5.11(b) of the Credit Agreement is amended to read as
follows:
(b) Fixed Charge Coverage Ratio. The Borrower will keep and
maintain as of each Determination Date, for a period of four
consecutive fiscal quarters ending as of such Determination Date,
a ratio of
(a) the sum of (i) EBITDA during such period minus (ii)
Capital Expenditures made during such period, to
(b) the sum of (i) cash interest payable on, and
amortization of debt discount in respect of, all Indebtedness
during such period plus (ii) regularly scheduled principal
amounts of all Indebtedness (including current obligations
owing under Capitalized Leases, but for purposes hereof
exclusive of (A) the aggregate outstanding principal amount
of current obligations owing by the Borrower through December
31, 1997 under each of (1) the Credit Agreement dated as of
February 9, 1994, as amended, among the Borrower, the Banks
identified therein and NationsBank of North Carolina, N.A.
(now known as NationsBank, N.A.), as Agent, (2) the Amended
and Restated Credit Agreement, dated as of October 23, 1996,
as amended, between the Borrower and NationsBank, N.A., as
Lender, and (3) the Revolving Loan Agreement, dated as of May
10, 1996, as amended, between the Borrower and Bank of
America Illinois, and (B) the attributed principal amount
relating to any accounts receivables securitization financing
or sale transaction) payable during the period of the next
four consecutive fiscal quarters beginning on the day after
such Determination Date,
of not less than 5.0 to 1.0.
2. The Required Banks hereby waive any Default or Event of
Default which existed or may have existed prior to the effective date
of this Amendment solely on account of calculation of the Fixed Charge
Coverage Ratio under Section 5.11(b) of the Credit Agreement prior to
its amendment hereunder.
3. The Borrower hereby represents and warrants in connection
herewith that as of the date hereof (after giving effect hereto) (i)
the representations and warranties set forth in Section 4 of the Credit
Agreement are true and correct in all material respects (except those
which expressly relate to an earlier date), and (ii) no Default or
Event of Default presently exists under the Credit Agreement.
4. Except as expressly modified hereby, all of the terms and
provisions of the Credit Agreement remain in full force and effect.
5. The Borrower agrees to pay all reasonable costs and expenses
in connection with the preparation, execution and delivery of this
Amendment, including the reasonable fees and expenses of the Agent's
legal counsel.
6. This 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 Amendment
to produce or account for more than one such counterpart.
7. This 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.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this 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:__________________________________
Name:
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:__________________________________
Name:
Title:
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK, B.A.
By:__________________________________
Name:
Title:
By:__________________________________
Name:
Title:
ARAB BANKING CORPORATION
By:__________________________________
Name:
Title:
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this 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:__________________________________
Name:
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:__________________________________
Name:
Title:
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK, B.A.
By:__________________________________
Name:
Title:
By:__________________________________
Name:
Title:
ARAB BANKING CORPORATION
By:__________________________________
Name:
Title:
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this 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:__________________________________
Name:
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:__________________________________
Name: Mary W. Corcoran
Title: Vice President
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK, B.A.
By:__________________________________
Name:
Title:
By:__________________________________
Name:
Title:
ARAB BANKING CORPORATION
By:__________________________________
Name:
Title:
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this 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:__________________________________
Name:
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:__________________________________
Name:
Title:
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK, B.A., "RABOBANK
NEDERLAND", NEW YORK BRANCH
By:__________________________________
Name: W. Jeffrey Vollack
Title: Vice President, Manager
By:__________________________________
Name: Dana W. Hemenway
Title: Vice President
ARAB BANKING CORPORATION
By:__________________________________
Name:
Title:
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this 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:__________________________________
Name:
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:__________________________________
Name:
Title:
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK, B.A.
By:__________________________________
Name:
Title:
By:__________________________________
Name:
Title:
ARAB BANKING CORPORATION
By:__________________________________
Name: Grant E. McDonald
Title: Vice President
EXHIBIT 10.72
_______________________________________________________________
TRANSFER AND ADMINISTRATION AGREEMENT
between
ENTERPRISE FUNDING CORPORATION,
as Company
and
IMC-AGRICO RECEIVABLES COMPANY L.L.C.
as Transferor
and
IMC-AGRICO COMPANY
individually and as Collection Agent
Dated as of June 27, 1997
_______________________________________________________________
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Defined Terms 1
SECTION 1.2. Other Terms 25
SECTION 1.3. Computation of Time Periods 25
ARTICLE II
PURCHASES AND SETTLEMENTS
SECTION 2.1. Facility 26
SECTION 2.2. Transfers; Company Certificate;
Eligible Receivables
26
SECTION 2.3. Selection of Tranche Periods and
Tranche Rates
29
SECTION 2.4. Discount, Fees and Other Costs
and Expenses
30
SECTION 2.5. Non-Liquidation Settlement and
Reinvestment Procedures
30
SECTION 2.6. Liquidation Settlement Procedures 31
SECTION 2.7. Fees 32
SECTION 2.8. Protection of Ownership Interest of the
Company 32
SECTION 2.9. Deemed Collections; Application
of Payments
34
SECTION 2.10. Payments and Computations, Etc. 35
SECTION 2.11. Reports. 35
SECTION 2.12. Collection Account 36
SECTION 2.13. Net Investment Amount. 36
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties of the
Transferor 38
SECTION 3.2. Representations and Warranties of the
Collection Agent 42
SECTION 3.3. Reaffirmation of Representations and
Warranties by the Transferor and
Collection Agent 44
ARTICLE IV
CONDITIONS PRECEDENT
SECTION 4.1. Conditions to Closing. 45
ARTICLE V
COVENANTS
SECTION 5.1 Affirmative Covenants of Transferor 48
SECTION 5.2. Negative Covenants of Transferor 54
SECTION 5.3. Minimum Net Worth of the Transferor 56
SECTION 5.4. Covenants of the Collection Agent 56
SECTION 5.5. Covenants of the Seller 58
ARTICLE VI
ADMINISTRATION AND COLLECTIONS
SECTION 6.1. Appointment of Collection Agent 60
SECTION 6.2. Duties of Collection Agent 60
SECTION 6.3. Rights After Designation of New
Collection Agent
63
SECTION 6.4. Responsibilities of the Transferor
and the Seller
63
ARTICLE VII
TERMINATION EVENTS
SECTION 7.1. Termination Events 65
SECTION 7.2. Termination 66
ARTICLE VIII
INDEMNIFICATION; EXPENSES; RELATED MATTERS
SECTION 8.1. Indemnities by the Transferor 68
SECTION 8.2. Indemnity for Taxes, Reserves and
Expenses
70
SECTION 8.3. Other Costs, Expenses and
Related Matters
73
SECTION 8.4. Reconveyance Under Certain
Circumstances
74
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Term of Agreement 75
SECTION 9.2. Waivers; Amendments 75
SECTION 9.3. Notices 75
SECTION 9.4. Governing Law; Submission to
Jurisdiction; Integration
77
SECTION 9.5. Severability; Counterparts 78
SECTION 9.6. Successors and Assigns 78
SECTION 9.7. Waiver of Confidentiality 78
SECTION 9.8. Confidentiality Agreement 79
SECTION 9.9. No Bankruptcy Petition Against
the Company 80
SECTION 9.10. No Recourse Against Stockholders,
Officers or Directors 80
SECTION 9.11. Characterization of the Transactions
Contemplated by the Agreement 80
EXHIBITS
EXHIBIT A Form of Contract
EXHIBIT B Credit and Collection Policies and Practices
EXHIBIT C List of Lock-Box Banks
EXHIBIT D Form of Lock-Box Agreement
EXHIBIT E Form of Investor Report
EXHIBIT F Form of Transfer Certificate
EXHIBIT G Certain Definitions
EXHIBIT H-1 List of Actions and Suits of Transferor
EXHIBIT H-2 List of Action and Suits of Seller
EXHIBIT I [Reserved]
EXHIBIT J [Reserved]
EXHIBIT K Form of Opinion of Counsel for the Seller, Collection
Agent and Transferor
EXHIBIT L-1 Form of Responsible Officer's Certificate of Transferor
EXHIBIT L-2 Form of Responsible Officer's Certificate of Seller
EXHIBIT M Form of Company Certificate
TRANSFER AND ADMINISTRATION AGREEMENT
TRANSFER AND ADMINISTRATION AGREEMENT (this "Agreement"),
dated as of June 27, 1997, among IMC-Agrico Receivables Company L.L.C.,
a Delaware limited liability company as transferor (the "Transferor"),
IMC-AGRICO COMPANY, a general partnership formed under the laws of the
State of Delaware, individually, as Seller (in such capacity the
"Seller") and as collection agent (in such capacity, the "Collection
Agent"), and ENTERPRISE FUNDING CORPORATION, a Delaware corporation
(the "Company").
PRELIMINARY STATEMENTS
WHEREAS, the Transferor may desire to convey, transfer and
assign, from time to time, undivided percentage interests in certain
accounts receivable, and the Company may desire to accept such
conveyance, transfer and assignment of such undivided percentage
interests, subject to the terms and conditions of this Agreement.
NOW, THEREFORE, the parties hereby agree as follows:
DEFINITIONS
SECTION 1.1. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings:
"Adverse Claim" means a lien, security interest, charge or
encumbrance, or other right or claim in, of or on any Person's assets
or properties in favor of any other Person.
"Administrative Agent" means NationsBank, N.A., as
administrative agent.
"Affiliate" means, with respect to any Person, any Person
directly or indirectly controlling, controlled by, or under direct or
indirect common control with, such Person. A Person shall be deemed to
control another Person if the controlling Person possesses, directly or
indirectly, the power to direct or cause the direction of the
management or policies of the controlled Person, whether through
ownership of voting stock, by contract or otherwise.
"Affiliated Obligor" means any Obligor which is an Affiliate
of another Obligor.
"Aggregate Unpaids" means, at any time, an amount equal to
the sum of (i) the aggregate accrued and unpaid Discount with respect
to all Tranche Periods at such time, (ii) the Net Investment at such
time, and (iii) all other amounts owed (whether due or accrued)
hereunder by Transferor to the Company at such time.
"Amendment Fee" means the fee payable by the Transferor to
the Administrative Agent pursuant to Section 2.7 hereof, the terms of
which are set forth in the Fee Letter.
"Average Collection Period" means at any time a period of
days (rounded up to the next whole day) equal to the product of (i) a
fraction the numerator of which shall be the amount set forth in the
most recent Investor Report as the "Beginning Balance" of the
Receivables and the denominator of which shall be the Collections as
set forth in the most recent Investor Report and (ii) thirty (30).
"Base Rate" or "BR" means, a rate per annum equal to the
greater of (i) the prime rate of interest announced by the Liquidity
Provider from time to time, changing when and as said prime rate
changes (such rate not necessarily being the lowest or best rate
charged by the Liquidity Provider) and (ii) the rate equal to the
weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds
brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day that is a
Business Day, the average of the quotations for such day for such
transactions received by the Liquidity Provider from three Federal
funds brokers of recognized standing selected by it plus 2%.
"Business Day" means any day excluding Saturday, Sunday and
any day on which banks in New York, New York, Charlotte, North
Carolina, Dallas, Texas or Chicago, Illinois are authorized or required
by law to close, and, when used with respect to the determination of
any Eurodollar Rate or any notice with respect thereto, any such day
which is also a day for trading by and between banks in United States
dollar deposits in the London interbank market.
"BR Tranche" means a Tranche as to which Discount is
calculated at the Base Rate.
"BR Tranche Period" means, with respect to a BR Tranche,
prior to the Termination Date, a period of up to 30 days requested by
the Transferor and agreed to by the Company or the Liquidity Provider
, as the case may be, commencing on a Business Day requested by the
Transferor and agreed to by the Company or the Liquidity Provider , as
the case may be, and after the Termination Date, a period of one day.
If such BR Tranche Period would end on a day which is not a Business
Day, such BR Tranche Period shall end on the next succeeding Business
Day.
"Capitalized Lease" of a Person means any lease of property
by such Person as lessee which would be capitalized on a balance sheet
of such Person prepared in accordance with generally accepted
accounting principles.
"CD Rate" shall mean, with respect to any CD Tranche Period,
a rate which is 0.375% in excess of a rate per annum equal to the sum
(rounded upward to the nearest 1/100 of 1%) of (A) the rate obtained by
dividing (x) the Certificate of Deposit Rate for such CD Tranche Period
by (y) a percentage equal to 100% minus the stated maximum rate for all
reserve requirements as specified in Regulation D (including without
limitation any marginal, emergency, supplemental, special or other
reserves) that would be applicable during such Tranche Period to a
negotiable certificate of deposit in excess of $100,000, with a
maturity approximately equal to such Tranche Period, of any member bank
of the Federal Reserve System plus (B) the then daily net annual
assessment rate (rounded upward, if necessary, to the nearest 1/100 of
1%) as estimated by the Liquidity Provider for determining the current
annual assessment payable by the Liquidity Provider to the Federal
Deposit Insurance Corporation for insuring such certificates of
deposit.
"CD Tranche" means a Tranche as to which Discount is
calculated at the CD Rate.
"CD Tranche Period" means, with respect to a CD Tranche,
prior to the Termination Date, a period of up to one month requested by
the Transferor and agreed to by the Company or the Liquidity Provider,
as the case may be, commencing on a Business Day requested by the
Transferor and agreed to by the Company or the Liquidity Provider, as
the case may be, and after the Termination Date, a period of one day.
If such CD Tranche Period would end on a day which is not a Business
Day, such CD Tranche Period shall end on the next succeeding Business
Day.
"Certificate of Deposit Rate" means, with respect to any CD
Tranche Period, the average of the bid rates determined by the
Liquidity Provider to be bid rates per annum, at approximately 10:00
a.m. (New York City time) on the Business Day before the first day of
the CD Tranche Period for which such CD Rate is to be applicable, of
two or more New York certificate of deposit dealers of recognized
standing selected by the Liquidity Provider for the purchase in New
York from the Liquidity Provider at face value of certificates of
deposit of the Liquidity Provider in an aggregate amount approximately
comparable to the amount of the CD Tranche to which such CD Rate is to
be applicable and with a maturity approximately equal to the applicable
CD Tranche Period.
"Closing Date" means June 30, 1997.
"Collateral Agent" means NationsBank, N.A., as collateral
agent for any Liquidity Provider, any Credit Support Provider, the
holders of Commercial Paper and certain other parties.
"Collections" means, with respect to any Receivable, all cash
collections and other cash proceeds of such Receivable, including,
without limitation, all Finance Charges, if any, and cash proceeds of
Related Security with respect to such Receivable and any Deemed
Collections.
"Collection Account" means the account, established by the
Collateral Agent, for the benefit of the Company, pursuant to Section
2.12.
"Collection Agent" means at any time the Person then
authorized pursuant to Section 6.1 to service, administer and collect
Receivables.
"Collection Delay" means 30 days, or upon written notice to
the Collection Agent, such higher number of days as the Administrative
Agent may estimate to be necessary for the collection of a Receivable.
"Commercial Paper" means the promissory notes of the Company
issued by the Company in the commercial paper market.
"Company Certificate" means the certificate issued to the
Company pursuant to Section 2.2 hereof.
"Concentration Factor" means for any Designated Obligor at
any time (a) (i) with respect to any Designated Obligor and its affili
ates whose long term unsecured debt obligations are rated at least "A1"
by Moody's and at least "A+" by Standard & Poor's and with respect to
which rating neither Moody's nor Standard & Poor's shall have made a
public announcement anticipating a downgrading of such Designated
Obligor's long term unsecured debt obligations to a rating less than
the aforementioned ratings ("A1/A+ Rated Obligors") 5% of the
Outstanding Balance of all Eligible Receivables at such time; (ii) with
respect to Phosphate Chemicals Export Association, Inc. (a "Special
Obligor"), 50% of the Outstanding Balance of all Eligible Receivables
at such time, provided that such amount shall not exceed $32,500,000,
and the Company shall have full recourse to the Transferor for all
Receivables payable by Phosphate Chemicals Export Association, Inc.;
and (iii) with respect to any other Designated Obligor, 3% of the
Outstanding Balance of all Eligible Receivables at such time, or (b)
such other amount determined by the Company in the reasonable exercise
of its good faith judgment and disclosed in a written notice delivered
to the Transferor.
"Contract" means an agreement or invoice in substantially the
form of one of the forms set forth in Exhibit A or otherwise approved
by the Company, pursuant to or under which an Obligor shall be
obligated to pay for merchandise purchased or services rendered.
"CP Rate" means, with respect to any CP Tranche Period, the
rate equivalent to the rate (or if more than one rate, the weighted
average of the rates) at which Commercial Paper having a term equal to
such CP Tranche Period may be sold by any placement agent or commercial
paper dealer selected by the Company, provided, however, that if the
rate (or rates) as agreed between any such agent or dealer and the
Company is a discount rate, then the rate (or if more than one rate,
the weighted average of the rates) resulting from the Company's
converting such discount rate (or rates) to an interest-bearing equiva
lent rate per annum.
"CP Tranche" means a Tranche as to which Discount is
calculated at a CP Rate.
"CP Tranche Period" means, with respect to a CP Tranche, a
period of days not to exceed 120 days commencing on a Business Day
requested by the Transferor and agreed to by the Company pursuant to
Section 2.3. If such CP Tranche Period would end on a day which is not
a Business Day, such CP Tranche Period shall end on the next succeeding
Business Day.
"Credit and Collection Policy" shall mean the Transferor's
credit and collection policy or policies and practices, relating to
Contracts and Receivables existing on the date hereof and referred to
in Exhibit B attached hereto, as modified from time to time in
compliance with Section 5.2(c).
"Credit Support Agreement" means the agreement between the
Company and the Credit Support Provider evidencing the obligation of
the Credit Support Provider to provide credit support to the Company in
connection with the issuance by the Company of Commercial Paper.
"Credit Support Provider" means the Person or Persons who
will provide credit support to the Company in connection with the
issuance by the Company of Commercial Paper.
"Dealer Fee" means the fee payable by the Transferor to the
Collateral Agent, pursuant to Section 2.4 hereof, the terms of which
are set forth in the Fee Letter.
"Deemed Collections" means any Collections on any Receivable
deemed to have been received pursuant to Section 2.9(a) or (b).
"Defaulted Receivable" means a Receivable: (i) as to which
any payment, or part thereof, remains unpaid for 91 days or more from
the original due date for such Receivable; (ii) as to which an Event of
Bankruptcy has occurred with respect to the Obligor thereof; (iii)
which has been identified by the Seller, the Transferor or the
Collection Agent as uncollectible; or (iv) which, consistent with the
Credit and Collection Policy, should be written off as uncollectible.
"Delinquency Ratio" means, the ratio (expressed as a
percentage) computed as of the last day of each calendar month by
dividing (i) the aggregate Outstanding Balance of all Delinquent
Receivables as of such date by (ii) the aggregate Outstanding Balance
of all Receivables as of such date less Defaulted Receivables as of
such date.
"Delinquent Receivable" means a Receivable: (i) as to which
any payment, or part thereof, remains unpaid for more than 30 days from
the original due date for such Receivable and (ii) which is not a
Defaulted Receivable.
"Designated Obligor" means, at any time, each Obligor;
provided, however, that any Obligor shall cease to be a Designated
Obligor upon notice to the Transferor from the Company, delivered at
any time.
"Dilution Ratio" means the ratio (expressed as a percentage)
computed as of the last day of each calendar month by dividing (i) the
aggregate amount of credits, rebates, discounts, disputes, warranty
claims, repossessed or returned goods, charge back allowances and other
dilutive factors, and any other billing or other adjustment by the
Transferor or the Collection Agent, provided to Obligors in respect of
Receivables during such calendar month by (ii) the aggregate Outstand
ing Balance of all Receivables which arose during the immediately
preceding calendar month.
"Discount" means, with respect to any Tranche Period:
(TR x TNI x AD)
360
Where:
TR = the Tranche Rate applicable to such Tranche Period.
TNI = the portion of the Net Investment allocated to such Tranche
Period.
AD = the actual number of days during such Tranche Period.
provided, however, that no provision of this Agreement shall require
the payment or permit the collection of Discount in excess of the
maximum amount permitted by applicable law; and provided, further, that
Discount shall not be considered paid by any distribution if at any
time such distribution is rescinded or must be returned for any reason.
"Discount Reserve" means, at any time, an amount equal to:
TD + LY
Where:
TD = the sum of the unpaid Discount for all Tranche Periods.
LY = the Liquidation Yield
"Early Collection Fee" means, for any Tranche Period (such
Tranche Period to be determined without regard to the last sentence in
Section 2.3(a) hereof) during which the portion of the Net Investment
that was allocated to such Tranche Period is reduced for any reason
whatsoever, the excess, if any, of (i) the additional Discount that
would have accrued during such Tranche Period if such reductions had
not occurred, minus (ii) the income, if any, received by the Company
from investing the proceeds of such reductions.
"Eligible Investments" means any of the following (a) negotia
ble instruments or securities represented by instruments in bearer or
registered or in book-entry form which evidence (i) obligations fully
guaranteed by the United States of America; (ii) time deposits in, or
bankers acceptances issued by, any depositary institution or trust
company incorporated under the laws of the United States of America or
any state thereof and subject to supervision and examination by Federal
or state banking or depositary institution authorities; provided,
however, that at the time of investment or contractual commitment to
invest therein, the certificates of deposit or short-term deposits, if
any, or long-term unsecured debt obligations (other than such
obligation whose rating is based on collateral or on the credit of a
Person other than such institution or trust company) of such depositary
institution or trust company shall have a credit rating from Moody's
and S&P of at least "P-1" and "A-1", respectively, in the case of the
certificates of deposit or short-term deposits, or a rating not lower
than one of the two highest investment categories granted by Moody's
and by S&P; (iii) certificates of deposit having, at the time of
investment or contractual commitment to invest therein, a rating from
Moody's and S&P of at least "P-1" and "A-1", respectively; (iv)
investments in money market funds rated in the highest investment
category or otherwise approved in writing by the applicable rating
agencies, (b) demand deposits in any depositary institution or trust
company referred to in (a)(ii) above, (c) commercial paper (having
original or remaining maturities of no more than 30 days) having, at
the time of investment or contractual commitment to invest therein, a
credit rating from Moody's and S&P of at least "P-1" and "A-1",
respectively, (d) Eurodollar time deposits having a credit rating from
Moody's and S&P of at least "P-1" and "A-1", respectively, and (e)
repurchase agreements involving any of the Eligible Investments
described in clauses (a)(i), (a)(iii) and (d) hereof so long as the
other party to the repurchase agreement has at the time of investment
therein, a rating from Moody's and S&P of at least "P-1" and "A-1",
respectively.
"Eligible Receivable" means, at any time, any Receivable:
(i) which (a) has been originated by the Seller,
(b) which has been sold or otherwise conveyed by the Seller
to the Transferor pursuant to (and in accordance with) the
Receivables Purchase Agreement and (c) to which the
Transferor has good title thereto, free and clear of all
Adverse Claims;
(ii) the Obligor of which is a United States
resident, is a Designated Obligor at the time of the initial
creation of an interest therein hereunder, is not an
Affiliate of any of the parties hereto, and is not a
government or a governmental subdivision or agency;
(iii) which is not a Defaulted Receivable at the
time of the initial creation of an interest of the Company
therein;
(iv) which is not a Delinquent Receivable at the
time of the initial creation of an interest of the Company
therein;
(v) which is required to be paid in full within
not more than 30 days of the original billing date therefor;
provided that not more than 10.0% of the Receivables
(determined by reference to the Outstanding Balance of such
Receivables and the aggregate Outstanding Balance of all
Receivables) may be required to be paid in full greater than
30 days but within 90 days of the original billing date
therefor;
(vi) which is an "eligible asset" as defined in
Rule 3a-7 under the Investment Company Act of 1940, as
amended;
(vii) a purchase of which with the proceeds of
Commercial Paper would constitute a "current transaction"
within the meaning of Section 3(a)(3) of the Securities Act
of 1933, as amended;
(viii) which is an "account" or "chattel paper"
within the meaning of Article 9 of the UCC of all applicable
jurisdictions;
(ix) which is denominated and payable only in
United States dollars in the United States;
(x) which, arises under a Contract that together
with the Receivable related thereto, is in full force and
effect and constitutes the legal, valid and binding
obligation of the related Obligor enforceable against such
Obligor in accordance with its terms and is not subject to
any offset, counterclaim or other defense at such time;
(xi) which, together with the Contract related
thereto, does not contravene in any material respect any
laws, rules or regulations applicable thereto (including,
without limitation, laws, rules and regulations relating to
truth in lending, fair credit billing, fair credit reporting,
equal credit opportunity, fair debt collection practices and
privacy) and with respect to which no part of the Contract
related thereto is in violation of any such law, rule or
regulation in any material respect;
(xii) which (A) satisfies all applicable
requirements of the Credit and Collection Policy and (B)
arises pursuant to a Contract with respect to which the
Seller has performed all obligations required to be performed
by it thereunder at the time it is transferred to the Buyer
including, but not limited to, the shipment of the product;
(xiii) which was generated in the ordinary course
of the Seller's business;
(xiv) the Obligor of which has been directed to
make all payments to a specified account of the Transferor
covered by a Lock-Box Agreement;
(xv) which (together with the Collections and
Related Security related thereto) has been the subject of
either a valid transfer and assignment from the Transferor to
the Company of all the Transferor's right, title, and
interest therein or the grant of a first priority perfected
security interest therein (and in the Collections and Related
Security related thereto), effective until the termination of
this Agreement; and
(xvi) the assignment of which by the Seller to the
Transferor under the Receivables Purchase Agreement and
hereunder by the Transferor to the Company does not violate,
conflict or contravene any applicable laws, rules,
regulations, orders or writs or any contractual or other
restriction, limitation or encumbrance.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and
the rulings issued thereunder.
"Estimated Maturity Period" means, at any time, the period,
rounded upward to the nearest whole number of days, equal to the
weighted average number of days until due of the Receivables as
calculated by the Collection Agent in good faith and set forth in the
most recent Investor Report, such calculation to be based on the
assumptions that (a) each Receivable within a particular aging
category, (as set forth in the Investor Report) will be paid on the
last day of such aging category and (b) the last day of the last such
aging category coincides with the last date on which any Outstanding
Balance of any Receivables would be written off as uncollectible or
charged against any applicable reserve or similar account in accordance
with the objective requirements of the Credit and Collection Policy and
the Seller's normal accounting practices applied on a basis consistent
with those reflected in the Seller's financial statements, provided,
however, that if the Company shall reasonably disagree with any such
calculaion, the Company may recalculate the Estimated Maturity Period,
and such recalculation, in the absence of manifest error, shall be
conclusive.
"Eurodollar Rate" means, with respect to any Eurodollar
Tranche Period, a rate which is 0.25% in excess of a rate per annum
equal to the sum (rounded upwards, if necessary, to the next higher
1/100 of 1%) of (A) the rate obtained by dividing (i) the applicable
LIBOR Rate by (ii) a percentage equal to 100% minus the reserve
percentage used for determining the maximum reserve requirement as
specified in Regulation D (including, without limitation, any marginal,
emergency, supplemental, special or other reserves) that is applicable
to the Liquidity Provider during such Eurodollar Tranche Period in
respect of eurocurrency or eurodollar funding, lending or liabilities
(or, if more than one percentage shall be so applicable, the daily
average of such percentage for those days in such Eurodollar Tranche
Period during which any such percentage shall be applicable) plus (B)
the then daily net annual assessment rate (rounded upwards, if neces
sary, to the nearest 1/100 of 1%) as estimated by the Liquidity
Provider for determining the current annual assessment payable by the
Liquidity Provider to the Federal Deposit Insurance Corporation in
respect of eurocurrency or eurodollar funding, lending or liabilities.
"Eurodollar Tranche" means a Tranche as to which Discount is
calculated at the Eurodollar Rate.
"Eurodollar Tranche Period" means, with respect to a
Eurodollar Tranche, prior to the Termination Date, a period of up to
one month requested by the Transferor and agreed to by the Company or
the Liquidity Provider, as the case may be, commencing on a Busness Day
requested by the Transferor and agreed to by the Company; provided,
however, that if such Eurodollar Tranche Period would expire on a day
which is not a Business Day, such Eurodollar Tranche Period shall
expire on the next succeeding Business Day; provided, further, that if
such Eurodollar Tranche Period would expire on (a) a day which is not a
Business Day but is a day of the month after which no further Business
Day occurs in such month, such Eurodollar Tranche Period shall expire
on the next preceding Business Day or (b) a Business Day for which
there is no numerically corresponding day in the applicable subsequent
calendar month, such Eurodollar Tranche Period shall expire on the last
Business Day of such month.
"Event of Bankruptcy", with respect to any Person, shall mean
(i) that such Person shall generally not pay its debts as such debts
become due or shall admit in writing its inability to pay its debts
generally or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against such
Person seeking to adjudicate it as bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief or compostion of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment
of a receiver, trustee or other similar official for it or any
substantial part of its property provided that in the case of any such
proceeding instituted against such Person, either such proceeding shall
remain undismissed or unstayed for a period of thirty (30) days or any
action sought in such proceeding shall occur or (ii) if such Person is
a corporation, such Person or any Subsidiary shall take any corporate
action to authorize any of the actions set forth in the preceding
clause (i).
"Fee Letter" means the letter agreement dated the date hereof
between the Transferor and the Company, as amended, modified or
supplemented from time to time.
"Finance Charges" means, with respect to a Contract, any
finance, interest, late or similar charges owing by an Obligor pursuant
to such Contract.
"Guaranty" means, with respect to any Person, any agreement
by which such Person assumes, guarantees, endorses, contingently agrees
to purchase or provide funds for the payment of, or otherwise becomes
liable upon, the obligation of any other Person, or agrees to maintain
the net worth or working capital or other financial condition of any
other Person or otherwise assures any other creditor of such other
Person against loss, including, without limitation, any comfort letter,
operating agreement or take-or-pay contract and shall include, without
limitation, the contingent liabilIty of such Person in connection with
any application for a letter of credit.
"Incremental Transfer" means a Transfer which is made
pursuant to Section 2.2(a).
"Indebtedness" means, with respect to any Person such
Person's (i) obligations for borrowed money, (ii) obligations repre
senting the deferred purchase price of property other than accounts
payable arising in the ordinary course of such Person's business on
terms customary in the trade, (iii) obligations, whether or not
assumed, secured by liens or payable out of the proceeds or production
from property now or hereafter owned or acquired by such Person, (iv)
obligations which are evidenced by notes, acceptances, or other
instruments, (v) Capitalized Lease obligations and (vi) obligations for
which such Person is obligated pursuant to a Guaranty.
"Indemnified Amounts" has the meaning specified in Section
8.1.
"Indemnified Parties" has the meaning specified in Section
8.1.
"Investor Report" means a report, in substantially the form
of Exhibit E or in such other form as is mutually agreed to by the
Transferor and the Company, furnished by the Collection Agent to the
Company and the Administrative Agent pursuant to Section 2.11.
"Law" shall mean any law (including common law),
constitution, statute, treaty, regulation, rule, ordinance, order,
injunction, writ, decree or award of any Official Body.
"LIBOR Rate" shall mean, with respect to any Eurodollar
Tranche Period, the rate at which deposits in dollars are offered to
the Liquidity Provider in the London interbank market at approximately
11:00 a.m. (London time) two Business Days before the first day of such
Eurodollar Tranche Period in an amount approximately equal to the
Eurodollar Tranche to which the Eurodollar Rate is to apply and for a
period of time approximately equal to the applicable Eurodollar Tranche
Period.
"Liquidation Yield" means, at any time, an amount equal
to:
(RVF x LBR x NI) x (EM + CD)
360
Where:
RVF = the Rate Variance Factor at such time.
LBR = the Base Rate at such time which is applicable to the
liquidation period of the Net Investment at such time.
NI = the Net Investment at such time.
EM = the Estimated Maturity Period of the Receivables.
CD = the Collection Delay.
"Liquidity Provider Agreement" means the agreement between
the Company and the Liquidity Provider evidencing the obligation of the
Liquidity Provider to provide liquidity support to the Company in
connection with the issuance by the Company of Commercial Paper.
"Liquidity Provider" means the Person or Persons who will
provide liquidity support to the Company in connection with the
issuance by the Company of Commercial Paper.
"Lock-Box Account" means an account maintained by the
Collection Agent at a Lock-Box Bank for the purpose of receiving
Collections from Receivables.
"Lock-Box Agreement" means an agreement among the Collateral
Agent, the Collection Agent and a Lock-Box Bank in substantially the
form of Exhibit D hereto.
"Lock-Box Bank" means each of the banks set forth in Exhibit
C hereto and such banks as may be added thereto or deleted therefrom
pursuant to Section 2.8.
"Loss Percentage" means on any day the greater of (i) five
(5) times the highest Loss-to-Liquidation Ratio as of the last day of
the 12 calendar months preceding the then current calendar month and
(ii) 10%.
"Loss Reserve" means, on any day, an amount equal to:
LP x (NI + DR + SFR)
Where:
LP = the Loss Percentage at the close of business of the
Collection Agent on such day.
NI = the Net Investment at the close of business of the
Collection Agent on such day.
DR = the Discount Reserve at the close of business of the
Collection Agent on such day.
SFR = the Servicing Fee Reserve at the close of business of
the Collection Agent on such day.
Notwithstanding the foregoing, the Loss Reserve shall at all times be
at least equal to $3,000,000.
"Loss-to-Liquidation Ratio" means the ratio (expressed as a
percentage) computed as of the last day of each calendar month by
dividing (i) the aggregate Outstanding Balance of all Receivables which
became Defaulted Receivables during such calendar month, by (ii) the
aggregate amount of Collections received by the Collection Agent during
such calendar month.
"Management Committee" means the management committee of the
Transferor.
"Maximum Net Investment" means $65,000,000.
"Maximum Percentage Factor" means 95%.
"Moody's" means Moody's Investors Service, Inc.
"Net Investment" means the sum of the amounts paid to the
Transferor for each Incremental Transfer less the aggregate amount of
Collections received and applied by the Company to reduce such Net
Investment pursuant to Section 2.6 or Section 2.9; provided that the
Net Investment shall be restored in the amount of any Collections so
received and applied if at any time the distribution of such
Collections is rescinded or must otherwise be returned for any reason;
provided further that at no time shall the Net Investment exceed the
Maximum Net Investment.
"Net Receivables Balance" means at any time the Outstanding
Balance of the Eligible Receivables at such time reduced by the sum of
(i) the aggregate amount by which the Outstanding Balance of all
Eligible Receivables of each Designated Obligor exceeds the
Concentration Factor for such Designated Obligor, plus (ii) the
aggregate Outstanding Balance of all Eligible Receivables which are
Defaulted Receivables, plus (iii) the aggregate OutStanding Balance of
all Eligible Receivables of each Obligor with respect to which 50% or
more of such Obligor's Receivables are Delinquent Receivables.
"Net Worth" means, with respect to the Transferor and at any
time, an amount equal to the aggregate outstanding balance of all
Eligible Receivables at such time minus the amount of the Net
Investment at such time minus the outstanding principal amount at such
time of the subordinated note issued by the Transferor in connection
with the Receivables Purchase Agreement entered into with the Seller
minus any other liabilities of the Transferor plus all cash of the
Transferor.
"Obligor" means a Person obligated to make payments for the
provision of goods and services pursuant to a Contract.
"Official Body" shall mean any government or political
subdivision or any agency, authority, bureau, central bank, commission,
department or instrumentality of any such government or political
subdivision, or any court, tribunal, grand jury or arbitrator, in each
case whether foreign or domestic.
"Operating Manager" means IMC-Agrico Company in its capacity
as the operating manager of the Transferor.
"Other Transferor" means any Person other than the Transferor
that has entered into a receivables purchase agreement or transfer and
administration agreement with the Company.
"Outstanding Balance" of any Receivable at any time means the
then outstanding principal amount thereof including any accrued and
outstanding Finance Charges related thereto.
"Percentage Factor" means the percentage computed at any time
of determination as follows:
NI + LR + DR + SFR
NRB
Where:
NI = the Net Investment at the time of such computation.
LR = the Loss Reserve at the time of such computation.
DR = the Discount Reserve at the time of such computation.
SFR = the Servicing Fee Reserve at the time of such
computation.
NRB = the Net Receivables Balance at the time of such
computation.
Notwithstanding the foregoing computation, the Percentage
Factor shall not exceed one hundred percent (100%). The Percentage
Factor shall be calculated by the Collection Agent on the day of the
initial Incremental Transfer hereunder. Thereafter, until the
Termination Date, the Collection Agent shall daily recompute the
Percentage Factor and report such recomputations to the Company monthly
in the Investor Report or as requested by the Company. The Percentage
Factor shall remain constant from the time as of which any such compu
tation or recomputation is made until the time as of which the next
such recomputation shall be made, notwithstanding any additional
Receivables arising, any Incremental Transfer made pursuant to Section
2.2(a) or any reinvestment Transfer made pursuant to Section 2.2(b) and
2.5 during any period between computations of the Percentage Factor.
The Percentage Factor, as calculated at the close of business on the
Business Day immediately preceding the Termination Date, shall remain
constant at all times thereafter until such time as the Company shall
have received the Aggregate Unpaids, at which time the Percentage
Factor shall be recomputed in accordance with Section 2.6.
"Person" means any corporation, limited liability company,
natural person, firm, joint venture, partnership, trust, unincoporated
organization, enterprise, government or any department or agency of any
government.
"Potential Termination Event" means an event which but for
the lapse of time or the giving of notice, or both, would constitute a
Termination Event.
"Proceeds" means "proceeds" as defined in Section 9-306(1) of
the UCC.
"Program Fee" means the fee payable by the Transferor to the
Company pursuant to Section 2.7 hereof, the terms of which are set
forth in the Fee Letter.
"Purchased Interest" means the interest in the Receivables
acquired by the Liquidity Provider through purchase pursuant to the
terms of the Liquidity Provider Agreement.
"Rate Variance Factor" means the number, computed from time
to time in good faith by the Company, that reflects the largest
potential variance (from minimum to maximum) in selected interest rates
over a period of time selected by the Company from time to time, set
forth in a written notice by the Company to the Transferor and the
Collection Agent. As of the date hereof, the Rate Variance Factor is
1.15% (it being understood that such number is subject to change as set
forth above).
"Receivable" means the indebtedness owed to the Seller by any
Obligor (without giving effect to any purchase under the Receivables
Purchase Agreement by the Transferor at any time) under a Contract and
sold or otherwise conveyed by the Seller to the Transferor pursuant to
the Receivables Purchase Agreement whether constituting an account,
chattel paper, instrument or general intangible, arising in connection
with the sale or lease of merchandise or the rendering of services by
the Seller and includes the right to payment of any Finance Charges and
other obligations of such Obligor with respect thereto.
Notwithstanding the foregoing, once a Receivable has been deemed
collected pursuant to Section 2.9 hereof, it shall no longer constitute
a Receivable hereunder.
"Receivables Purchase Agreement" means that certain
Receivables Purchase Agreement dated as of June 27, 1997 between the
Seller as seller and the Transferor as purchaser, as such agreement may
be amended, modified or supplemented and in effect from time to time.
"Records" means all Contracts and other documents, books,
records and other information (including, without limitation, computer
programs, tapes, discs, punch cards, data processing software and
related property and rights) maintained with respect to Receivables and
the related Obligors.
"Related Security" means with respect to any Receivable all
of the Transferor's right, title and interest in, to and under:
(i) all of the Transferor's interest, if any, in
the merchandise (including returned or repossessed
merchandise), if any, the sale of which by the Seller to the
relevant Obligor gave rise to such Receivable;
(ii) all other security interests or liens and
property subject thereto from time to time, if any,
purporting to secure payment of such Receivable, whether
pursuant to the Contract related to such Receivable or
otherwise, together with all financing statements signed by
an Obligor describing any collateral securing such
Receivable;
(iii) all guarantees, indemnities, warranties,
insurance (and proceeds and premium refunds thereof) or other
agreements or arrangements of any kind from time to time sup
porting or securing payment of such Receivable whether
pursuant to the Contract related to such Receivable or
otherwise;
(iv) all Records related to such Receivables;
(v) all rights and remedies of the Transferor
under the Receivables Purchase Agreement, together with all
financing statements filed by the Transferor against the Sell
er in connection therewith; and
(vi) all Proceeds of any of the foregoing.
"Section 8.2 Costs" has the meaning specified in Section
8.2(d).
"Seller" means IMC-Agrico Company as seller under the
Receivables Purchase Agreement and its successors and permitted
assigns.
"Servicing Fee" shall mean the fee payable by the Company to
the Collection Agent, with respect to a Tranche, in an amount equal to
0.75% per annum on the amount of the Net Investment allocated to such
Tranche pursuant to Section 2.3. Such fee shall accrue from the date
of the initial purchase of an ownership interest in the Receivables to
the later of the Termination Date or the date on which the Net
Investment is reduced to zero. On or prior to the Termination Date
such fee shall be payable only from Collections pursuant to, and
subject to the priority of payments set forth in, Section 2.5. After
the Termination Date such fee shall be payable only from Collections
pursuant to, and subject to the priority of payments set forth in,
Section 2.6.
"Servicing Fee Reserve" means at any time the sum of (i) the
Servicing Fee for all outstanding Tranches and (ii) an amount equal to
the product of (A) the Net Investment at such time, and (B) the
Servicing Fee percentage and (C) a fraction having as the numerator,
the sum of the Estimated Maturity Period and the Collection Delay and
as the denominator, 360.
"Standard & Poor's" or "S&P" means Standard & Poor's Ratings,
a Group division of McGraw-Hill Companies, Inc.
"Subsidiary" of a Person means any corporation more than 50%
of the outstanding voting securities of which shall at any time be
owned or controlled, directly or indirectly, by such Person or by one
or more Subsidiaries of such Person or any similar business
organization which is so owned or controlled.
"Termination Date" means the earliest of (i) that Business
Day designated by the Transferor to the Company as the Termination Date
at any time following 30 days written notice to the Company, (ii) the
date of termination of the commitment of the Liquidity Provider under
the Liquidity Provider Agreement, (iii) the date of termination of the
commitment of the Credit Support Provider under the Credit Support
Agreement, (iv) the day occurring on or after a Termination Event on
which the Company notifies the Transferor that the Termination Date has
occurred except that in the case of the events specified in Section
7.1(e), (f) and (k) the Termination Date shall occur automatically upon
the occurrence of such event without any further notice to Section 7.1,
or (v) June 26, 1998, unless extended.
"Termination Event" means an event described in Section 7.1.
"Tranche" means a portion of the Net Investment allocated to
a Tranche Period pursuant to Section 2.3.
"Tranche Period" means a CP Tranche Period, a BR Tranche
Period, a CD Tranche Period or a Eurodollar Tranche Period.
"Tranche Rate" means the CP Rate, the Base Rate, the CD Rate
or the Eurodollar Rate.
"Transaction Costs" has the meaning specified in Section
8.3(a).
"Transaction Documents" means, collectively, this Agreement,
the Receivables Purchase Agreement, the Fee Letter, the Lock-Box
Agreements, the Company Certificates, the Transfer Certificates and all
of the other instruments, documents and other agreements executed and
delivered by the Seller or the Transferor in connection with any of the
foregoing, in each case, as the same may be amended, restated,
supplemented or otherwise modified from time to time.
"Transfer" means a conveyance, transfer and assignment by the
Transferor to the Company of an undivided percentage ownership interest
in Receivables hereunder.
"Transfer Certificate" has the meaning given to it in Section
2.2(a).
"Transfer Date" means, with respect to each Transfer, the
Business Day on which such Transfer is made.
"Transfer Price" means with respect to any Incremental
Transfer, the amount paid to the Transferor by the Company as described
in the Transfer Certificate.
"Transferor" means IMC-Agrico Receivables Company L.L.C., a
Delaware limited liability company, and its successors and permitted
assigns.
"Transferred Interest" means, at any time of determination,
an undivided percentage ownership interest in (i) each and every then
outstanding Receivable, (ii) all Related Security with respect to each
such Receivable, (iii) all Collections with respect thereto, and (iv)
other Proceeds of the foregoing, which undivided ownership interest
shall be equal to the Percentage Factor at such time, and only at such
time (without regard to prior calculations). The Transferred Interest
in each Receivable, together with Related Security and Collections and
Proceeds with respect thereto, shall at all times be equal to the
Transferred Interest in each other Receivable, together with Related
Security and Collections and Proceeds with respect thereto. To the
extent that the Transferred Interest shall decrease as a result of a
recalculation of the Percentage Factor, the Company shall be considered
to have reconveyed to the Transferor an undivided percentage ownership
interest in each Receivable, together with Related Security and
Collections and Proceeds with respect thereto, in an amount equal to
such decrease such that in each case the Transferred Interest in each
Receivable shall be equal to the Transferred Interest in each other
Receivable.
"UCC" means, with respect to any state, the Uniform
Commercial Code as from time to time in effect in such state.
"Unused Facility Fee" means the fee payable by the Transferor
to the Company pursuant to Section 2.7 hereof, the terms of which are
set forth in the Fee Letter.
SECTION 1.2. Other Terms. All accounting terms not
specifically defined herein shall be construed in accordance with
generally accepted accounting principles. All terms used in Article 9
of the UCC in the State of New York, and not specifically defined
herein, are used herein as defined in such Article 9.
SECTION 1.3. Computation of Time Periods. Unless otherwise
stated in this Agreement, in the computation of a period of time from a
specified date to a later specified date, the word "from" means "from
and including" and the words "to" and "until" each means "to but
excluding and the word "within" means "from and excluding a specified
date and to and including a later specified date"."
ARTICLE II
PURCHASES AND SETTLEMENTS
SECTION 2.1. Facility. Upon the terms and subject to the
conditions herein set forth the Transferor may, at its option, convey,
transfer and assign to the Company, and the Company shall accept such
conveyance, transfer and assignment from the Transferor, without
recourse except as provided herein, undivided percentage ownership
interests in the Receivables, together with Related Security and
Collections with respect thereto, from time to time.
SECTION 2.2. Transfers; Company Certificate; Eligible
Receivables. (a) Incremental Transfers. Upon the terms and subject to
the conditions herein set forth the Transferor may, at its option,
convey, transfer and assign to the Company, and the Company shall
accept such conveyance, transfer and assignment from the Transferor,
without recourse except as provided herein, undivided percentage
ownership interests in the Receivables, together with Related Security
and Collections with respect thereto (each, an "Incremental Transfer")
from time to time prior to the Termination Date for an aggregate
Transfer Price not to exceed the Maximum Net Investment. The
Transferor shall by notice given by telefax offer to convey, transfer
and assign to the Company undivided percentage ownership interests in
the Receivables at least three (3) Business Days prior to the proposed
date of transfer. Each such notice shall specify the desired Transfer
Price (which shall be at least $1,000,000 or integral multiples of
$250,000 (or to the extent that the then unused portion of the Maximum
Net Investment is less than $250,000, such lesser amount) in excess
thereof) and the desired date of such Incremental Transfer, together
with the desired Tranche Period (or range) related thereto as required
by Section 2.3. The Company shall accept such offer to convey,
transfer and assign undivided percentage ownership interests by notice
given to the Transferor by telephone or telefax. Each notice of
proposed Transfer shall be irrevocable and binding on the Transferor
and the Transferor shall indemnify the Company against any loss or
expense incurred by the Company, either directly or through the
Liquidity Provider Agreement as a result of any failure by the
Transferor to complete such Incremental Transfer including, without
limitation, any loss (including loss of anticipated profits) or expense
incurred by the Company, either directly or pursuant to the Liquidity
Provider Agreement, by reason of the liquidation or reemployment of
funds acquired by the Company or the Liquidity Provider (including,
without limitation, funds obtained by issuing commercial paper or
promissory notes or obtaining deposits or loans from third parties) for
the Company to fund such Incremental Transfer. Notwithstanding any
other provision hereof, the Company shall have no obligation to accept
any Transfer if it is unable to obtain funds therefor in the commercial
paper market or under the Liquidity Provider Agreement.
On the date of the initial Incremental Transfer, the Company
shall deliver written confirmation to the Transferor of the Transfer
Price, the Tranche Period(s) and the Tranche Rate(s) relating to such
Transfer and the Transferor shall deliver to the Company the Transfer
Certificate in the form of Exhibit F hereto (the "Transfer
Certificate"). The Company shall indicate the amount of the initial
Incremental Transfer together with the date thereof on the grid
attached to the Transfer Certificate. On the date of each subsequent
Incremental Transfer, the Company shall send written confirmation to
the Transferor of the Transfer Price, the Tranche Period(s), the
Transfer Date and the Tranche Rate(s) applicable to such Incremental
Transfer. The Company shall indicate the amount of the Incremental
Transfer together with the date thereof as well as any decrease in the
Net Investment on the grid attached to the Transfer Certificate. The
Transfer Certificate shall evidence the Incremental Transfers.
Following each Incremental Transfer, the Company shall deposit to the
Transferor's account at the location indicated in Section 9.3, in
immediately available funds, an amount equal to the Transfer Price for
such Incremental Transfer.
(b) Reinvestment Transfers. On each Business Day
occurring after the initial Incremental Transfer hereunder and prior to
the Termination Date, the Transferor hereby agrees to convey, transfer
and assign to the Company, and in consideration of Transferor's
agreement to maintain at all times prior to the Termination Date a Net
Receivables Balance in an amount at least sufficient to maintain the
Percentage Factor at an amount not greater than the Maximum Percentage
Factor, the Company hereby agrees to purchase from the Transferor
undivided percentage ownership interests in each and every Receivable,
together with Related Security and Collections with respect thereto, to
the extent that Collections are available for such Transfer in
accordance with Section 2.5, such that after giving effect to such
Transfer, (i) the amount of the Company's Net Investment at the close
of the Company's business on such Business Day shall be equal to the
amount of the Company's Net Investment at the close of the Company's
business on the Business Day immediately preceding such Business Day
plus the Transfer Price of any Incremental Transfer made on such day,
if any, less the aggregate amount of any Collections received and
applied by the Company on such day to reduce the Net Investment
pursuant to Section 2.6 or Section 2.9 and (ii) the Company's
Transferred Interest in each Receivable, together with Related Security
and Collections with respect thereto, shall be equal to its Transferred
Interest in each other Receivable, together with Related Security and
Collections with respect thereto.
(c) All Transfers. Each Transfer shall constitute a
purchase of undivided percentage ownership interests in each and every
Receivable, together with Related Security and Collections with respect
thereto, then existing, as well as in each and every Receivable,
together with Related Security and Collections with respect thereto,
which arises at any time after the date of such Transfer but prior to
the date on which the Net Investment shall become zero and all amounts
due hereunder from the Transferor shall be paid in full. The Company's
aggregate undivided percentage ownership interest in the Receivables,
together with Related Security and Collections with respect thereto,
shall equal the Percentage Factor in effect from time to time.
(d) Company Certificate. The Transferor shall issue to
the Company the Company Certificate, in the form of Exhibit M, on or
prior to the date hereof.
(e) Percentage Factor. The Percentage Factor shall be
initially computed as of the opening of business of the Collection
Agent on the date of the initial Incremental Transfer hereunder.
Thereafter until the Termination Date, the Percentage Factor shall be
automatically recomputed as of the close of business of the Collection
Agent on each day (other than a day after the Termination Date). The
Percentage Factor shall remain constant from the time as of which any
such computation or recomputation is made until the time as of which
the next such recomputation, if any, shall be made. The Percentage
Factor, as computed as of the day immediately preceding the Termination
Date, shall remain constant at all times on and after such Termination
Date until the date on which the Net Investment shall become zero.
SECTION 2.3. Selection of Tranche Periods and Tranche
Rates.
(a) At all times hereafter, but prior to the occurrence
of a Termination Event, the Transferor shall, subject to the Company's
approval and the limitations described below, request Tranche Periods
and allocate a portion of the Net Investment to each selected Tranche
Period, so that the aggregate amounts allocated to outstanding Tranche
Periods at all times shall equal the Net Investment. The Transferor
shall give the Company irrevocable notice by telephone of the new
requested Tranche Period(s) at least three (3) Business Days prior to
the expiration of any then existing Tranche Period; provided, however,
that the Company may select, in its discretion, any such new Tranche
Period if (i) the Transferor fails to provide such notice on a timely
basis or (ii) the Company determines, in its reasonable discretion,
that the Tranche Period requested by the Transferor is unavailable or
for any reason commercially impracticable. The Company confirms that
it is its intention to allocate all or substantially all of the Net
Investment to one or more CP Tranche Periods; provided that the Company
may determine, from time to time, in its reasonable discretion, that
funding such Net Investment by means of one or more CP Tranche Periods
is impracticable for any reason. If the Liquidity Provider acquires a
Purchased Interest with respect to the Receivables pursuant to the
terms of the Liquidity Provider Agreement, the Liquidity Provider may
exercise the right of selection granted to the Company hereby. The
Tranche Rate applicable to any such Purchased Interest shall be
selected by the Liquidity Provider and shall be any of the BR Rate, the
CD Rate or the Eurodollar Rate (in each case as defined herein). In
the case of any Tranche Period outstanding upon the occurrence of a
Termination Event, such Tranche Period shall end on the date of such
occurrence.
(b) At all times on and after the occurrence of a
Termination Event, the Company or the Liquidity Provider, as
applicable, shall select all Tranche Periods and Tranche Rates
applicable thereto.
SECTION 2.4. Discount, Fees and Other Costs and Expenses.
Notwithstanding the limitation on recourse under Section 2.1, the
Transferor shall pay, as and when due in accordance with this
Agreement, all fees hereunder, Discount, all amounts payable pursuant
to Article VIII hereof, if any, and the Servicing Fee. On the last day
of each Tranche Period the Transferor shall pay to the Company an
amount equal to the discount accrued on the Company's Commercial Paper
notes to the extent such notes were issued in order to fund the
Transferred Interest in an amount in excess of the Transfer Price of an
Incremental Transfer. The Transferor shall pay to the Company, on each
day on which Commercial Paper is issued by the Company, the Dealer Fee.
Discount shall accrue with respect to each Tranche on each day
occurring during the Tranche Period related thereto. Nothing in this
Agreement shall limit in any way the obligations of the Transferor to
pay the amounts set forth in this Section 2.4.
SECTION 2.5. Non-Liquidation Settlement and Reinvestment
Procedures. On each day after the date of any Incremental Transfer but
prior to the Termination Date and provided that no Potential
Termination Event shall have occurred and be continuing, the Collection
Agent shall out of the Percentage Factor of Collections received on or
prior to such day and not previously applied or accounted for: (i) set
aside and hold in trust for the Company (or deposit into the Collection
Account if so required pursuant to Section 2.12) an amount equal to all
Discount and the Servicing Fee accrued through such day and not so
previously set aside or paid and (ii) apply the balance of such
Percentage Factor of Collections remaining after application of
Collections as provided in clause (i) of this Section 2.5 to the
Transferor, for the benefit of the Company to the purchase of addi
tional undivided percentage interests in each Receivable pursuant to
Section 2.2(b). On the last day of each Tranche Period, from the
amounts set aside as described in clause (i) of the first sentence of
this Section 2.5, the Collection Agent shall deposit to the Company's
account, an amount equal to the accrued and unpaid Discount for such
Tranche Period and shall deposit to its account an amount equal to the
accrued and unpaid Servicing Fee for such Tranche Period. As provided
in Section 6.2(b), the Collection Agent shall remit to the Transferor,
as soon as practicable after receipt, such portion of Collections not
allocated to the Company.
SECTION 2.6. Liquidation Settlement Procedures. If on the
Termination Date, the Percentage Factor is greater than the Maximum
Percentage Factor, then the Transferor shall immediately pay to the
Company from previously received Collections, an amount equal to the
amount such that, when applied in reduction of the Net Investment, will
result in a Percentage Factor less than or equal to the Maximum
Percentage Factor. Such amount shall be applied by the Company to the
reduction of the Net Investment of Tranche Periods selected by the
Company. On the Termination Date and on each day thereafter, and on
each day on which a Potential Termination Event has occurred and is
continuing, the Collection Agent shall set aside and hold in trust for
the Company (or deposit into the Collection Account if so required
pursuant to Section 2.12) the Percentage Factor of all Collections
received on such day. On the Termination Date or the day on which a
Potential Termination Event occurs, the Collection Agent shall deposit
to the Company's account any remaining amounts set aside pursuant to
Section 2.5(i) above. On the last day of each Tranche Period to occur
on or after the Termination Date or during the continuance of a
Potential Termination Event, the Collection Agent shall deposit to the
Company's account, the amounts set aside pursuant to the preceding
sentence, together with any remaining amounts set aside pursuant to
Section 2.5(i) prior to the Termination Date or the day on which a
Potential Termination Event occurs but not to exceed the sum of (i) the
accrued Discount for such Tranche Period, (ii) the portion of the Net
Investment allocated to such Tranche Period, and (iii) the aggregate of
all other amounts then owed (whether due or accrued) hereunder by
Transferor to the Company. On such day, the Collection Agent shall
deposit to its account, from the amounts set aside pursuant to the
preceding sentence which remain after payment in full of the afore
mentioned amounts, the accrued Servicing Fee for such Tranche Period.
If there shall be insufficient funds on deposit for the Collection
Agent to distribute funds in payment in full of the aforementioned
amounts, the Collection Agent shall distribute funds first, in payment
of the accrued Discount, second, in payment of all fees and expenses
payable to the Company hereunder, third, if the Transferor or an
Affiliate of the Transferor is not the Collection Agent, to the
Collection Agent's account, in payment of the Servicing Fee payable to
the Collection Agent, fourth, in reduction of the Net Investment allo
cated to such Tranche Period, fifth, in payment of all other amounts
payable to the Company and sixth, if the Transferor or an Affiliate of
the Transferor is the Collection Agent, to its or such Affiliate's
account as Collection Agent, in payment of the Servicing Fee payable to
the Transferor as Collection Agent. Following the date on which the
Net Investment has been reduced to zero, all accrued Discount and
Servicing Fees have been paid in full and all other Aggregate Unpaids
have been paid in full, (i) the Collection Agent shall recompute the
Percentage Factor, (ii) the Company shall be considered to have
reconveyed to the Transferor any interest in the Receivables (including
the Transferred Interest), (iii) the Collection Agent shall pay to
Transferor any remaining Collections set aside and held by the
Collection Agent pursuant to the second sentence of this Section 2.6
and (iv) the Company shall execute and deliver to the Transferor, at
the Transferor's expense, such documents or instruments as are
necessary to terminate the Company's interest in the Receivables. Any
such documents shall be prepared by or on behalf of the Transferor.
SECTION 2.7. Fees. Notwithstanding any limitation on
recourse contained in this Agreement, the Transferor shall pay the
following non-refundable fees:
(a) On the last day of each calendar month, to the
Company, the Program Fee and the Unused Facility Fee.
(b) On the date of execution hereof, to the
Administrative Agent, the Amendment Fee.
SECTION 2.8 . Protection of Ownership Interest of the
Company. (a) The Transferor agrees that from time to time, at its
expense, it will promptly execute and deliver all instruments and
documents and take all actions as may be necessary or as the Company
may reasonably request in order to perfect or protect the Transferred
Interest or as are necessary to enable the Company to exercise or
enforce any of its rights hereunder. Without limiting the foregoing,
the Transferor will, upon the request of the Company, in order to
accurately reflect this purchase and sale transaction, execute and file
such financing or continuation statements or amendments thereto or
assignments thereof (as permitted pursuant to Section 9.6 hereof) as
may be requested by the Company and mark its master data processing
records and other documents with a legend describing the purchase by
the Company of the Transferred Interest. The Transferor shall, upon
request of the Company, obtain such additional search reports as the
Company shall request. To the fullest extent permitted by applicable
law, the Company shall be permitted to sign and file continuation
statements and amendments thereto and assignments thereof without the
Transferor's signature. Carbon, photographic or other reproduction of
this Agreement or any financing statement shall be sufficient as a
financing statement. The Transferor shall neither change its name,
identity or corporate structure (within the meaning of Section 9-402(7)
of the UCC as in effect in the States of New York and Illinois) nor
relocate its chief executive office or any office where Records are
kept unless it shall have: (i) given the Company at least thirty (30)
days prior notice thereof and (ii) prepared at Transferor's expense and
delivered to the Company all financing statements, instruments and
other documents necessary to preserve and protect the Transferred
Interest or requested by the Company in connection with such change or
relocation. Any filings under the UCC or otherwise that are occasioned
by such change in name or location shall be made at the expense of
Transferor.
(b) The Collection Agent shall instruct all Obligors to
cause all Collections to be deposited directly with a Lock-Box Bank.
Any Lock-Box Account maintained by a Lock-Box Bank pursuant to the
related Lock-Box Agreement shall be under the ownership and control of
the Collateral Agent. The Collection Agent shall be permitted to give
instructions to the Lock-Box Banks for so long as either a Collection
Agent default or any other Termination Event has not occurred
hereunder. The Collection Agent shall not add any bank as a Lock-Box
Bank to those listed on Exhibit C unless such bank has entered into a
Lock-Box Agreement. The Collection Agent shall not terminate any bank
as a Lock-Box Bank unless the Administrative Agent shall have received
fifteen (15) days' prior notice of such termination. If the Transferor
or the Collection Agent receives any Collections or the Transferor is
deemed to receive any Collections pursuant to Section 2.9, the
Transferor or the Collection Agent, as applicable, shall immediately,
but in any event within forty-eight (48) hours of receipt, remit such
Collections to a Lock-Box Account.
SECTION 2.9. Deemed Collections; Application of Payments.
(a) If on any day the Outstanding Balance of a Receivable is either (x)
reduced as a result of any defective, rejected or returned goods or
services, any cash discount, credit, rebate, allowance or other
dilution factor, any billing adjustment or other adjustment, or (y)
reduced or canceled as a result of a setoff or offset in respect of any
claim by any Person (whether such claim arises out of the same or a
related transaction or an unrelated transaction), the Transferor shall
be deemed to have received on such day a collection of such Receivable
in the amount of such reduction or cancellation and the Transferor
shall pay to the Collection Agent an amount equal to such reduction or
cancellation and such amount shall be applied by the Collection Agent
as a Collection in accordance with Section 2.5 or 2.6, as applicable.
The Net Investment shall be reduced by the amount of such payment
actually received by the Company.
(b)If on any day any of the representations or warran
ties in Section 3.1(d), (e), (i), (k),(l), (o), (r), (u) or (v) is no
longer true with respect to a Receivable, the Transferor shall be
deemed to have received on such day a Collection of such Receivable in
full and the Transferor shall on such day pay to the Collection Agent
an amount equal to the aggregate Percentage Factor of the Outstanding
Balance of such Receivable and such amount shall be allocated to the
Company and applied by the Collection Agent as a Collection allocable
to the Transferred Interest in accordance with Section 2.5 or 2.6, as
applicable. The Net Investment shall be reduced by the amount of such
payment actually received by the Company.
(c)Any payment by an Obligor in respect of any
indebtedness owed by it to the Transferor shall, except as otherwise
specified by such Obligor or otherwise required by contract or law and
unless otherwise instructed by the Company, be applied as a Collection
of any Receivable of such Obligor included in the Transferred Interest
(starting with the oldest such Receivable) to the extent of any amounts
then due and payable thereunder before being applied to any other
receivable or other indebtedness of such Obligor.
(d)If on any day any Receivable owed by Phosphate
Chemicals Export Association, Inc. is determined to be either a
Delinquent Receivable or a Defaulted Receivable, the Transferor shall
within two (2) Business Days thereafter pay to the Collection Agent an
amount equal to the aggregate Percentage Factor of the Outstanding
Balance of such Receivable and such amount shall be allocated to the
Company and applied by the Collection Agent as a Collection allocable
to the Transferred Interest in accordance with Section 2.5 or 2.6, as
applicable. The Net Investment shall be reduced by the amount of such
payment actually received by the Company.
SECTION 2.10. Payments and Computations, Etc. All amounts
to be paid or deposited by the Transferor or the Collection Agent
hereunder shall be paid or deposited in accordance with the terms
hereof no later than 1:00 p.m. (New York City time) on the day when due
in immediately available funds; if such amounts are payable to the
Company they shall be paid or deposited in the account indicated on the
signature page hereof, until otherwise notified by the Company. The
Transferor shall, to the extent permitted by law, pay to the Company
upon demand, interest on all amounts not paid or deposited when due to
the Company hereunder at a rate equal to 2% per annum plus the Base
Rate. All computations of discount, interest and all per annum fees
hereunder shall be made on the basis of a year of 360 days for the
actual number of days (including the first but excluding the last day)
elapsed. Any computations of amounts payable by the Transferor
hereunder to the Company, the Liquidity Provider or the Credit Support
Provider shall be binding absent manifest error.
SECTION 2.11. Reports. Prior to the fifteenth day of each
month, the Collection Agent shall prepare and forward to the
Administrative Agent (i) an Investor Report as of the end of the last
day of the immediately preceding month, (ii) if requested by the
Company or the Administrative Agent, a listing by Obligor of all
Receivables together with an aging of such Receivables and (iii) such
other information as the Company or the Administrative Agent may
reasonably request.
SECTION 2.12. Collection Account. There shall be estab
lished on the day of the initial Incremental Transfer hereunder and
maintained, for the benefit of the Company, with the Collateral Agent,
a segregated account (the "Collection Account"), bearing a designation
clearly indicating that the funds deposited therein are held for the
benefit of the Company. The Collection Agent shall remit daily within
forty-eight hours of receipt to the Collection Account all Collections
received with respect to any Receivables; provided, however, the
Collection Agent shall be permitted to make payments to the Company on
the last day of each Tranche Period instead of depositing funds into
the Collection Account on a daily basis for so long as, and only for so
long as no Collection Agent default and no other Termination Event has
occurred hereunder. Funds on deposit in the Collection Account (other
than investment earnings) shall be invested by the Collateral Agent in
Eligible Investments that will mature so that such funds will be avail
able prior to the last day of each successive Tranche Period following
such investment. On the last day of each calendar month, all interest
and earnings (net of losses and investment expenses) on funds on
deposit in the Collection Account shall be retained in the Collection
Account and be available to make any payments required to be made
hereunder (including Discount) to the Company. On the date on which
the Net Investment is zero and all amounts payable hereunder have been
paid to the Company, any funds remaining on deposit in the Collection
Account shall be paid to the Transferor.
SECTION 2.13. Net Investment Amount. The Transferor hereby
acknowledges that upon the effectiveness of the Receivables Purchase
Agreement, the Net Investment will be equal to $32,536,515.31 prior to
the transfers to be made pursuant to Section 2.2 hereof. The
Transferor also hereby acknowledges that such amount represents the net
investment in effect as of the date of termination of the Transfer and
Administration Agreement dated as of October 31, 1994 between the
Company and the Seller.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties of the. The
Transferor represents and warrants to the Company that:
(a) Existence and Power. The Transferor is a limited
liability company formed and validly existing under the laws of the
State of Delaware and has all power and all material governmental
licenses, authorizations, consents and approvals required to carry on
its business in each jurisdiction in which its business is now con
ducted where the failure to have such governmental licenses,
authorizations, consents and approvals would have a material adverse
effect on (i) the Transferor's busness or properties, (ii) the
Transferor's ability to perform its obligations hereunder or (iii) the
Company's interest in the Receivables.
(b) Authorization; Contravention. The execution,
delivery and performance by the Transferor of this Agreement, the
Receivables Purchase Agreement, the Fee Letter, the Company Certificate
and the Transfer Certificate are within the Transferor's limited
liability company powers, have been duly authorized by all necessary
action, require no action by or in respect of, or filing with, any
governmental body, agency or official (except as contemplated by
Section 2.8), and do not contravene, or constitute a default under, any
provision of applicable law or regulation or of the certificate of
formation or agreement among members (or other similar agreement) of
the Transferor or of any agreement, judgment, injunction, order, decree
or other instrument binding upon the Transferor or result in the
creation or imposition of any lien on assets of the Transferor or any
of its Subsidiaries (except as contemplated by Section 2.8).
(c) Binding Effect. Each of this Agreement, the
Receivables Purchase Agreement, the Fee Letter and the Company
Certificate constitutes and the Transfer Certificate upon payment by
the Company of the Transfer Price set forth therein will constitute the
legal, valid and binding obligation of the Transferor, enforceable in
accordance with its terms, subject to applicable bankruptcy,
insolvency, moratorium or other similar laws affecting the rights of
creditors.
(d) Perfection. Immediately preceding each Transfer
hereunder, the Transferor shall be the owner of all of the Receivables
(with the exception of the Receivables related to the Special Obligor),
free and clear of all liens, encumbrances, security interests,
preferences or other security arrangement of any kind or nature whatso
ever. On or prior to each Transfer and each recomputation of the
Transferred Interest, all financing statements and other documents
required to be recorded or filed in order to perfect and protect the
Transferred Interest against all creditors of and purchasers from the
Transferor and the Seller will have been duly filed in each filing
office necessary for such purpose and all filing fees and taxes, if
any, payable in connection with such filings shall have been paid in
full.
(e) Accuracy of Information. To the best of its
knowledge, all information heretofore furnished by the Transferor
(including without limitation, the Investor Reports, any reports
delivered pursuant to Section 2.11 and the Transferor's financial
statements) to the Company or the Administrative Agent for purposes of
or in connection with this Agreement or any transaction contemplated
hereby is, and all such information hereafter furnished by the
Transferor to the Company or the Administrative Agent will be, true and
accurate in every material respect, on the date such information is
stated or certified.
(f) Tax Status. The Transferor has filed all tax
returns (federal, state and local) required to be filed and has paid or
made adequate provision for the payment of all taxes, assessments and
other governmental charges.
(g) Action, Suits. Except as set forth in Exhibit H-1,
there are no actions, suits or proceedings pending or, to the knowledge
of the Transferor, threatened against the Transferor or any Affiliate
of the Transferor or their respective properties, in or before any
court, arbitrator or other body, which question the validity of the
transactions contemplated hereby and by the Receivables Purchase
Agreement or which, individually or in the aggregate, could be
reasonably expected to have a material adverse effect on the
Transferor's ability to perform its obligations under this Agreement
and the Receivables Purchase Agreement.
(h) Place of Business. The chief place of business and
chief executive office of the Transferor and the offices where the
Transferor keeps all its Records relating to the Receivables are
located at the address of the Transferor indicated in Section 9.3
hereof or such other locations notified to the Company in accordance
with Section 2.8 in jurisdictions where all action required by Section
2.8 has been taken and completed.
(i) Good Title. Upon each Transfer and each
recomputation of the Transferred Interest, assuming that the Company
takes all action required under this Agreement, the Company shall
acquire a valid and perfected first priority undivided percentage
ownership interest to the extent of the Transferred Interest or a first
priority perfected security interest, to the extent such interests can
be created under Article 9 of the UCC and perfected by the filing of
financing statements, in each Receivable that exists on the date of
such Transfer and recomputation and in the Related Security and
Collections with respect thereto free and clear of any Adverse Claim.
(j) Tradenames, Etc. As of the date hereof: (i) the
Transferor has no subsidiaries or divisions; and (ii) the Transferor
has, since formation, not operated under any tradenames, and, since
formation, has not changed its name, merged with or into or
consolidated with any other corporation or been the subject of any
proceeding under Title 11, United States Code (Bankruptcy).
(k) Nature of Receivables. Each Receivable (x)
represented by the Transferor or the Collection Agent, so long as the
Collection Agent is IMC-Agrico Company or an affiliate thereof, to be
an Eligible Receivable (including in any Investor Report or other
report delivered pursuant to Section 2.11 of this Agreement) or (y)
included in the calculation of the Net Receivables Balance, in fact
satisfies at such time the definition of "Eligible Receivables" and is
an "eligible asset" as defined in Rule 3a-7 under the Investment
Company Act, of 1940, as amended.
(l) Coverage Requirement; Amount of Receivables. The
Percentage Factor does not exceed the Maximum Percentage Factor. As of
June 26, 1997, the aggregate Outstanding Balance of the Receivables in
existence was $77,556,653.71 and the Net Receivable Balance was
$58,765,886.42.
(m) Credit and Collection Policy. Since February 20,
1997, there have been no material changes in the Credit and Collection
Policy.
(n) [Intentionally omitted]
(o) No Termination Event. No event has occurred and is
continuing and no condition exists which constitutes a Termination
Event or a Potential Termination Event.
(p) Not an Investment Company. The Transferor is not
an "investment company" within the meaning of the Investment Company
Act of 1940, as amended, or is exempt from all provisions of such Act.
(q) ERISA. The Transferor is in compliance in all
material respects with ERISA and no lien in favor of the Pension
Benefit Guaranty Corporation on any of the Receivables shall exist.
(r) Lock-Box Accounts. The names and addresses of all
the Lock-Box Banks, together with the account numbers of the Lock-Box
Accounts at such Lock-Box Banks, are specified in Exhibit C hereto (or
at such other Lock-Box Banks and/or with such other Lock-Box Accounts
as have been notified to the Collateral Agent and for which Lock-Box
Agreements have been executed in accordance with Section 2.8(b) and
delivered to the Collection Agent). All Obligors have been instructed
to make payment to a Lock-Box Account and only Collections shall be
deposited into the Lock-Box Accounts.
(s) Use of Proceeds. No proceeds of any Transfer will
be used by the Transferor to acquire any security in any transaction
which is subject to Section 13 or 14 of the Securities and Exchange Act
of 1934, as amended;
(t) Bulk Sales. No transaction contemplated hereby or
by the Receivables Purchase Agreement requires compliance with any bulk
sales act or similar law.
(u) Transfers Under Receivables Purchase Agreement.
Each Receivable which has been transferred or otherwise conveyed to the
Transferor by the Seller has been acquired by the Transferor from the
Seller pursuant to, and in accordance with, the terms of the
Receivables Purchase Agreement.
(v) Preference; Voidability. The Transferor shall have
given reasonably equivalent value to the Seller in consideration for
the transfer to the Transferor of the Receivables and Related Security
from the Seller, and each such transfer shall not have been made for or
on account of an antecedent debt owed by the Seller to the Transferor
and no such transfer is or may be voidable under any Section of the
Bankruptcy Reform Act of 1978 (11 U.S.C. 101 et seq.), as amended.
Any document, instrument, certificate or notice delivered by
the Transferor to the Company hereunder shall be deemed a
representation and warranty by the Transferor.
SECTION 3.2. Representations and Warranties of the
Collection Agent. The Collection Agent represents and warrants to the
Company that:
(a) Corporate Existence and Power. The Collection
Agent is a general partnership formed and validly existing under the
laws of the State of Delaware and has all power and all material
governmental licenses, authorizations, consents and approvals required
to carry on its business in each jurisdiction in which its business is
now conducted where the failure to have such governmental licenses,
authorizations, consents and approvals would have a material adverse
effect on (i) the Collection Agent's business or properties, (ii) the
Collection Agent's ability to perform its obligations hereunder or
(iii) the Company's interest in the Receivables.
(b) Partnership and Governmental Authorization;
Contravention. The execution, delivery and performance by the
Collection Agent of this Agreement are within the Collection Agent's
partnership powers, have been duly authorized by all necessary action,
require no action by or in respect of, or filing with, any governmental
body, agency or official (except as contemplated by Section 2.8), and
do not contravene, or constitute a default under, any provision of
applicable law or regulation or of the partnership agreement of the
Collection Agent or of any agreement, judgment, injunction, order,
decree or other instrument binding upon the Collection Agent or result
in the creation or imposition of any lien on assets of the Collection
Agent or any of its Subsidiaries.
(c) Binding Effect. This Agreement constitutes, the
legal, valid and binding obligation of the Collection Agent,
enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws affecting the
rights of creditors.
(d) Accuracy of Information. To the best of its
knowledge, all information heretofore furnished by the Collection Agent
to the Transferor, the Company or the Administrative Agent for purposes
of or in connection with this Agreement or any transaction contemplated
hereby is, and all such information hereafter furnished by the
Collection Agent to the Transferor, the Company or the Administrative
Agent will be, true and accurate in every material respect, on the date
such information is stated or certified.
(e) Tax Status. The Collection Agent has filed all tax
returns (federal, state and local) required to be filed and has paid or
made adequate provision for the payment of all taxes, assessments and
other governmental charges on or before the date such taxes are due,
taking into account any extension of such due date.
(f) Action, Suits. Except as set forth in Exhibit H-2,
there are no actions, suits or proceedings pending or, to the knowledge
of the Collection Agent, threatened against or affecting the Collection
Agent or any Affiliate of the Collection Agent or their respective
properties, in or before any court, arbitrator or other body, which
question the validity of the transactions contemplated hereby or which,
individually or in the aggregate, could be reasonably expected to have
a material adverse effect on the Collection Agent's ability to perform
its obligations hereunder.
(g) Collections and Servicing. Since June 27, 1997,
there has been no material adverse change in the ability of the
Collection Agent to service and collect the Receivables.
(h) Not an Investment Company. The Collection Agent is
not an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, or is exempt from all provisions of
such Act.
(i) ERISA. The Collection Agent is in compliance in
all material respects with ERISA.
SECTION 3.3. Reaffirmation of Representations and
Warranties by the Transferor and Collection Agent. On each day that a
Transfer is made hereunder, the Transferor, by accepting the proceeds
of such Transfer, whether delivered to the Transferor pursuant to
Section 2.2(a) or Section 2.5, shall be deemed to have certified that
all representations and warranties described in Section 3.1 hereof are
correct on and as of such day as though made on and as of such day, and
provided that the Collection Agent is IMC-Agrico Company or an
affiliate thereof, the Collection Agent shall be deemed to have
certified that all the representations and warranties described in
Section 3.2 hereof are correct on and as of such day as though made on
and as of such day. Each Incremental Transfer shall be subject to the
further condition precedent that prior to the date of such Transfer,
the Collection Agent shall have delivered to the Administrative Agent,
in form and substance satisfactory to the Administrative Agent, a
completed Investor Report dated within fourteen (14) days prior to the
date of such Incremental Transfer, together with a listing by Obligor,
if requested, and such additional information as may be reasonably
requested by the Administrative Agent; and the Transferor shall be
deemed to have represented and warranted that such conditions precedent
have been satisfied.
ARTICLE V
CONDITIONS PRECEDENT
SECTION 4.1. Conditions to Closing. On or prior to the
Closing Date, the Transferor shall deliver to the Company the following
documents, instruments and fees all of which shall be in a form and
substance acceptable to the Company:
(a) Copies of the unanimous written consents of the
Board of Directors of IMC-Agrico MP, Inc., as managing partner of the
Seller, and of the Policy Committee of the Seller, individually and as
Operating Manager, certified by the Secretary of IMC-Agrico MP, Inc.,
approving the execution, delivery and performance by the Transferor of
this Agreeent, the Receivables Purchase Agreement and the other
Transaction Documents to be delivered by the Transferor hereunder or
thereunder.
(b) The Certificate of Formation of the Transferor
certified by the Secretary of State or other similar official of the
Transferor's jurisdiction of organization dated a date reasonably prior
to the Closing Date and the Transferor's agreement among members (or
other similar agreement) certified by the Secretary of IMC-Agrico MP
Inc.
(c) A Certificate of the Secretary of the Managing
Partner of the Collection Agent substantially in the form of Exhibit L-
2 attached hereto.
(d) The partnership agreement of the Collection Agent,
the Certificate of Incorporation of the Managing Partner certified by
the Secretary of State or other similar official of Delaware and the By-
laws of the Managing Partner certified by the secretary of the Managing
Partner.
(e) A Good Standing Certificate for the Managing
Partner issued by the Secretary of State or a similar official of
Delaware and certificates of qualification as a forign corporation
issued by the Secretaries of State or other similar officials of each
jurisdiction when such qualification is material to the transactions
contemplated by this Agreement.
(f) Copies of proper financing statements (Form UCC-1),
dated a date reasonably near to the date of the initial Incremental
Transfer naming the Transferor as the debtor/seller in favor of the
Company and showing the Collateral Agent as assignee of the secured
party/purchaser or other similar instruments or documents as may be
necessary or in the reasonable opinion of the Company desirable under
the UCC of all appropriate jurisdictions or any comparable law to
perfect the Company's ownership interest in all Receivables.
(g) Copies of proper financing statements (Form UCC-1),
dated a date reasonably near to the date of the initial Incremental
Transfer naming the Seller as the debtor/seller in favor of the
Transferor as secured party/purchaser and the Collateral Agent, as
assignee of the secured party or other similar instruments or documents
as may be necessary or in the reasonable opinion of the Company
desirable under the UCC of all appropriate jurisdictions or any
comparable law to perfect the Transferor's ownership interest in all
Receivables.
(h) Copies of proper financing statements (Form UCC-3),
if any, necessary to terminate all security interests and other rights
of any person in Receivables previously granted by Transferor.
(i) Copies of proper financing statements (Form UCC-3),
if any, necessary to terminate all security interests and other rights
of any person in Receivables previously granted by the Seller.
(j) Certified copies of requests for information or
copies (Form UCC-11) (or a similar search report certified by parties
acceptable to the Company) dated a date reasonably near the date of the
initial Incremental Transfer listing all effective financing statements
which name the Transferor or the Seller (under any present or previous
name) as debtor and which are filed in jurisdictions in which the
filings were made pursuant to items (f), (g), and (h) above together
with copies of such financing statements (none of which shall cover any
Receivables or Contracts).
(k) Executed copies of the Lock-Box Agreements.
(l) Opinions of (i) Sidley & Austin, special counsel to
the Transferor, the Collection Agent and the Seller, covering certain
of the matters set forth in Exhibit K hereto and certain bankuptcy
matters, in each case in form and substance acceptable to the
Administrative Agent and (ii) Marschall I. Smith, Esq., Vice President
and General Counsel of IMC Global Inc., as to certain of the matters
set forth in Exhibit K hereto, in form and substance acceptable to the
Administrative Agent.
(m) A computer tape setting forth all Receivables and
the Outstanding Balances thereon and such other information as the
Company may reasonably request.
(n) An executed copy of the Fee Letter.
(o) The Transfer Certificate, duly executed by the
Transferor.
(p) The Company Certificate, duly executed by the
Transferor and appropriately completed.
(q) The Amendment Fee in accordance with Section
2.7(b).
(r) An Investor Report dated June 27, 1997.
(s) Such other documents as the Company shall
reasonably request.
ARTICLE V
COVENANTS
SECTION 5.1. Affirmative Covenants of Transferor. At all
times from the date hereof to the later to occur of (i) the Termination
Date or (ii) the date on which the Company's Transferred Interest shall
be equal to zero, unless the Company shall otherwise consent in
writing:
(a) Financial Reporting. The Transferor will maintain
a system of accounting established and administered in accordance with
generally accepted accounting principles, and furnish to the
Administrative Agent:
(i) Annual Reporting.
(A) Within ninety (90) days after the close of each of
the Seller's fiscal years, audited financial statements,
prepared in accordance with generally accepted accounting
principles on a consolidated and consolidating basis
(consolidating statements need not be audited by such
accountants) for the Seller and its Subsidiaries, in each
case, including balance sheets as of the end of such period,
related statements of operations, partner's or shareholder's
equity and cash flows, accompanied by an unqualified audit
report certified by independent certified public accountants,
acceptable to the Administrative Agent, prepared in
accordance with generally accepted auditing principles and
any management letter prepared by said accountants.
(B) Within ninety (90) days after the close of each of
the Transferor's fiscal years, financial statements, reviewed
by independent certified public accountants, acceptable to
the Administrative Agent, in accordance with the standards of
the American Institute of Certified Public Accountants for
the Transferor, including balance sheets as of the end of
such period, related statements of operations, partner's or
shareholder's equity and cash flows, accompanied by a review
report certified by such independent certified public
accountants.
(ii) Quarterly Reporting. Within forty-five (45)
days after the close of the first three quarterly periods of
each of the Transferor's and the Seller's fiscal years, for
(x) the Transferor and (y) for the Seller and its
Subsidiaries, in each case, consolidated and, in the case of
the Seller, consolidating unaudited balance sheets as at the
close of each such period and consolidated and consoliating
related statements of operations, partner's or shareholder's
equity and cash flows for the period from the beginning of
such fiscal year to the end of such quarter, all certified by
its chief financial officer of the Seller or the Operating
Manager, as applicable.
(iii) Compliance Certificate. Together with the
financial statements required hereunder, a compliance
certificate signed by an authorized officer of the Seller or
the Operating Manager statng that no Termination Event or
Potential Termination Event exists, or if any Termination
Event or Potential Termination Event exists, stating the
nature and status thereof and showing the computation of, and
showing compliance with, each of the financial ratios and
restrictions set forth in Section 5.3.
(iv) Partners Statements. Promptly upon the
furnishing thereof to the partners of the Seller, copies of
all financial statements so furnished.
(v) S.E.C. Filings. Promptly upon the filing
thereof, copies of all registration statements and annual,
quarterly, monthly or other regular reports which the Seller
or any subsidiary files with the Securities and Exchange
Commission.
(vi) Notice of Termination Events or Potential
Termination Events. As soon as possible and in any event
within three (3) days after the occurrence of each
Termination Event or each Potential Termination Event, a
statement of an authorized officer of the Operating Manager
setting forth details of such Termination Event or Potential
Termination Event and the action which the Transferor
proposes to take with respect thereto.
(vii) Change in Credit and Collection Policy.
Within ten (10) days after the date any material change in or
amendment to the Credit and Collection Policy is made, a copy
of the Credit and Collection Policy then in effect indicating
such change or amendment.
(viii) Credit and Collection Policy. Upon request
of the Administrative Agent, a complete copy of the Credit
and Collection Policy then in effect.
(ix) Other Information. Such other information
including non-financial information as the Administrative
Agent may from time to time reasonably request with respect
to the Seller, the Transferor or any Subsidiary of the
foregoing.
(b) Conduct of Business. The Transferor will, and will
cause the Seller and each of the Seller's Subsidiaries to, (x) carry on
and conduct its business in substantially the same manner and in
substantially the same fields of enterprise as it is presently
conducted and (y) do all things necessary to remain validly existing as
a domestic partnership, limited liability company or corporation, as
applicable, in the State of Delaware and maintain all requisite
authority to conduct its business in each jurisdiction in which its
business is conducted where the failure to maintain such authority
would have a material adverse effect on (i) the Transferor's or
Seller's business or properties, (ii) the Transferor's or Seller's
ability to perform its obligations hereunder or (iii) the
collectability of the Receivables.
(c) Compliance with Laws. The Transferor will, and
will cause the Seller and each of the Seller's Subsidiaries to, comply
with all laws, rules, regulations, orders, writs, judgments,
injunctions, decrees or awards to which it may be subject.
(d) Furnishing of Information and Inspection of
Records. The Transferor will and will cause the Seller to furnish to
the Company from time to time such information with respect to the
Receivables as the Company may reasonably request, including, without
limitation, listings identifying the Obligor and the Outstanding
Balance for each Receivable. The Transferor will and will cause the
Seller to at any time and from time to time during regular business
hours permit the Company, or its agents or representatives, (i) to exam
ine and make copies of and abstracts from all Records and (ii) to visit
the offices and properties of the Transferor or the Seller, as
applicable, for the purpose of examining such Records, and to discuss
matters relating to Receivables or the Transferor's or the Seller's, as
applicable, performance hereunder with any of the officers, directors,
employees or independent public accountants of the Transferor or the
Seller having knowledge of such matters.
(e) Keeping of Records and Books of Account. The
Transferor will and will cause the Seller to maintain and implement
administrative and operating procedures (including, without limitation,
an ability to recreate records evidencing Receivables in the event of
the destruction of the originals thereof), and keep and maintain, all
documents, books, records and other information reasonably necessary or
advisable for the collection of all Receivables (including, without
limitation, records adequate to permit the daily identification of each
new Receivable and all Collections of and adjustments to each existing
Receivable). The Transferor will and will cause the Seller to give the
Company notice of any material change in the administrative and
operating procedures referred to in the previous sentence.
(f) Performance and Compliance with Receivables and
Contracts. The Transferor, at its expense, will and will cause the
Seller to timely and fully perform and comply with all material
provisions, covenants and other promises required to be observed by the
Transferor or the Seller under the Contracts related to the
Receivables.
(g) Credit and Collection Policies. The Transferor
will and will cause the Seller to comply in all material respects with
the Credit and Collection Policy in regard to each Receivable and the
related Contract.
(h) Collections. The Transferor shall and shall cause
the Seller to instruct all Obligors to cause all Collections to be
deposited directly to a Lock-Box Account.
(i) Collections Received. The Transferor shall and
shall cause the Seller to, hold in trust, and deposit or mail for
deposit, immediately, but in any event not later than forty-eight (48)
hours of its receipt thereof, to a Lock-Box Account all Collections
received from time to time by the Transferor or the Seller (including
without limitation all Collections deemed to have been received by the
Transferor under Section 2.9).
(j) Sale Treatment. The Transferor shall report the
transactions contemplated by this Agreement on its financial statements
as a sale of the Transferred Interest to the Company and, to the extent
such reporting is required, shall cause the Seller to report the
transactions contemplated by the Receivables Purchase Agreement on its
financial statements as a sale of the Receivables to the Transferor.
(k) Certain Actions. Each of the Transferor and the
Seller shall conduct its business and its relationships with its
Affiliates in such a manner so as to comply with the facts and
assumptions set forth in paragraphs 1 through 17, inclusive, of Section
I of the opinion of Sidley & Austin, special counsel to the Transferor
and the Seller, dated the date hereof and addressed to the Company and
the Collateral Agent, covering certain bankruptcy matters.
(l) Separate Business. The Transferor shall at all
times (a) to the extent the Transferor's office is located in the
offices of the Seller or any Affiliate of the Seller, pay fair market
rent for its executive office space located in the offices of the
Seller or any Affiliate of the Seller, (b) have at all times an
Independent Manager who is not and has never been an employee, officer
or director of the Seller or any Affiliate of the Seller or of any
major creditor of the Seller or any Affiliate of the Seller and are
persons who are familiar and have experience with asset securitization,
(c) maintain the Transferor's books, financial statements, accounting
records and other corporate documents and records separate from those
of the Seller or any other entity, (d) not commingle the Transferor's
assets with those of the Seller or any other entity, (e) act solely in
its company name and through its own authorized manager, officers and
agents, (f) make investments directly or by brokers engaged and paid by
the Transferor or its agents (provided that if any such agent is an
Affiliate of the Transferor it shall be compensated at a fair market
rate for its services), (g) separately manage the Transferor's
liabilities from those of the Seller or any Affiliates of the Seller
and pay its own liabilities, including all administrative expenses,
from its own separate assets, except that the Seller may pay the
organizational expenses of the Transferor, and (h) pay from the
Transferor's assets all obligations and indebtedness of any kind
incurred by the Transferor. The Transferor shall abide by all company
formalities, including the maintenance of current minute books, and the
Transferor shall cause its financial statements to be prepared in
accordance with generally accepted accounting principles in a manner
that indicates the separate existence of the Transferor and its assets
and liabilities. The Transferor shall (i) pay all its liabilities,
(ii) not assume the liabilities of the Seller or any Affiliate of the
Seller, (iii) not lend funds or extend credit to the Seller or any
affiliate of the Seller except pursuant to the Receivables Purchase
Agreement in connection with the purchase of Receivables thereunder and
(iv) not guarantee the liabilities of the Seller or any Affiliates of
the Seller. The Management Committee and/or the Operating Manager of
the Transferor (as appropriate) shall make decisions with respect to
the business and daily operations of the Transferor independent of and
not dictated by any controlling entity. The Transferor shall not
engage in any business not permitted by its Certificate of Formation as
in effect on the Closing Date.
(m) Limited Liability Company Documents. The
Transferor shall only amend, alter, change or repeal Restricted
Articles as defined in its Certificate of Formation with the prior
written consent of the Administrative Agent.
SECTION 5.2. Negative Covenants of Transferor. During the
term of this Agreement, unless the Company shall otherwise consent in
writing:
(a) No Sales, Liens, Etc. Except as otherwise provided
herein, the Transferor will not and will not permit the Seller to sell,
assign (by operation of law or otherwise) or otherwise dispose of, or
create or suffer to exist any Adverse Claim upon (or the filing of any
financing statement) or with respect to, any inventory or goods, the
sale of which will give rise to a Receivable, or any Receivable or
related Contract, or upon or with respect to any account which
concentrates in a Lock-Box Bank to which any Collections of any
Receivable are sent, or assign any right to receive income in respect
thereof.
(b) No Extension or Amendment of Receivables. Except
as otherwise permitted in Section 6.2, the Transferor will not and will
not permit the Seller to extend, amend or otherwise modify the terms of
any Receivable, or amend, modify or waive any term or condition of any
Contract related thereto.
(c) No Change in Business or Credit and Collection
Policy. The Transferor will not and will not permit the Seller to make
any material change in the character of its business or in the Credit
and Collection Policy, which change would, in either case, impair the
collectibility of any Receivable.
(d) No Mergers, Etc. The Transferor will not and will
not permit the Seller to (i) consolidate or merge with or into any
other Person, or (ii) sell, lease or transfer all or substantially all
of its assets to any other person.
(e) Change in Payment Instructions to Obligors. The
Transferor will not and will not permit the Seller to, add or terminate
any bank as a Lock-Box Bank or any account as a Lock-Box Account to or
from those listed in Exhibit C hereto or make any change in its
instructions to Obligors regarding payments to be made to any Lock-Box
Account, unless (i) such instructions are to deposit such payments to
another existing Lock-Box Account or (ii) the Administrative Agent
shall have received written notice of such addition, termination or
change at least 30 days prior thereto and the Administrative Agent
shall have received a Lock-Box Agreement executed by each new Lock-Box
Bank or an existing Lock-Box Bank with respect to each new Lock-Box
Account, as applicable.
(f) Deposits to Lock-Box Accounts. The Transferor will
not and will not permit the Seller, to, deposit or otherwise credit, or
cause or permit to be so deposited or credited, to any Lock-Box Account
cash or cash proceeds other than Collections of Receivables.
(g) Change of Name, Etc. The Transferor will not and
will not permit the Seller to, change its name, identity or structure
or its chief executive office, unless at least 10 days prior to the
effective date of any such change the Transferor delivers to the
Collateral Agent (i) UCC financing statements, executed by the
Transferor, necessary to reflect such change and to continue the
perfection of the Company's ownership interests or security interests
in the Receivables and (ii) the Lock-Box Agreements and, in the case of
the Lock-Box Agreements, the Lock-Box Banks necessary to reflect such
change and to continue to enable the Collateral Agent to exercise its
rights contained in Section 2.8.
(h) Intentionally omitted.
(i) Amendment to Receivables Purchase Agreement. The
Transferor will not, and will not permit the Seller to, amend, modify,
or supplement the Receivables Purchase Agreement or waive any provision
thereof, in each case except with the prior written consent of the
Administrative Agent; nor shall the Transferor take, or permit the
Seller to take, any other action under the Receivables Purchase
Agreement that shall have a material adverse affect on the Company or
which is inconsistent with the terms of this Agreement.
(j) Other Debt. Except as provided for herein, the
Transferor will not create, incur, assume or suffer to exist any
indebtedness whether current or funded, or any other liability other
than (i) indebtedness of the Transferor representing fees, expenses and
indemnities arising hereunder or under the Receivables Purchase
Agreement for the purchase price of the Receivables under the
Receivables Purchase Agreement, including, without limitation, the
Subordinated Note and (ii) other indebtedness incurred in the ordinary
course of its business in an amount not to exceed $100,000 at any time
outstanding.
(k) Payment to the Seller. With respect to any
Receivable sold by the Seller to the Transferor, the Transferor shall,
and shall cause the Seller to, effect such sale under, and pursuant to
the terms of, the Receivables Purchase Agreement, including, without
limitation, the payment by the Transferor (either in cash or by
increase in the amount of the Subordinated Note) to the Seller of an
amount equal to the purchase price for such Receivable as required by
the terms of the Receivables Purchase Agreement.
SECTION 5.3. Minimum Net Worth of the Transferor. During
the term of this Agreement, unless the Company shall otherwise consent
in writing:
(a) On the Closing Date, the Transferor shall have a
Net Worth of at least 10% of the Outstanding Balance of Eligible
Receivables.
(b) The Transferor shall make no distributions of
dividends or returns of capital except to the extent that, after giving
effect thereto, the Transferor shall have a Net Worth at least equal to
the greater of (i) 10% of the aggregate Outstanding Balance of all
Eligible Receivables shown on the Investor Report delivered with
respect to the immediately preceding calendar month period or (ii)
$4,000,000.
SECTION 5.4. Covenants of the Collection Agent. The
Collection Agent covenants to the Company and the Transferor that:
(a) Compliance with Requirements of Law. The
Collection Agent shall duly satisfy its obligations in all material
respects in its part to be fulfilled under or in connection with each
Receivable and the related Contract, will maintain in effect all
material qualifications required under Requirements of Law in order to
service properly each Receivable and the related Contract and will
comply in all material respects with all other Requirements of Law in
connection with servicing each Receivable and the related Contract the
failure to comply with which would have a material adverse effect on
the Company.
(b) No Rescission or Cancellation. The Collection
Agent shall not permit any rescission or cancellation of an Eligible
Receivable except as ordered by a court of competent jurisdiction or
other governmental authority or in the ordinary course of its business
and in accordance with the Credit and Collection Policy.
(c) Protection of Company's Rights. Except as
otherwise permitted by this Agreement, the Collection Agent shall take
no action, nor omit to take any action, which would impair the rights
of the Company in any Receivable or the related Contract.
(d) All Consents Required. All approvals,
authorizations, consents, orders, or other actions of any Person or of
any governmental body or official required in connection with the
execution and delivery by the Collection Agent of this Agreement, the
performance by the Collection Agent of the transactions contemplated by
this Agreement and the fulfillment by the Collection Agent of the terms
of this Agreement, have been obtained.
(e) Custodian. The Collection Agent will, at its own
cost and expense, (i) maintain the books and records with respect to
the Accounts and the Receivables and copies of all documents relating
to each Account as custodian for the Company and (ii) clearly and
unambiguously mark such books and records that indicate the Receivables
have been sold to the Transferor under the Receivables Purchase
Agreement and to the Company, pursuant to this Agreement.
(f) No Extension or Amendment of Receivables. Except
as otherwise permitted in Sections 5.2 and 6.2 of this Agreement, the
Collection Agent will not extend, amend or otherwise modify the terms
of any Eligible Receivable, or amend, modify or waive any term or
condition of any Contract related thereto except as otherwise allowed
by the Credit and Collection Policy.
(g) No Change in Business or Credit and Collection
Policy. The Collection Agent will not make any change in the character
of its business or in the Credit and Collection Policy which would in
either case impair the collectibility of any material portion of the
Receivables or otherwise result in a material adverse effect on the
collectibility of the Receivables.
(h) No Mergers, Etc. The Collection Agent will not (i)
consolidate or merge with or into any other Person (except for a merger
with or into any wholly-owned subsidiary, where the Collection Agent
shall be the surviving entity), or (ii) sell, lease or transfer all or
substantially all of its assets to any other Person.
(i) Change in Payment Instructions to Obligors. The
Collection Agent will not make any change in the instructions to
Obligors regarding payments to be made to any Lock-Box Account, unless
(i) such instructions are to deposit such payments to another existing
Lock-Box Account or (ii) the Collection Agent shall have received
written notice of such change at least 30 days prior thereto and the
Collection Agent shall have received a Lock-Box Agreement executed by
each new Lock-Box Bank or an existing Lock-Box Bank with respect to
each new Lock-Box Account, as applicable.
(j) Deposits to Lock-Box Accounts. The Collection
Agent will not deposit or otherwise credit, or cause or permit to be so
deposited or credited, to any Lock-Box Account cash or cash proceeds
other than Collection of Receivables.
SECTION 5.5. Covenants of the Seller. The Seller hereby
covenants to the Transferor, the Company and the Collection Agent that:
(a) Modification Regarding Distributable Cash. The
Seller will not amend or otherwise modify the definition of
"Distributable Cash" or the provisions relating to thereto in its
partnership agreement (including without limitation Section 5.07
thereof) without the prior written consent of the Company.
(b) Fixed Charge Coverage Ratio. The Seller will keep
and maintain, for a period of four consecutive fiscal quarters ending
as of each fiscal quarter, a ratio of EBITDA minus Capital Expenditures
to the sum of (i) cash interest payable on, and amortization of debt
discount in respect of, all Indebtedness during such period plus (ii)
regularly scheduled principal amounts of all Indebtedness (including
current obligations owing under Capitalized Leases) payable during the
period of the prior four consecutive fiscal quarters beginning on the
day after such date of determination, of not less than 2.0 to 1.0.
(Capitalized terms used in this Section 5.5(b) which are not defined in
Article I shall have the meanings assigned thereto in Exhibit G.)
ARTICLE VI
ADMINISTRATION AND COLLECTIONS
SECTION 6.1. Appointment of Collection Agent. The ser
vicing, administering and collection of the Receivables shall be
conducted by such Person (the "Collection Agent") so designated from
time to time in accordance with this Section 6.1. Until the Company
gives notice to the Transferor and IMC-AGRICO COMPANY of the
designation of a new Collection Agent pursuant to the succeeding
sentence, IMC-AGRICO COMPANY is hereby designated as, and hereby agrees
to perform the duties and obligations of, the Collection Agent pursuant
to the terms hereof. The Company may, upon the occurrence of a
Colletion Agent default or any Termination Event designate as
Collection Agent any Person (including itself) to succeed IMC-AGRICO
COMPANY or any successor Collection Agent, on the condition in each
case that any such Person so designated shall agree to perform the
duties and obligations of the Collection Agent pursuant to the terms
hereof. The Company may notify any Obligor of the Transferred
Interest.
SECTION 6.2. Duties of Collection Agent.
(a) The Collection Agent shall take or cause to be
taken all such action as may be necessary or advisable to collect each
Receivable from time to time, all in accordance with applicable laws,
rules and regulations, with reasonable care and diligence, and in
accordance with the Credit and Collection Policy. Each of the
Transferor and the Company hereby appoints as its agent the Collection
Agent, from time to time designated pursuant to Section 6.1, to enforce
its respective rights and interests in and under the Receivables, the
Related Security and the Contracts. To the extent permitted by
applicable law, each of the Transferor and the Seller (to the extent
not then acting as Collection Agent hereunder) hereby grants to any
Collection Agent appointed hereunder an irrevocable power of attorney
to take any and all steps in the Transferor's and/or the Seller's name
and on behalf of the Transferor or the Seller necessary or desirable,
in the reasonable determination of the Collection Agent, to collect all
amounts due under any and all Receivables, including, without
limitation, endorsing the Transferor's and/or the Seller's name on
checks and other instruments representing Collections and enforcing
such Receivables and the related Contracts. The Collection Agent shall
set aside for the account of the Transferor and the Company their
respective allocable shares of the Collections of Receivables in
accordance with Sections 2.5 and 2.6. Neither the Collection Agent nor
the Transferor may extend the maturity of Receivables except as
provided in the next sentence. So long as no Termination Event shall
have occurred and be continuing, the Transferor or the Collection Agent
may, in accordance with the Credit and Collection Policy, adjust the
Outstanding Balance of Receivables and may extend the maturity of any
Defaulted Receivable in each case as the Transferor or the Collection
Agent may determine to be appropriate to maximize Collections thereof;
provided, however, that such adjustment shall not alter the amount of
such Receivable considered as a Delinquent Receivable or a Defaulted
Receivable. The Transferor and/or the Collection Agent shall also be
authorized to adjust the Outstanding Balance of any Receivable to
reflect reductions of the type described in the first sentence of
Section 2.9(a). The Transferor shall deliver to the Collection Agent
and the Collection Agent shall hold in trust for the Transferor and the
Company in accordance with their respective interests, all Records
which evidence or relate to Receivables or Related Security.
Notwithstanding anything to the contrary contained herein, the Company
shall have the absolute and unlimited right to direct the Collection
Agent (whether the Collection Agent is the Transferor or any other
Person) to commence or settle any legal action to enforce collection of
any Receivable or to foreclose upon or repossess any Related Security.
(b) The Collection Agent shall as soon as practicable
following receipt thereof, turn over to the Transferor any collections
of any indebtedness of any Person which is not on account of a Receiv
able. If the Collection Agent is not the Transferor or the Seller or
an Affiliate of the Transferor or the Seller, the Collection Agent, by
giving three Business Days' prior written notice to the Company, may
revise the percentage used to calculate the Servicing Fee so long as
the revised percentage will not result in a Servicing Fee that exceeds
110% of the reasonable and appropriate out-of-pocket costs and expenses
of such Collection Agent incurred in connection with the performance of
its obligations hereunder as documented to the reasonable satisfaction
of the Company. The Collection Agent, if other than the Transferor or
the Seller or an Affiliate of the Transferor the Seller, shall as soon
as practicable upon demand, deliver to the Seller all Records in its
possession which evidence or relate to indebtedness of an Obligor which
is not a Receivable.
(c) On or before 90 days after the end of each fiscal
year of the Collection Agent, beginning with the fiscal year ending
June 30, 1997, the Collection Agent shall cause a firm of independent
public accountants (who may also render other services to the Colletion
Agent, the Transferor, the Seller or any Affiliate of any of the
foregoing), the Business Credit Field Exam Group of NationsBank, N.A.
or such other Person as may be approved by the Administrative Agent to
furnish a report to the Company to the effect that they have (i)
compared the information contained in the Investor Reports delivered
during such fiscal year with the information contained in the Contracts
and the Collection Agent's records and computer systems for such
period, and that, on the basis of such examination and comparison, such
firm is of the opinion that the information contained in the Investor
Reports reconciles with the information contained in the Contracts and
the Collection Agent's records and computer system and that the
servicing of the Receivables has been conducted in compliance with this
Agreement, and (ii) verified that the Receivables treated by the
Collection Agent as Eligible Receivables in fact satisfied the require
ments of the definition thereof contained herein, except, in each case
for (a) such exceptions as such firm shall believe to be immaterial
(which exceptions need not be enumerated) and (b) such other exceptions
as shall be set forth in such statement.
(d) Notwithstanding anything to the contrary contained
in this Article VI, the Collection Agent, if not the Transferor, the
Seller or any Affiliate of the Transferor or the Seller shall have no
obligation to collect, enforce or take any other action described in
this Article VI with respect to any Receivable that is not included in
the Transferred Interest other than to deliver to the Transferor or
Seller, as applicable, the Collections and documents with respect to
any such Receivable as described in Section 6.2(b).
SECTION 6.3. Rights After Designation of New Collection
Agent. At any time following the designaion of a Collection Agent
(other than the Transferor, the Seller or any Affiliate of the
Transferor or the Seller) pursuant to Section 6.1:
(i) The Company may direct that payment of all
amounts payable under any Receivable be made directly to the
Company or its designee.
(ii) The Transferor shall, at the Company's
request and at the Transferor's expense, give notice of the
Company's ownership of Receivables to each Obligor and direct
that payments be made directly to the Company or its
designee.
(iii) The Transferor shall, at the Company's
request, (A) assemble all of the Records, and shall make the
same available to the Company at a place selected by the
Company or its designee, and (B) segregate all cash, checks
and other instruments received by it from time to time
constituting Collections of Receivables in a manner
acceptable to the Company and shall, promptly upon receipt,
remit all such cash, checks and instruments, duly endorsed or
with duly executed instruments of transfer, to the Company or
its designee.
(iv) The Transferor and the Seller hereby
authorize the Company to take any and all steps in the
Transferor's or Seller's name and on behalf of the Transferor
and the Seller necessary or desirable, in the determination
of the Company, to collect all amounts due under any and all
Receivables, including, without limitation, endorsing the
Transferor's or Seller's name on checks and other instruments
representing Collections and enforcing such Receivables and
the related Contracts.
SECTION 6.4. Responsibilities of the Transferor and the
Seller. Anything herein to the contrary notwithstanding, the
Transferor shall and/or shall cause the Seller to (i) perform all of
the Seller's obligations under the Contracts related to the Receivables
to the same extent as if interests in such Receivables had not been
sold hereunder and under the Receivables Purchase Agreement, and the
exercise by the Company of its rights hereunder or the Receivables
Purchase Agreement shall not relieve the Transferor or the Seller from
such obligations and (ii) pay when due any taxes, including without
limitation, any sales taxes payable in connection with the Receivables
and their creation and satisfaction. The Company shall not have any
obligation or liability with respect to any Receivable or related
Contracts, nor shall it be obligated to perform any of the obligations
of the Transferor or the Seller thereunder.
ARTICLE VIII
TERMINATION EVENTS
SECTION 7.1. Termination Events. The occurrence of any one
or more of the following events shall constitute a Termination Event:
(a) (i) the Collection Agent shall fail to perform or
observe any term, covenant, or agreement under this Agreement or other
related agreements and such failure shall remain unremedied for 10 days
after the earlier of (x) the date on which the Company notifies the
Collection Agent thereof and (y) the date the Collection Agent knew of
any such breach, or (ii) either the Collection Agent or the Transferor
shall fail to make any payment or deposit to be made by it hereunder
when due or the Collection Agent shall fail to observe or perform any
term, covenant or agreement on the Collection Agent's part to be
performed under Section 2.8(b) hereof, or
(b) any representation, warranty, certification or
statement made by the Transferor in this Agreement or any other
Transaction Document to which it is a party or in any other document
delivered pursuant hereto or thereto shall prove to have been incorrect
in any material respect when made or deemed made; or
(c) the Transferor or the Collection Agent shall de
fault in the performance of any payment or undertaking (other than
those covered by clause (a) above) (i) to be performed or observed
under Sections 5.1(a)(vii), 5.1(b)(x), 5.1(f), 5.1(g), 5.1(h), 5.1(k),
5.2(a), (c), (d), (e), (g)(ii), (h) or (i) or (ii) to be performed or
observed under any other provision hereof and such default in the case
of this clause (ii) shall continue for ten (10) days after the earlier
of (x) the date on which the Company notifies the Transferor thereof
and (y) the date the Transferor knew of any such default; or
(d) any Indebtedness in excess of $10,000,000 in the
aggregate for the Transferor or the Seller shall be declared due and
payable, or required to be prepaid (other than by a regularly scheduled
payment) prior to the scheduled date of maturity thereof; or
(e) any Event of Bankruptcy shall occur with respect to
(i) the Transferor or the Seller, (ii) any Subsidiary of the Seller; or
(f) the Company shall, for any reason, fail to have a
valid and perfected first priority security interest in the
Receivables; or
(g) the Seller shall enter into any transaction or
merger whereby it is not the surviving entity; or
(h) there shall have occurred any event which
materially affects the Collection Agent's ability either to collect the
Receivables or to perform under this Agreement; or
(i) the Liquidity Provider or the Credit Support
Provider shall have given notice that an event of default has occurred
and is continuing under its agreements with the Company; or
(j) Intentionally Omitted; or
(k) the Percentage Factor exceeds the Maximum
Percentage Factor unless the Transferor reduces the Net Investment
within two Business Days, bringing the Percentage Factor to less than
or equal to 95% or the Percentage Factor equals or exceeds 100% at any
time; or
(l) the Dilution Ratio averaged for any three
consecutive months exceeds 3.50%; or
(m) the Loss to Liquidation Ratio averaged for any
three consecutive months exceeds 1.25%; or
(n) the Delinquency Ratio averaged for any three
consecutive months exceeds 5.0%; or
(o) Any breach of any of the covenants of the Seller
set forth in Section 5.5 shall occur; or
(p) the Receivables Purchase Agreement shall have
terminated.
SECTION 7.2. Termination. (a) If a Termination Event
occurs, the Company may, by notice to the Transferor, declare all
outstanding Tranche Periods to be ended and designate the Base Rate
plus 2% to be applicable to the Net Investment.
(b) In addition, if any Termination Event occurs the
Company and the Collateral Agent shall have all of the rights and
remedies provided to a secured creditor or a purchaser of accounts
under the UCC by applicable law in respect thereto.
ARTICLE VIII
INDEMNIFICATION; EXPENSES; RELATED MATTERS
SECTION 8.1. Indemnities by the Transferor. Without
limiting any other rights which the Company may have hereunder or under
applicable law, the Transferor hereby agrees to indemnify the Company,
the Liquidity Provider and the Credit Support Provider and any
permitted assigns and their respective officers, directors and
employees (collectively, "Indemnified Parties") from and against any
and all damages, losses, claims, liabilities, costs and expenses,
including reasonable attorneys' fees (which such attorneys may be
employees of the Liquidity Provider, the Credit Support Provider or the
Company) and disbursements (all of the foregoing being collectively
referred to as "Indemnified Amounts") awarded against or incurred by
any of them arising out of or as a result of this Agreement, the other
Transaction Documents, the ownership, either directly or indirectly, by
the Company of the Transferred Interest or any of the other
transactions contemplated hereby or thereby, excluding, however, (i)
Indemnified Amounts to the extent resulting from gross negligence or
willful misconduct on the part of an Indemnified Party or (ii) recourse
(except as otherwise specifically provided in this Agreement) for
uncollectible Receivables or (iii) income or franchise taxes payable by
any Indemnified Party on amounts received under this Agreement.
Without limiting the generality of the foregoing, the Transferor shall
indemnify each Indemnified Party for Indemnified Amounts relating to or
resulting from:
(i) any representation or warranty made by the
Transferor or the Seller (including, in its capacity as the
Collection Agent) (or any officers of the Transfeor or the
Seller (including, in its capacity as the Collection Agent))
under or in connection with this Agreement, the Receivables
Purchase Agreement, any of the other Transaction Documents,
any Investor Report or any other information or report
delivered by the Transferor or the Collection Agent pursuant
hereto, which shall have been false or incorrect in any
material respect when made or deemed made;
(ii) the failure by the Transferor or the Seller
(including, in its capacity as the Collection Agent) to
comply with any applicable law, rule or regulation with
respect to any Receivable or the related Contract, or the
nonconformity of any Receivable or the related Contract with
any such applicable law, rule or regulation;
(iii) the failure to vest and maintain vested in
the Company an undivided percentage ownership interest, to
the extent of the Transferred Interest, in the Receivables
included in the Transferred Interest, free and clear of any
Adverse Claim;
(iv) the failure to file, or any delay in filing,
financing statements, continuation statements, or other simi
lar instruments or documents under the UCC of any applicable
jurisdiction or other applicable laws with respect to any
Receivable included in the Transferred Interest;
(v) any dispute, claim, offset or defense (other
than discharge in bankruptcy) of the Obligor to the payment
of any Receivable included in the Transferred Interest
(including, without limitation, a defense based on such
Receivable or the related Contract not being the legal, valid
and binding obligation of such Obligor enforceable against it
in accordance with its terms), or any other claim resulting
from the sale of merchandise or services related to such
Receivable or the furnishing or failure to furnish such
merchandise or services;
(vi) any failure of the Seller, as Collection
Agent or otherwise, to perform its duties or obligations in
accordance with the provisions of Article VI; or
(vii) any products liability claim or personal
injury or property damage suit or other similar or related
claim or action of whatever sort arising out of or in
connection with merchandise or services which are the subject
of any Receivable;
provided, however, that if the Company enters into agreements for the
purchase of interests in receivables from one or more Other
Transferors, the Company shall allocate such Indemnified Amounts which
are in connection with the Liquidity Provider Agreement, the Credit
Support Agreement or the credit support furnished by the Credit Support
Provider to the Transferor and each Other Transferor; and provided,
further, that if such Indemnified Amounts are attributable to the
Transferor or the Seller (including in its capacity as the Collection
Agent) and not attributable to any Other Transferor, the Transferor
shall be solely liable for such Indemnified Amounts or if such
Indemnified Amounts are attributable to Other Transferors and not
attributable to the Transferor or the Seller (including in its capacity
as the Collection Agent), such Other Transferors shall be solely liable
for such Indemnified Amounts.
SECTION 8.2. Indemnity for Taxes, Reserves and Expenses.
(a) If after the date hereof, the adoption of any Law or bank
regulatory guideline or any amendment or change in the interpretation
of any existing or future Law or bank regulatory guideline by any
Official Body charged with the administration, interpretation or
application thereof (and, in the case of a change in the interpretation
of any such Law or regulatory guideline, such change has been generally
accepted by institutions to which such Law or regulatory guideline is
applicable), or the compliance with any directive of any Official Body
(in the case of any bank regulatory guideline, whether or not having
the force of Law):
(i) shall subject any Indemnified Party to any
tax, duty or other charge with respect to this Agreement, the
other Transaction Documents, the ownership, maintenance or
financing of the Transferred Interest, the Receivables or
payments of amounts due hereunder, or shall change the basis
of taxation of payments to any Indemnified Party of amounts
payable in respect of this Agreement, the other Transaction
Documents, the ownership, maintenance or financing of the
Transferred Interest, the Receivables or payments of amounts
due hereunder or its obligation to advance funds herewith
under the Liquidity Provider Agreement or the credit support
furnished by the Credit Support Provider or otherwise in
respect of this Agreement, other Transaction Documents, the
ownership, maintenance or financing of the Transferred
Interest or the Receivables (except for changes in the rate
of general corporate, franchise, net income or other income
tax imposed on such Indemnified Party by the jurisdiction in
which such Indemnified Party's principal executive office is
located);
(ii) shall impose, modify or deem applicable any
reserve, special deposit or similar requirement (including,
without limitation, any such requirement imposed by the Board
of Governors of the Federal Reserve System) against assets
of, deposits with or for the account of, or credit extended
by, any Indemnified Party or shall impose on any Indemnified
Party or on the United States market for certificates of
deposit or the London interbank market any other condition
affecting this Agreement, the other Transaction Documents,
the ownership, maintenance or financing of the Transferred
Interest, the Receivables or payments of amounts due
hereunder or its obligation to advance funds under the
Liquidity Provider Agreement or the credit support provided
by the Credit Support Provider or otherwise in respect of
this Agreement, the other Transaction Documents, the
ownership, maintenance or financing of the Transferred
Interest or the Receivables; or
(iii) imposes upon any Indemnified Party any other
expense (including, without limitation, reasonable attorneys'
fees and expenses, and expenses of litigation or preparation
therefor in contesting any of the foregoing) with respect to
this Agreement, the other Transaction Documents, the
ownership, maintenance or financing of the Transferred
Interest, the Receivables or payments of amounts due
hereunder or its obligation to advance funds hereunder, under
the Liquidity Provider Agreement or the credit support
furnished by the Credit Support Provider or otherwise in
respect of this Agreement, the other Transaction Documents,
the ownership, maintenance or financing of the Transferred
Interests or the Receivables,
and the result of any of the foregoing is to increase the cost to such
Indemnified Party with respect to this Agreement, the other Transaction
Documents, the ownership, maintenance or financing of the Transferred
Interest, the Receivables, the obligations hereunder, the funding of
any purchases hereunder, the Liquidity Provider Agreement or the Credit
Support Agreement, by an amount deemed by such Indemnified Party to be
material, then, within ten (10) days after demand by the Company, the
Transferor shall pay to the Company such additional amount or amounts
as will compensate such Indemnified Party for such increased cost or
reduction; provided, however, that such demand shall not seek
additional amounts incurred earlier than the ninetieth day immediately
succeeding the date of such demand.
(b) If any Indemnified Party shall have determined that
after the date hereof, the adoption of any applicable Law or bank
regulatory guideline regarding capital adequacy, or any change therein,
or any change in the interpretation thereof by any Official Body (which
change has been generally accepted by institutions to which such Law or
regulatory guideline is applicable), or any directive regarding capital
adequacy (in the case of any bank regulatory guideline, whether or not
having the force of law) of any such Official Body, has or would have
the effect of reducing the rate of return on capital of such
Indemnified Party (or its parent) as a consequence of such Indemnified
Party's obligations hereunder or with respect hereto to a level below
that which such Indemnified Party (or its parent) could have achieved
but for such adoption, change, request or directive (taking into
consideration its policies with respect to capital adequacy) by an
amount deemed by such Indemnified Party to be material, then from time
to time, within ten (10) days after demand by the Company, the
Transferor shall pay to the Company such additional amount or amounts
as will compensate such Indemnified Party (or its parent) for such
reduction; provided, however, that such demand shall not seek
additional amounts incurred earlier than the ninetieth day immediately
succeeding the date of such demand.
(c) The Company will promptly notify the Transferor of
any event of which it has knowledge, occurring after the date hereof,
which will entitle an Indemnified Party to compensation pursuant to
this Section. A notice by the Company claiming compensation under this
Section and setting forth the additional amount or amounts to be paid
to it hereunder shall be conclusive in the absence of manifest error.
In determining such amount, the Company may use any reasonable
averaging and attributing methods.
(d) Anything in this Section 8.2 to the contrary
notwithstanding, if the Company enters into agreements for the
acquisition of interests in receivables from one or more Other
Transferors, the Company shall allocate the liability for any amounts
under this Section 8.2 ("Section 8.2 Costs") to the Transferor and each
Other Transferor; and provided, further, that if such Section 8.2 Costs
are attributable to the Transferor or the Seller (in its capacity as
the Collection Agent) and not attributable to any Other Transferor, the
Transferor shall be solely liable for such Section 8.2 Costs or if such
Section 8.2 Costs are attributable to Other Transferors and not
attributable to the Transferor or the Seller (in its capacity as the
Collection Agent), such Other Transferors shall be solely liable for
such Section 8.2 Costs.
SECTION 8.3 Other Costs, Expenses and Related Matters. (a)
The Transferor agrees, upon receipt of a written invoice, to pay or
cause to be paid, and to save the Company and the Administrative Agent
harmless against liability for the payment of, all reasonable out-of-
pocket expenses (including, without limitation, reasonable attorneys',
accountants' and other third parties' fees and expenses, any filing
fees and expenses incurred by officers or employees of the Company)
incurred by or on behalf of the Company and the Administrative Agent
(i) in connection with the negotiation, execution, delivery and
preparation of this Agreement and any documents or instruments
delivered pursuant hereto and the transactions contemplated hereby
(including, without limitation, the perfection or protection of the
Transferred Interest) and (ii) from time to time (a) relating to any
amendments, waivers or consents under this Agreement, (b) arising in
connection with the Company's or its agent's enforcement or
preservation of rights (including, without limitation, the perfection
and protection of the Transferred Interest under this Agreement), or
(c) arising in connection with any audit, dispute, disagreement,
litigation or preparation for litigation involving this Agreement (all
of such amounts, collectively, "Transaction Costs").
(b) Transferor shall pay the Company on demand any
Early Collection Fee due on account of the reduction of a Tranche on a
day prior to the last day of its Tranche Period.
SECTION 8.4. Reconveyance Under Certain Circumstances.
Transferor agrees to accept the reconveyance from the Company of the
Transferred Interest if the Company notifies Transferor of a material
breach of any representation or warranty made or deemed made pursuant
to Article III of this Agreement and such breach shall not be cured
within 15 days (or, in the case of the representations and warranties
in Sections 3.1(d) and 3.1(j), 3 days) of such notice. The
reconveyance price shall be paid by the Transferor to the Company in
immediately available funds on such 15th day (or 3rd day, if
applicable) in an amount equal to the Aggregate Unpaids.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Term of. This Agreement shall terminate fol
lowing the Termination Date when the Net Investment has been reduced to
zero, all accrued Discount has been paid in full and all other
Aggregate Unpaids have been paid in full; provided, however, that (i)
the rights and remedies of the Company with respect to any
representation and warranty made or deemed to be made by Transferor or
the Collection Agent pursuant to this Agreement, (ii) the
indemnification and payment provisions of Article VIII, and (iii) the
agreement set forth in Section 9.9, shall be continuing and shall
survive any termination of this Agreement.
SECTION 9.2. Waivers; Amendments. No failure or delay on
the part of the Company in exercising any power, right or remedy under
this Agreement shall operate as a waiver thereof, nor shall any single
or partial exercise of any such power, right or remedy preclude any
other further exercise thereof or the exercise of any other power,
right or remedy. The rights and remedies herein provided shall be
cumulative and nonexclusive of any rights or remedies provided by law.
Any provision of this Agreement may be amended if, but only if, such
amendment is in writing and is signed by the Transferor and the
Company.
SECTION 9.3. Notices. Except as provided below, all
communications and notices provided for hereunder shall be in writing
(including bank wire, telex, telecopy or electronic facsimile
transmission or similar writing) and shall be given to the recipient at
its address or telecopy number set forth below or at such other address
or telecopy number as such party may hereafter specify for the purposes
of notice to such party. Each such notice or other communication shall
be effective (i) if given by telecopy, when such telecopy is
transmitted to the telecopy number specified in this Section and
confirmation is received, (ii) if given by mail 3 Business Days
following such posting, or (iii) if given by any other means, when
received at the address specified in this Section. However, anything
in this Agreement to the contrary notwithstanding, the Transferor
hereby authorizes the Company to effect Transfers, Tranche Period and
Tranche Rate selections based on telephonic notices made by any Person
which the Company in good faith believes to be acting on behalf of the
Transferor. The Transferor agrees to deliver promptly to the Company a
written confirmation of each telephonic notice signed by an authorized
representative of Transferor. However, the absence of such
confirmation shall not affect the validity of such notice. If the
written confirmation differs in any material respect from the action
taken by the Company, the records of the Company shall govern absent
manifest error.
If to the Company:
Enterprise Funding Corporation
c/o Merrill Lynch Money Markets Inc.
World Financial Center--South Tower
225 Liberty Street
New York, New York 10218
Telephone: (212) 236-7200
Telecopy: (212) 236-7584
(with a copy to the Administrative Agent)
If to the Transferor:
IMC AGRICO RECEIVABLES COMPANY L.L.C.
2345 Waukegan Road
Suite E-200
Bannockburn, IL 60015
Telephone:
Telecopy:
Attention:
Payment Information:
NationsBank, N.A.
ABA 071000152
Account 65595
Reference IMC-Agrico Receivables
Company L.L.C.
If to the Collection Agent or Seller:
IMC-AGRICO COMPANY
2345 Waukegan Road
Suite E-200
Bannockburn, IL 60015
Telephone: (847) 607-3000
Telecopy: (847) 607-3529
Attention: Vice President-Finance
If to the Collateral Agent or the Administrative Agent:
NationsBank, N.A.
NationsBank Corporate Center
NC1-007-10-01
100 North Tryon Street
Charlotte, North Carolina 28255
Attention: Michelle M. Heath--
Investment Banking
Telephone: (704) 386-7922
Telecopy: (704) 388-9169
SECTION 9.4. Governing Law; Submission to Jurisdiction;
Integration.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK INCLUDING 5-1401 OF
THE GENERAL OBLIGATIONS LAW BUT OTHERWISE WITHOUT GIVING EFFECT TO
CONFLICTS OF LAWS PRINCIPLES AND THE PERFECTION AND THE EFFECT OF
PERFECTION OR NONPERFECTION OF ANY "SECURITY INTEREST" (AS DEFINED IN
THE UCC AS IN EFFECT IN THE STATE OF NEW YORK) GRANTED HEREUNDER SHALL
BE GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS. THE TRANSFEROR
HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW
YORK STATE COURT SITTING IN THE CITY OF NEW YORK FOR PURPOSES OF ALL
LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY. The Transferor hereby irrevocably
waives, to the fullest extent it may effectively do so, any objection
which it may now or hereafter have to the laying of the venue of any
such proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an inconvenient
forum. Nothing in this Section 9.4 shall affect the right of the
Company to bring any action or proceeding against the Transferor or its
property in the courts of other jurisdictions.
(b) This Agreement contains the final and complete
integration of all prior expressions by the parties hereto with respect
to the subject matter hereof and shall constitute the entire Agreement
among the parties hereto with respect to the subject matter hereof
superseding all prior oral or written understandings.
SECTION 9.5. Severability; Counterpart. This Agreement may
be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed shall
be deemed to be an original and all of which when taken together shall
constitute one and the same Agreement. Any provisions of this
Agreement which are prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
SECTION 9.6. Successors and Assigns.
(e) This Agreement shall be binding on the parties
hereto and their respective successors and assigns; provided, however,
that neither the Transferor nor the Seller may assign any of its rights
or delegate any of its duties hereunder or under the Receivables
Purchase Agreement or under any of the other Transaction Documents to
which it is a party without the prior written consent of the Company.
No provision of this Agreement shall in any manner restrict the ability
of the Company to assign, participate, grant security interests in, or
otherwise transfer any portion of the Transferred Interest.
(f) Each of the Transferor and the Seller hereby agrees
and consents to the assignment by the Company from time to time of all
or any part of its rights under, interest in and title to this
Agreement and the Transferred Interest to any Liquidity Provider. In
addition, the Transferor hereby agrees and consents to the complete
assignment by the Company of all of its rights under, interest in and
title to this Agreement and the Transferred Interest to the Collateral
Agent.
SECTION 9.7. Waiver of Confidentiality. Each of the
Transferor and the Seller hereby consents to the disclosure of any non-
public information with respect to it received by the Company or the
Administrative Agent (i) to any nationally recognized rating agency
rating the Company's commercial paper provided such rating agencies are
informed of the highly confidential nature of such information, (ii) to
any of the Company, the Administrative Agent, the Liquidity Provider,
the Credit Support Provider or any placement agent for the Company's
Commercial Paper in relation to this Agreement, provided any such
Person agrees to hold such information confidential, or any of such
Person's auditors, attorneys or financial advisors provided such
parties are informed of the highly confidential nature of such
information, (iii) as otherwise required by applicable law or order of
a court of competent jurisdiction or as requested by any regulatory
authority having jurisdiction over the Company or the Administrative
Agent or (iv) as requested by the Liquidity Provider, the Credit Sup
port Provider or any placement agent for the Company's Commercial Paper
solely as a result of a requirement of applicable law or order of a
court of competent jurisdiction or solely as a result of a request by
any regulatory authority having jurisdiction over any such Person.
Notwithstanding the foregoing, the Company shall be permitted to
disclose portfolio data regarding the Receivables to holders (and
prospective holders) of its Commercial Paper provided that such
information does not contain the name of the Transferor, the Seller or
the Collection Agent.
SECTION 9.8. Confidentiality Agreement. Each of the
Transferor, the Collection Agent and the Seller hereby agrees that it
will not disclose the contents of this Agreement or any other
proprietary or confidential information of the Company, the Collateral
Agent, the Administrative Agent, the Liquidity Provider or the Credit
Support Provider to any other Person except (i) their auditors and
attorneys or financial advisors (other than any commercial bank) who
are in confidential relationships with the Transferor, the Collection
Agent or the Seller and to any affiliates of the Transferor, the
Collection Agent or the Seller and/or the Buyer and any nationally
recognized rating agency, provided such auditors, attorneys, financial
advisors or rating agencies are informed of the highly confidential
nature of such information or (ii) as otherwise required by applicable
law or order of a court of competent jurisdiction or as requested by
any regulatory authority having jurisdiction over the Transferor,
Collection Agent or Seller.
SECTION 9.9. No Bankruptcy Petition Against the Company.
Each of the Transferor, the Seller and the Collection Agent hereby
covenants and agrees that, prior to the date which is one year and one
day after the payment in full of all outstanding Commercial Paper or
other indebtedness of the Company, it will not institute against, or
join any other Person in instituting against, the Company any bankrupt
cy, reorganization, arrangement, insolvency or liquidation proceedings
or other similar proceeding under the laws of the United States or any
state of the United States.
SECTION 9.10. No Recourse Against Stockholders, Officers or
Directors. No recourse under any obligation, covenant or agreement of
the Company contained in this Agreement shall be had against Merrill
Lynch Money Markets Inc. (or any affiliate thereof), or any
stockholder, officer or director of the Company, as such, by the
enforcement of any assessment or by any legal or equitable proceeding,
by virtue of any statute or otherwise; it being expressly agreed and
understood that this Agreement is solely a corporate obligation of the
Company, and that no personal liability whatever shall attach to or be
incurred by Merrill Lynch Money Markets Inc. (or any affiliate
thereof), or the stockholders, officers or directors of the Company, as
such, or any of them, under or by reason of any of the obligations,
covenants or agreements of the Company contained in this Agreement, or
implied therefrom, and that any and all personal liability for breaches
by the Company of any of such obligations, covenants or agreements,
either at common law or at equity, or by statute or constitution, of
Merrill Lynch Money Markets Inc. (or any affiliate thereof) and every
such stockholder, officer or director is hereby expressly waived as a
condition of and consideration for the execution of this Agreement.
SECTION 9.11. Characterization of the Transactions
Contemplated by the Agreement. It is the intention of the parties that
the transactions contemplated hereby constitute the sale of the
Transferred Interest, conveying good title thereto free and clear of
any Adverse Claims to the Company and that the Transferred Interest not
be part of the Transferor's estate in the event of an insolvency. If,
notwithstanding the foregoing, the transactions contemplated hereby
should be deemed a financing, the parties intend that the Transferor
shall be deemed to have granted to the Company, and the Transferor
hereby grants to the Company, a first priority perfected security
interest in all of the Transferor's right, title and interest in, to
and under the Receivables, together with Related Security, Collections
and Proceeds with respect thereto and that this Agreement shall
constitute a security agreement under applicable law.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Transfer and Administration Agreement as of the date
first written above.
ENTERPRISE FUNDING CORPORATION,
as Company
By:
Name:
Title:
IMC-AGRICO RECEIVABLES COMPANY L.L.C.
as Transferor
By: IMC AGRICO COMPANY,
its operating manager
By: IMC AGRICO MP, INC.,
its managing partner
By: ________________________
Name:
Title:
IMC-AGRICO COMPANY,
as Collection Agent
By: IMC-AGRICO MP, INC.,
its managing partner
By:
Name:
Title:
Exhibit A
[Form of Contract]
Exhibit B
[Credit and Collection Policies and Practices]
The Transferor's Credit and Collection Policy or Policies and
practices, relating to Contracts and Receivables, existing on the date
hereof are as set forth in manuals that were delivered by the
Transferor on February 20, 1997 to the Company and the receipt of which
has been separately acknowledged by the Company.
Exhibit C
List of Lock-Box Banks and Accounts
Exhibit D
FORM OF LOCK-BOX AGREEMENT
[Date]
[Name and Address
of Lock-Box Bank]
Re: IMC-AGRICO COMPANY
Lock-Box Account
No[s]. ___________
Ladies and Gentlemen:
IMC-AGRICO COMPANY ("IMC-Agrico") hereby notifies you that
in connection with certain transactions involving its accounts
receivable, it has transferred exclusive ownership and dominion of
its lock-box account no[s]. __________ maintained with you
(collectively the "Accounts") to IMC-Agrico Receivables Company
L.L.C., for the benefit of NationsBank, N.A., as collateral agent
(the "Collateral Agent"), and that IMC-Agrico Receivables Company
L.L.C. will transfer exclusive control of the Accounts to the
Collateral Agent effective upon delivery to you of the Notice of
Effectiveness (as hereinafter defined).
In furtherance of the foregoing, IMC-Agrico Receivables
Company L.L.C. and the Collateral Agent hereby instruct you,
beginning on the date of your receipt of the Notice of
Effectiveness: (i) to collect the monies, checks, instruments and
other items of payment mailed to the Accounts; (ii) to deposit into
the Accounts all such monies, checks, instruments and other items of
payment or all funds collected with respect thereto (unless
otherwise instructed by the Collateral Agent); and (iii) to transfer
all funds deposted and collected in the Accounts pursuant to
instructions given to you by the Collateral Agent from time to time.
You are hereby further instructed: (i) unless and until
the Collateral Agent notifies you to the contrary at any time after
your receipt of the Notice of Effectiveness, to make such transfers
from the Accounts at such times and in such manner as IMC-Agrico, in
its capacity as collection agent for IMC-Agrico Receivables Company
L.L.C., and the Collateral Agent, shall from time to time instruct
to the extent such instructions are not inconsistent with the
instructions set forth herein, and (ii) to permit IMC-Agrico (in its
capacity as collection agent for the IMC-Agrico Receivables Company
L.L.C. and the Collateral Agent) and the Collateral Agent to obtain
upon request any information relating to the Accounts, including,
without limitation, any information regarding the balance or
activity of the Accounts.
IMC-Agrico Receivables Company L.L.C. also hereby notifies
you that, beginning on the date of your receipt of the Notice of
Effectiveness and notwithstanding anything herein or elsewhere to
the contrary, the Collateral Agent, and not IMC-Agrico or IMC-Agrico
Receivables Company L.L.C., shall be irrevocably entitled to
exercise any and all rights in respect of or in connection with the
Accounts, including, without limitation, the right to specify when
payments are to be made out of or in connection with the Accounts.
The Collateral Agent has a continuing interest in all of the checks
and their proceeds and all monies and earnings, if any, thereon in
the Accounts, and you shall be the Collateral Agent's agent for the
purpose of holding and collecting such property. The monies,
checks, instruments and other items of payment mailed to, and funds
deposited to, the Accounts will not be subject to deduction, set-
off, banker's lien, or any other right in favor of any person other
than the Collateral Agent (except that you may set off (i) all
amounts due to you in respect of your customary fees and expenses
for the routine maintenance and operation of the Accounts, and (ii)
the face amount of any checks which have been credited to the
Accounts but are subsequently returned unpaid because of uncollected
or insufficient funds).
This Agreement may not be terminated at any time by IMC-
Agrico Receivables Company L.L.C. or you without the prior written
consent of the Collateral Agent. Neither this Agreement nor any
provision hereof may be changed, amended, modified or waived orally
but only by an instrument in writing signed by the Collateral Agent
and IMC-Agrico Receivables Company L.L.C.
You shall not assign or transfer your rights or
obligations hereunder (other than to the Collateral Agent) without
the prior written consent of the Collateral Agent and IMC-Agrico
Receivables Company L.L.C. Subject to the preceding sentence, this
Agreement shall be binding upon each of the parties hereto and their
respective successors and assigns, and shall inure to the benefit
of, and be enforceable by, the Collateral Agent, each of the parties
hereto and their respective successors and assigns.
You hereby represent that the person signing this
Agreement on your behalf is duly authorized by you to so sign.
You agree to give the Collateral Agent and IMC-Agrico
prompt notice if the Accounts become subject to any writ,
garnishment, judggent, warrant of attachment, execution or similar
process.
Any notice, demand or other communication required or
permitted to be given hereunder shall be in writing and may be
personally served or sent by facsimile or by courier service or by
United States mail and shall be deemed to have been delivered when
delivered in person or by courier service or by facsimile or three
(3) Business Days after deposit in the United States mail
(registered or certified, with postage prepaid and properly
addressed). For the purposes hereof, (i) the addresses of the
parties hereto shall be as set forth below each party's name below,
or, as to each party, at such other address as may be designated by
such party in a written notice to the other party and the Collateral
Agent and (ii) the address of the Collateral Agent shall be
NationsBank, N.A., NationsBank Corporate Center, 100 North Tryon
Street, NC1-007-10-01, Charlotte, North Carolina 28255, Attention:
Michelle M. Heath, Investment Banking, or at such other address as
may be designated by the Collateral Agent in a written notice to
each of the parties hereto.
Please agree to the terms of, and acknowledge receipt of,
this notice by signing in the space provided below.
The transfer of control of the Accounts, referred to in
the first paragraph of this letter, shall become effective upon
delivery to you of a notice (the "Notice of Effectiveness") in
substantially the form attached hereto as Annex "1".
Very truly yours,
IMC-AGRICO COMPANY
By: IMC-Agrico MP Inc.,
its managing partner
By:_____________________________
Title:__________________________
Attention:______________________
Facsimile No.:__________________
IMC-AGRICO COMPANY RECEIVABLES
COMPANY L.L.C.
By: IMC-Agrico Company,
its operating manager
By:_____________________________
Title:__________________________
By: IMC-Agrico MP Inc.,
its managing partner
By:_____________________________
Title:__________________________
ACKNOWLEDGED AND AGREED:
[NAME OF LOCK-BOX BANK]
By:________________________
Title:_____________________
Date:______________________
[Address]
Attention:_________________
Facsimile No.:_____________
ANNEX 1
TO LOCK-BOX AGREEMENT
[FORM OF NOTICE OF EFFECTIVENESS]
DATED: ______________, 199_
TO: [Name of Lock-Box Bank]
[Address]
ATTN: ______________________
Re: Lock-Box Account No[s]._______
Ladies and Gentlemen:
We hereby give you notice that the transfer of control of
the above-referenced Lock-Box Account[s], as described in our letter
agreement with you dated ________ __, 1997 is effective as of the
date hereof. You are hereby instructed to comply immediately with
the instructions set forth in that letter.
Very truly yours,
IMC-AGRICO RECEIVABLES
COMPANY L.L.C.
By:_____________________________
Title:__________________________
ACKNOWLEDGED AND AGREED:
[NAME OF LOCK-BOX BANK]
By:________________________
Title:_____________________
Date:______________________
[Address]
Attention:_________________
Facsimile No.:_____________
ANNEX 2
TO LOCK-BOX AGREEMENT
[FORM OF ACKNOWLEDGMENT AND AUTHORIZATION]
ACKNOWLEDGMENT AND AUTHORIZATION
NationsBank, N.A., as collateral agent (the "Collateral
Agent"), hereby acknowledges the transfer of exclusive ownership,
dominion and control of the Accounts defined in and pursuant to the
foregoing letter agreement (the "Lock-Box Agreement"), executed by IMC-
AGRICO RECEIVABLES COMPANY L.L.C. ("IMC-Agrico") and acknowledged by
[Name of Lock-Box Bank] (the "Bank"), which transfer to the Collateral
Agent of ownership and dominion of the Accounts is in effect on, and
shall continue after, the date hereof and which transfer to the
Collateral Agent of control of the Accounts shall be effective upon
delivery to the Bank of the Notice of Effectiveness (as defined in the
Lock-Box Agreement). Pursuant to the third and fourth paragraphs of
the Lock-Box Agreement, the Collateral Agent hereby instructs the Bank,
beginning on the date of the Notice of Effectiveness until the
Collateral Agent notifies the Bank to the contrary, to accept the
directions of IMC-Agrico, as collection agent for the Collateral Agent,
as to the manner and timing of such payments.
Very truly yours,
NATIONSBANK, N.A.,
as Collateral Agent
By:_________________________________
Name:
Title:
ACKNOWLEDGED AND AGREED:
[NAME OF LOCK-BOX BANK]
By:________________________
Title:_____________________
Date:______________________
Exhibit E
Form of Investor Report
Exhibit F
[Transfer Certificate]
TRANSFER CERTIFICATE
Reference is made to the Transfer and Administration
Agreement dated as of June 27, 1997 (the "Agreement") among IMC-AGRICO
RECEIVABLES COMPANY, L.L.C. as transferor (in such capacity, the
"Transferor"), IMC-AGRICO COMPANY as seller (in such capacity, the
"Seller") and ENTERPRISE FUNDING CORPORATION (the "Company"). Terms
defined in the Agreement are used herein as therein defined.
The Transferor hereby conveys, transfers and assigns to the
Company an undivided ownership interest in the Receivables, together
with Related Security and Collections with respect thereto (each, an
"Incremental Transfer"). Each Incremental Transfer by the Transferor
to the Company and each reduction or increase in the Net Investment in
respect of each Incremental Transfer evidenced hereby shall be
indicated by the Company on the grid attached hereto which is part of
this Transfer Certificate.
This Transfer Certificate is made without recourse except as
otherwise provided in the Agreement.
This Transfer Certificate shall be governed by, and construed
in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the undersigned has caused this Transfer
Certificate to be duly executed and delivered by its duly authorized
officer as of the date first above written.
[ ]
By
Name:
Title:
GRID
Net Investment
Date of Amount of (Giving Effect
Incremental Incremental to Incremental
Transfer Transfer Transfer)
Exhibit G
Definitions of Certain Terms
"Capital Expenditures" means all expenditures which in
accordance with generally accepted accounting principles would be
classified as capital expenditures, including without limitation,
Capitalized Leases.
"Capitalized Lease" means the obligations of a Person as
lessee under leases that have been, or should be, characterized as
capital leases in accordance with generally accepted accounting
principles applied on a consistent basis.
"EBITDA" means, for any period, the net earnings (or net
loss) plus the sum of (i) interest expense (including amortization of
debt discount), (ii) income tax expense, (iii) depreciation,
amortization and depletion expense, in each case determined in
accordance with generally accepted accounting principles applied on a
consistent basis for such period.
Exhibit H-1
List of Actions and Suits for Transferor
Exhibit H-2
List of Actions and Suits for Seller
Exhibit I
[Reserved]
Exhibit J
[Reserved]
Exhibit K
[Form of Transferor's and Seller's Counsel Opinion]
[Letterhead of Counsel]
____________, 19__
Enterprise Funding Corporation
c/o Merrill Lynch Money Markets Inc.
Merrill Lynch World Headquarters
World Financial Center--South Tower
225 Liberty Street--8th Floor
New York, New York 10080
NationsBank, N.A.
as Collateral Agent
100 North Tryon Street
Charlotte, North Carolina 28255
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section _______ of
the Transfer and Administration Agreement dated as of _________, 199_
(the "Agreement") among [TRANSFEROR], a _______ [corporation] (the
"Transferor"), [SELLER], a _________[corporation], individually and as
Collection Agent ("[SELLER]"), and Enterprise Funding Corporation, a
Delaware corporation (the "Company"). Terms defined in the Agreement
and not otherwise defined herein are used in this opinion with the
meanings so defined.
We have acted as counsel to the Seller and the Transferor in
connection with the preparation of the Agreement, the Receivables
Purchase Agreement, the other Transaction Documents and the
transactions contemplated thereby.
We have examined, on the date hereof, the Agreement and all
Exhibits thereto, the Receivables Purchase Agreement and all Exhibits
thereto, the Certificate, the Transfer Certificate delivered under the
Agreement, certificates of public officials and of officers of the
Transferor and the Seller and certified copies of Seller's and the
Transferor's certificate of incorporation, and the Seller's partnership
agreement, by-laws, the Board of Directors' resolutions authorizing
Seller's and the Transferor's participation in the transactions
contemplated by the Agreement and the Receivables Purchase Agreement,
copies of each of the above having been delivered to you, copies of the
financing statements on Form UCC-1 filed in the filing offices listed
in Schedule I hereto executed by Seller, as debtor, in favor of the
Transferor, and showing the Collateral Agent as the assignee of the
secured party, substantially in the form attached hereto as Exhibit A
(the "Seller Financing Statements") and copies of the financing
statements on Form UCC-1 filed in the filing offices listed in Schedule
II hereto executed by Transferor, as debtor, in favor of the Company,
and showing the Collateral Agent as the assignee of the secured party,
substantially in the form attached hereto as Exhibit B (the "Transferor
Financing Statements"). We have also examined the closing documents
delivered pursuant to the Agreement and the Receivables Purchase
Agreement and copies of all such documents and records, and have made
such investigations of law, as we have deemed necessary and relevant as
a basis for our opinion. With respect to the accuracy of material
factual matters which were not independently established, we have
relied on certificates and statements of officers of Seller and the
Transferor.
On the basis of the foregoing, we are of the opinion that:
1. The Transferor is a corporation duly incorporated, validly
existing and in good standing under the laws of _________, has the
corporate power and authority to own its properties and to carry on its
business as now being conducted, and had at all relevant times, and now
has, all necessary power, authority, and legal right to acquire and own
the Receivables, and is duly qualified and in good standing as a
foreign corporation and is authorized to do business in each
jurisdiction in which the character of its properties or the nature of
its business requires such qualification or authorization, except for
qualifications and authorizations the lack of which, singly or in the
aggregate, has not had and will not have a materially adverse affect
upon the business properties of the Transferor or its ability to
perform its obligations under the Transaction Documents.
2. The Seller is a partnership duly organized, validly
existing and in good standing under the laws of Delaware, has the power
and authority to own its properties and to carry on its business as now
being conducted, and had at all relevant times, and now has, all
necessary power, authority, and legal right to acquire and own the
Receivables, and is duly qualified and in good standing as a foreign
partnership and is authorized to do business in each jurisdiction in
which the character of its properties or the nature of its business
requires such qualification or authorization, except for qualifications
and authorizations the lack of which, singly or in the aggregate, has
not had and will not have a materially adverse affect upon the business
properties of the Seller or its ability to perform its obligations
under the Agreement.
3. The Transferor has the power, corporate and other, and has
taken all necessary corporate action to execute, deliver and perform
the Agreement and the other Transaction Documents, each in accordance
with its respective terms, and to consummate the transactions
contemplated thereby. The Transaction Documents to which the
Transferor is a party have been duly executed and delivered by the
Transferor and when duly executed and delivered will constitute the
legal, valid and binding obligations of the Transferor enforceable
against the Transferor in accordance with their terms, except as
enforcement thereof may be limited by bankruptcy, insolvency and other
similar laws affecting the enforcement of creditors' rights generally
and by general equitable principles.
4. The Seller has the power and has taken all necessary
action to execute, deliver and perform the Agreement, and the other
Transaction Documents which it is a party, each in accordance with its
respective terms, and to consummate the transactions contemplated
thereby. The Agreement, and the other Transaction Documents to which
it is a party, have been duly executed and delivered by the Seller and
constitute the legal, valid and binding obligations of the Transferor
enforceable against the Seller in accordance with their terms, except
as enforcement thereof may be limited by bankruptcy, insolvency and
other similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles.
5. The execution, delivery and performance in accordance with
their terms by the Transferor of the Agreement and the other
Transaction Documents and the consummation of the transactions
contemplated thereby, do not and will not (i) require (a) any
governmental approval or (b) any consent or approval of any stockholder
of the Transferor that has not been obtained, (ii) violate or conflict
with, result in a breach of, or constitute a default under (a) the
certificate of incorporation or the by-laws of the Transferor, (b) any
other agreement to which the Transferor is a party or by which the
Transferor or any of its properties may be bound, or (c) any applicable
law, or any order, rule, or regulation applicable to the Transferor of
any court or of any federal or state regulatory body, administrative
agency, or other governmental instrumentality having jurisdiction over
the Transferor or any of its properties, or (iii) result or require in
the creation or imposition of any Lien upon any of the assets, property
or revenue of the Transferor other than as contemplated by the
Agreement.
6. The execution, delivery and performance in accordance with
their terms by the SELLER of the Receivables Purchase Agreement and the
other Transaction Documents and the consummation of the transactions
contemplated thereby, do not and will not (i) require (a) any
governmental approval or (b) any consent or approval of any partner of
the Seller that has not been obtained, (ii) violate or conflict with,
result in a breach of, or constitute a default under (a) the Seller's
partnership agreement (b) any other agreement to which the Seller is a
party or by which the Seller or any of its properties may be bound, or
(c) any applicable law, or any order, rule, or regulation applicable to
the Seller of any court or of any federal or state regulatory body,
administrative agency, or other governmental instrumentality having
jurisdiction over the Seller or any of its properties, or (iii) result
or require in the creation or imposition of any Lien upon any of the
assets, property or revenue of the Seller other than as contemplated by
the Receivables Purchase Agreement.
7. [Except as set forth in the schedule attached hereto,] to
the best of our knowledge, after due inquiry, there are not, in any
court or before any arbitrator of any kind or before or by any
governmental or non-governmental body, any actions, suits, proceedings
or investigations, pending or threatened, (i) against the Transferor or
the business or any property of the Transferor except actions, suits or
proceedings that, if adversely determined, would not, singly or in the
aggregate, have a materially adverse affect on the Transferor, or on
the ability of the Transferor to perform its respective obligations
under the Agreement and the Company Certificate or (ii) relating to the
Agreement or the Company Certificate.
8. [Except as set forth in the schedule attached hereto,] to the
best of our knowledge, after due inquiry, there are not, in any court
or before any arbitrator of any kind or before or by any governmental
or non-governmental body, any actions, suits, proceedings or
investigations, pending or to the best of our knowledge, after due
inquiry, threatened, (i) against the Seller or the business or any
property of the Seller except actions, suits or proceedings that, if
adversely determined, would not, singly or in the aggregate, have a
Materially Adverse Effect or (ii) relating to the Receivables Purchase
Agreement or any other Transaction Document.
9. The Agreement and the Transfer Certificate creates a
valid "security interest" (as that term is defined in Section 1-201(37)
of the Uniform Commercial Code (including the conflict of laws rules
thereof) as in effect in each applicable jurisdiction (the "UCC"),
including New York (the "New York UCC") and _______ (the "XYZ UCC"),
under Article 9 of the New York UCC ("Security Interest") in favor of
the Company in each Receivable (except that the Security Interest will
attach only when the Transferor possesses rights in such Receivable).
The internal laws of XYZ govern the perfection by the filing of
financing statements of the Company's Security Interest in the
Receivables and the proceeds thereof. The Financing Statement(s) have
been filed in the filing office(s) located in XYZ listed in Schedule I
hereto, which [is] [are] the only office(s) in which filings are
required under the XYZ UCC to perfect the Company's Security Interest
in the Receivables and the proceeds thereof, and accordingly the
Company's Security Interest in each Receivable and the proceeds thereof
will, on the date of the initial transfer under the Agreement, be
perfected under Article 9 of the XYZ UCC. All filing fees and all
taxes required to be paid as a condition to or upon the filing of the
Financing Statement(s) in XYZ have been paid in full. As of the date
hereof, there were no (i) UCC financing statements naming Transferor as
debtor, seller or assignor and covering any Receivables or any interest
therein or (ii) notices of the filing of any federal tax lien (filed
pursuant to Section 6323 of the Internal Revenue Code) or lien of the
Pension Benefit Guaranty Corporation (filed pursuant to Section 4068 of
the Employment Retirement Insurance Act) covering any Receivable or any
interest therein. The filing of the Financing Statement(s) in the
filing offices listed in Schedule I will create a first priority
security interest in each Receivable. Such perfection and priority
will continue, provided that appropriate continuation statements are
timely filed where and when required under the UCC.
10. The Receivables Purchase Agreement creates a valid "security
interest" (as that term is defined in Section 1-201(37) of the Uniform
Commercial Code (including the conflict of laws rules thereof) as in
effect in each applicable jurisdiction (the "UCC"), including New York
(the "New York UCC") and _______ (the "XYZ UCC"), under Article 9 of
the New York UCC ("Security Interest") in favor of the Transferor in
the Receivables and the proceeds thereof (except that the Security
Interest will attach to any Receivable created after the date hereof
only when the Seller possesses rights in such Receivable). The
internal laws of XYZ govern the perfection by the filing of financing
statements of the Transferor's Security Interest in the Receivables and
the proceeds thereof. The Seller Financing Statement(s) have been
filed in the filing office(s) located in XYZ listed in Schedule I
hereto, which [is] [are] the only office(s) in which filings are
required under the XYZ UCC to perfect the Transferor's Security
Interest in the Receivables and the proceeds thereof, and accordingly
the Transferor's Security Interest in each Receivable and the proceeds
thereof will, on the date of the initial transfer under the Receivables
Purchase Agreement, be perfected under Article 9 of the XYZ UCC. All
filing fees and all taxes required to be paid as a condition to or upon
the filing of the Seller Financing Statement(s) in XYZ have been paid
in full. As of the date hereof, there were no (i) UCC financing
statements naming the Seller as debtor, seller or assignor and covering
any Receivables or any interest therein or (ii) notices of the filing
of any federal tax lien (filed pursuant to Section 6323 of the Internal
Revenue Code) or lien of the Pension Benefit Guaranty Corporation
(filed pursuant to Section 4068 of the Employment Retirement Insurance
Act) covering any Receivable or any interest therein. The filing of
the Seller Financing Statement(s) in the filing offices listed in
Schedule I will create a first priority security interest in each
Receivable. Such perfection and priority will continue, provided that
appropriate continuation statements are timely filed where and when
required under the UCC.
In giving the opinions in paragraph 10 and 11, we have
assumed that (1) the Seller's and Transferor's chief executive office
will continue to be located in _____, and (2) the Transferor and the
Seller has kept and will continue to keep all of its records concerning
Receivables located only in ___ and _____, respectively. The
conclusions expressed in paragraph 10 and 11 are subject to the
accuracy of the personnel in the filing offices referred to above with
regard to the filing, indexing and recording of financing statements
and notices of Liens, and to the correctness of reports to us by
____________, who performed the searches of such records and who made
the filings on behalf of the Seller and Transferor in ___.
In giving the opinions set forth in paragraph 10 and 11, we
have assumed that all filings as appropriate in the event of a change
in the name, identity or corporate structure of the debtor (or seller
or assignor) named in any financing statements and all continuation
statements necessary under the UCC to maintain the perfection of the
Transferor's Security Interest and Company's Security Interest in the
Receivables and the proceeds thereof will be duly and timely filed. In
giving such opinions, we also do not express any opinion as to (a)
transactions excluded from Article 9 of the UCC by virtue of Section 9-
104 of the UCC, (b) any security interest in proceeds except to the
extent that the validity and perfection of any interest in proceeds (as
such term is defined under the UCC) thereof that is covered by the
Seller Financing Statements or the Transferor, the Financing Statements
or any duly filed financing statement referred to above may be
permitted by Section 9-306 of the UCC, and (c) any security interest
that is terminated or released.
The foregoing opinions and conclusions were given only in
respect of the laws of the State of New York, the Uniform Commercial
Code as in effect on the date hereof in the State of XYZ and, to the
extent specifically referred to herein, the Federal laws of the United
States of America.
This opinion has been delivered at your request for the
purposes contemplated by the Agreement. Without our prior written
consent, this opinion is not to be utilized or quoted for any other
purpose and no one other than you, any Liquidity Provider, Credit
Support Provider and any placement agent for the Company's Commercial
Paper is entitled to rely thereon.
Very truly yours,
Exhibit L-1
RESPONSIBLE OFFICER'S CERTIFICATE
I, __________________, the undersigned ________________ of
_________ (the "Transferor"), a ________ corporation, DO HEREBY CERTIFY
that:
1. Attached hereto as Annex A is a true and complete copy of
the Certificate of Incorporation of the Company as in effect on the
date hereof.
2. Attached hereto as Annex B is a true and complete copy of
the By-laws of the Company as in effect on the date hereof.
3. Attached hereto as Annex C is a true and complete copy of
the resolutions duly adopted by the Board of Directors of the Company
[adopted by consent] as of _________________, 199_, authorizing the
execution, delivery and performance by Company of each of the documents
mentioned therein, which resolutions have not been revoked, modified,
amended or rescinded and are still in full force and effect.
4. The below-named persons have been duly qualified as and
at all times since ________________, 199_, to and including the date
hereof have been officers or representatives of the Company holding the
respective offices or positions below set opposite their names are
authorized to execute on behalf of the Company the below-mentioned
Transfer and Administration Agreement and all other Transaction
Documents (as defined in such Transfer and Administration Agreement) to
which the Company is a party and the signatures below set opposite
their names are their genuine signatures:
Name Office Signatures
[OFFICE]
[OFFICE]
5. The representations and warranties of the Company
contained in Section 3.1 of the Transfer and Administration Agreement
dated as of March __, 1997 between the Transferor and Enterprise
Funding Corporation are true and correct as if made on the date
hereof.]
6. The Company is a general partner of the Transferor.
WITNESS my hand and seal of the Company as of this ____ day
of ________, 199_.
Secretary
[NAME OF COMPANY]
I, the undersigned, Vice President of the Company, DO HEREBY
CERTIFY that _____________________ is the duly elected and qualified
Secretary of the Company and the signature above is his/her genuine
signature.
WITNESS my hand as of this ____ day of _______, 199_.
Vice President
[NAME OF COMPANY]
Exhibit L-2
SECRETARY'S CERTIFICATE
I, __________________, the undersigned ________________ of
___________ (the "Company"), a ________ corporation, DO HEREBY CERTIFY
that:
1. Attached hereto as Annex A is a true and complete copy of
the Certificate of Incorporation of the Company as in effect on the
date hereof.
2. Attached hereto as Annex B is a true and complete copy of
the By-laws of the Company as in effect on the date hereof.
3. Attached hereto as Annex C is a true and complete copy of
the resolutions duly adopted by the Board of Directors of the Company
[adopted by consent] as of _________________, 199_, authorizing the
execution, delivery and performance of each of the documents mentioned
therein, which resolutions have not been revoked, modified, amended or
rescinded and are still in full force and effect.
4. The below-named persons have been duly qualified as and
at all times since ________________, 199_, to and including the date
hereof have been officers or representatives of the Company holding the
respective offices or positions below set opposite their names and are
authorized to execute on behalf of the Company the below-mentioned
Transfer and Administration Agreement and Receivables Purchase
Agreement and all other Transaction Documents (as defined in such
Transfer and Administration Agreement) to which the Company is a party
and the signatures below set opposite their names are their genuine
signatures:
Name Office Signatures
[OFFICE]
[OFFICE]
5. The representations and warranties of the Company
contained in Section ___ of the Transfer and Administration Agreement
dated as of __________, 199_ among the Company, IMG Agrico Funding
Company as Transferor, Enterprise Funding Corporation, NationsBank,
N.A. and certain financial institutions named therein are true and
correct as if made on the date hereof.]
6. The Company is a general partner of the Transferor.
WITNESS my hand and seal of the Company as of this ____ day
of ________, 199_.
Secretary
I, the undersigned, Vice President of the Company, DO HEREBY
CERTIFY that _____________________ is the duly elected and qualified
Secretary of the Company and the signature above is his/her genuine
signature.
WITNESS my hand as of this ____ day of _______, 199_.
Vice President
Exhibit M
[Form of Company Certificate]
THIS CERTIFICATE OR ANY INTEREST HEREIN MAY NOT BE TRANSFERRED,
ASSIGNED, EXCHANGED OR CONVEYED EXCEPT IN ACCORDANCE WITH THE TRANSFER
AND ADMINISTRATION AGREEMENT REFERRED TO HEREIN.
No. 1 One Unit
[Date]
Evidencing an undivided interest in a pool of accounts receivables
generated from time to time in the ordinary course of business by [
] (the "Transferor").
(Not an interest in or obligation of [ ] )
This certifies that ENTERPRISE FUNDING CORPORATION
("Enterprise") is the registered owner of a fractional undivided
interest in a pool of accounts receivables pursuant to a Transfer and
Administration Agreement between Enterprise and the Transferor, dated
as of March __, 1997 (the "Agreement"). The Receivables consist of all
accounts receivables generated under the Contracts from time to time
hereafter, all monies due or to become due in payment of the
Receivables and the other assets and interests as provided in the
Agreement.
To the extent not defined herein, capitalized terms used
herein have the meanings assigned to such terms in the Agreement. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement, as amended from time
to time, the holder hereof by virtue of the acceptance hereof assents
and by which the holder hereof is bound. In the event of any
inconsistency or conflict between the terms of this Certificate and the
terms of the Agreement, the terms of the Agreement shall control.
This Certificate represents a fractional undivided interest
in the Receivables, including the right to receive Collections and
other amounts at the times and in the amounts specified in the
Agreement. The aggregate interest in the Receivables represented by
this Certificate at any time shall equal the Percentage Factor as
determined in accordance with the Agreement.
IN WITNESS WHEREOF, the Transferor has caused this
Certificate to be duly executed.
[ ]
By:
Name:
Title:
EXHIBIT 10.73
RECEIVABLES PURCHASE AGREEMENT
between
IMC-AGRICO COMPANY
as Seller
and
IMC-AGRICO RECEIVABLES COMPANY L.L.C.
as Purchaser
Dated as of June 27, 1997
RECEIVABLES PURCHASE AGREEMENT
This RECEIVABLES PURCHASE AGREEMENT, dated as of June 27,
1997 (as amended, supplemented or otherwise modified and in effect from
time to time, this "Agreement"), between IMC-AGRICO COMPANY, a Delaware
general partnership, as seller and collection agent (the "Seller" or
the "Collection Agent") and IMC-AGRICO RECEIVABLES COMPANY L.L.C., a
Delaware limited liability company, as purchaser (the "Purchaser").
W I T N E S S E T H :
WHEREAS, the Purchaser desires to purchase from time to time
certain accounts receivable existing on the Closing Date and generated
thereafter in the normal course of the Seller's business;
WHEREAS, the Seller desires to sell and assign from time to
time such certain accounts receivable to the Purchaser upon the terms
and conditions hereinafter set forth;
WHEREAS, the Collection Agent has agreed to service the ac
counts receivable sold to the Purchaser by the Seller hereunder;
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, it is hereby
agreed by and between the Purchaser and the Seller as follows:
ARTICLE Numbering in use:
Ctrl+1 = ARTICLE I Ctrl+5 = (i)
Ctrl+2 = Section1.1 Ctrl+6 = (1)
Ctrl+3 = (a) Ctrl+7 = (A)
Ctrl+4 = (aa) Ctrl+8 = Section 1.1 (a)
When (aa) is required, play Choose Numbering Style macro,
Start Numbering at New Value, Level 3, start at 1.
Then use Ctrl+4 for (aa)
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. All capitalized terms used herein
shall have the meanings specified herein or, if not so specified, the
meaning specified in, or incorporated by reference into, the Transfer
Agreement, and shall include in the singular number the plural and in
the plural number the singular:
"Advance" shall have the meaning specified in Section 3.2(a).
"Certificate" shall mean the Purchase Certificate executed by
the Seller evidencing the transfer of Receivables hereunder.
"Closing Date" shall mean June 30, 1997.
"Company" shall mean Enterprise Funding Corporation, a
Delaware corporation, as purchaser under the Transfer Agreement.
"Cut-Off Date" shall mean June 27, 1997.
"Eligible Receivable" shall have the meaning specified in the
Transfer Agreement.
"Event of Bankruptcy" shall have the meaning specified in the
Transfer Agreement.
"Outstanding Balance" shall have the meaning specified in the
Transfer Agreement.
"Purchase Date" shall have the meaning assigned in Section
3.2(b) hereof.
"Purchase Discount" shall mean .65% or such other Purchase
Discount as may be agreed upon by the Purchaser and Seller on or prior
to the Purchase Date, which Purchase Discount shall be calculated to
yield a Purchase Price which approximates the expected present value of
the Receivables but allows the Purchaser a reasonable return with re
spect to such Purchase. The amount of the Purchase Discount shall
include an amount equal to the servicing fee to be paid to the
Collection Agent by the Purchaser.
"Purchase Period" shall mean, with respect to Receivables
sold by the Seller to the Purchaser after the Closing Date, the period
reported upon in the most recent Investor Report delivered after the
Closing Date.
"Purchase Price" shall have the meaning set forth in Section
3.1 hereof.
"Purchaser" shall mean IMC-Agrico Receivables Company L.L.C.,
a Delaware limited liability company, and its successors and permitted
assigns.
"Receivable" shall mean, for purposes of this Agreement, the
indebtedness owed to the Seller by any Obligor under a Contract whether
constituting an account, chattel paper, instrument or general intangi
ble, arising in connection with the sale or lease of merchandise or the
rendering of services by the Seller and includes the right to payment
of any Finance Charges and other obligations of such Obligor with re
spect thereto.
"Related Security" shall mean, with respect to any
Receivable, all of the Seller's right, title and interest in, to and
under:
(i) all of the Seller's interest, if any, in the
merchandise (including returned or repossessed merchandise),
if any, the sale of which by the Seller to the relevant
Obligor gave rise to such Receivable;
(ii) all other security interests or liens and
property subject thereto from time to time, if any, pur
porting to secure payment of such Receivable, whether
pursuant to the Contract related to such Receivable or
otherwise, together with all financing statements signed by
an Obligor describing any collateral securing such Receiv
able;
(iii) all guarantees, indemnities, warranties,
insurance (and proceeds and premium refunds thereof) or other
agreements or arrangements of any kind from time to time sup
porting or securing payment of such Receivable whether
pursuant to the Contract related to such Receivable or other
wise;
(iv) all Records related to such Receivables; and
(v) all Proceeds of any of the foregoing.
"Relevant UCC" with respect to any state shall mean the Uni
form Commercial Code as in effect in such state.
"Secured Obligations" shall have the meaning set forth in
Section 2.1(d) hereof.
"Subordinated Note" shall have the meaning specified in
Section 3.2(b).
"Termination Date" shall have the meaning specified in
Section 8.1.
"Transfer Agreement" shall mean the Transfer and
Administration Agreement, dated as of June 27, 1997, by and among IMC-
Agrico Company, individually and as Collection Agent, IMC-Agrico
Receivables Company L.L.C., as Transferor and Enterprise Funding Corpo
ration, as such agreement may be amended, modified or supplemented from
time to time.
SECTION 1.2 Other Terms. All accounting terms not
specifically defined herein shall be construed in accordance with
generally accepted accounting principles. All terms used in Article 9
of the Relevant UCC, and not specifically defined herein, are used
herein as defined in such Article 9.
SECTION 1.3 Computation of Time Periods. Unless otherwise
stated in this Agreement, in the computation of a period of time from a
specified date to a later specified date, the word "from" means "from
and including" and the words "to" and "until" each means "to but
excluding."
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
ARTICLE II
PURCHASE, CONVEYANCE AND SERVICING OF RECEIVABLES
SECTION 2.1. Sale. (a) Upon the terms and subject to the
conditions set forth herein, the Seller hereby sells, assigns,
transfers and conveys to the Purchaser, and the Purchaser hereby
purchases from the Seller, on the terms and subject to the conditions
specifically set forth herein, and without recourse except as otherwise
provided in Article VI, all of the Seller's right, title and interest,
whether now owned or hereafter acquired, in, to and under the Receiv
ables outstanding on the Closing Date and thereafter owned by the
Seller, through any Termination Date (but not thereafter), together
with all Related Security and Collections with respect thereto and all
proceeds of the foregoing. The foregoing sale, assignment, transfer
and conveyance does not constitute an assumption by the Purchaser of
any obligations of the Seller or any other Person to Obligors or to any
other Person in connection with the Receivables or the Contracts
related thereto or under any Related Security and instrument relating
to the Receivables.
(b) In connection with the foregoing sale, the Seller agrees
to record and file on or prior to the Closing Date, at its own expense,
a financing statement or statements with respect to the Receivables and
the other property described in Section 2.1(a) sold by the Seller here
under meeting the requirements of applicable state law in such manner
and in such jurisdictions as are necessary to perfect and protect the
interests of the Purchaser created hereby under the Relevant UCC
against all creditors of and purchasers from the Seller, and to deliver
either the originals of such financing statements or a file-stamped
copy of such financing statements or other evidence of such filings to
the Purchaser on the Closing Date.
(c) The Seller agrees that from time to time, at its
expense, it will promptly execute and deliver all instruments and
documents and take all actions as may be necessary or as the Purchaser
may reasonably request in order to perfect or protect the interest of
the Purchaser in the Receivables purchased hereunder or to enable the
Purchaser to exercise or enforce any of its rights hereunder. Without
limiting the foregoing, the Seller will, in order to accurately reflect
this purchase and sale transaction, execute and file such financing or
continuation statements or amendments thereto or assignments thereof
(as permitted pursuant hereto) as may be requested by the Purchaser,
and upon the request of the Purchaser, mark its master data processing
records and other documents with a legend describing the purchase by
the Purchaser of the Receivables and the subsequent transfer thereof to
the Company pursuant to the Transfer Agreement and stating "THE
RECEIVABLES IN THESE FILES HAVE BEEN ACQUIRED BY AND CONVEYED TO IMC-
AGRICO RECEIVABLES COMPANY L.L.C. (the "L.L.C.") PURSUANT TO THE
RECEIVABLES PURCHASE AGREEMENT DATED AS OF JUNE 27, 1997 BETWEEN IMC-
AGRICO COMPANY AND THE L.L.C., AND AN INTEREST THEREIN HAS BEEN AS
SIGNED BY THE L.L.C. TO ENTERPRISE FUNDING CORPORATION PURSUANT TO THE
TRANSFER AND ADMINISTRATION AGREEMENT DATED AS OF JUNE 27, 1997, AS
AMENDED FROM TIME TO TIME, AMONG IMC-AGRICO RECEIVABLES COMPANY L.L.C.,
IMC-AGRICO COMPANY AND ENTERPRISE FUNDING CORPORATION." The Seller
shall, upon request of the Purchaser, obtain such additional search
reports as the Purchaser shall request. To the fullest extent
permitted by applicable law, the Purchaser shall be permitted to sign
and file continuation statements and amendments thereto and assignments
thereof without the Seller's signature. Carbon, photographic or other
reproduction of this Agreement or any financing statement shall be
sufficient as a financing statement.
(d) It is the express intent of the Seller and the Purchaser
that the conveyance of the Receivables by the Seller to the Purchaser
pursuant to this Agreement be construed as a "sale of accounts," as
such term is used in Article 9 of the Relevant UCC, by the Seller to
the Purchaser, which sale is absolute and irrevocable and provides the
Purchaser with the full benefits of ownership of such Receivables. Fur
ther, it is not the intention of the Seller and the Purchaser that such
conveyance be deemed a grant of a security interest in the Receivables
by the Seller to the Purchaser to secure a debt or other obligation of
the Seller. However, in the event that, notwithstanding the express
intent of the parties, the Receivables are construed to constitute
property of the Seller, then (i) this Agreement also shall be deemed to
be, and hereby is, a security agreement within the meaning of the Rele
vant UCC; and (ii) the conveyance by the Seller provided for in this
Agreement shall be deemed to be, and the Seller hereby grants to the
Purchaser, a security interest in, to and under all of the Seller's
right, title and interest in, to and under the Receivables outstanding
on the Closing Date and thereafter owned by the Seller, together with
all Related Security and Collections with respect thereto and all pro
ceeds of the foregoing, to secure the rights of the Purchaser set forth
in this Agreement or as may be determined in connection therewith by
applicable law (collectively, the "Secured Obligations"). The Seller
and the Purchaser shall, to the extent consistent with this Agreement,
take such actions as may be necessary to ensure that the security
interest in the Receivables created hereby, whether deemed to be an
ownership interest as intended by the parties hereto or a security
interest to secure the Secured Obligations, would in each such event,
be deemed to be a perfected security interest in favor of the Purchaser
under applicable law and will be maintained as such throughout the term
of this Agreement.
SECTION 2.2. Servicing of Receivables. The servicing,
administering and collection of the Receivables shall be conducted by
the Seller, which hereby agrees to perform, take or cause to be taken
all such action as may be necessary or advisable to collect each
Receivable from time to time, all in accordance with applicable laws,
rules and regulations and with the care and diligence which the Seller
employs in servicing similar receivables for its own account, in accor
dance with the Credit and Collection Policy. The Purchaser hereby ap
points the Seller as its agent to enforce the Purchaser's rights and
interests in, to and under the Receivables, the related Contracts, the
Related Security and the Collections with respect thereto. The Seller
shall hold in trust for the Purchaser, in accordance with its inter
ests, all Records which evidence or relate to the Receivables, the
related Contracts, Related Security, Collections and proceeds with re
spect thereto. Notwithstanding anything to the contrary contained here
in, from and after the occurrence of a Termination Event (as defined in
the Transfer Agreement) or a Collection Agent default under the Trans
fer Agreement, the Company shall have the absolute and unlimited right
to terminate the Seller's servicing activities described in this Sec
tion 2.2. In consideration of the foregoing, the Purchaser agrees to
pay the Seller a servicing fee of 0.75% per annum on the aggregate Out
standing Balance of Receivables sold, payable monthly, for its perfor
mance of the duties and obligations described in this Section 2.2;
provided that any such monthly payment shall be reduced by any amounts
payable in such month by the Company to the Seller, in its capacity as
Collection Agent pursuant to the Transfer Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
(FOR CONSISTENCY PURPOSES)
ARTICLE III
CONSIDERATION AND PAYMENT; RECEIVABLES
SECTION 3.1. Purchase Price. The Purchase Price for the
Receivables and related property conveyed to the Purchaser by the
Seller under this Agreement shall be a dollar amount equal to (a) for
Receivables transferred by Seller on the date of the Initial Closing
Date, the product of (i) the aggregate Outstanding Balance of all
Receivables as of the Initial Closing Date, and (ii) one minus the then
applicable Purchase Discount, and (b) for Receivables transferred by
the Seller on any date thereafter, the product of (i) the aggregate Out
standing Balance of the Receivables sold on such date and (ii) one
minus the Purchase Discount applicable on the Purchase Date.
SECTION 3.2. Payment of Purchase Price. (a) The Purchase
Price for the Receivables sold on the Closing Date shall be paid (i) by
payment of $49,300,000 in immediately available funds, (ii) through an
advance under the Subordinated Note (such advance and any advance
thereunder as contemplated by Section 3.2(b), each an "Advance") in the
amount of $19,052,535.46 and (iii) the balance of the Purchase Price
shall be deemed paid as a contribution to the capital of the Purchaser
by the Seller of Receivables.
(b) The Purchase Price for the Receivables sold by the
Seller on any date after the date hereof (each, a "Purchase Date")
shall be paid either (i) in cash or (ii) if Purchaser does not have
sufficient cash to pay the Purchase Price, by means of (A) an Advance
under the Subordinated Note or (B) with the consent of the Seller, capi
tal contributed by the Seller to the Purchaser in the form of a con
tribution of the additional Receivables or contribution of cash in the
requisite amount or (iii) with the consent of the Seller, any combina
tion of the foregoing. Any cash contributions pursuant to the
immediately preceding sentence may be paid by a reduction in the Pur
chase Price to be paid to the Seller on such date. In the event the
Purchaser does not have sufficient cash to pay the Purchase Price due
on any Purchase Date and the Seller is not willing to consent to the
payment of such insufficiency by means of a capital contribution, such
insufficiency shall be evidenced by the making of an Advance on such
Purchase Date in an original principal amount equal to such cash short
fall owed to the Seller, provided, however that no Advance shall be
made if immediately thereafter the Net Worth of the Purchaser would be
less than 10% of the Outstanding Balance of all Eligible Receivables as
most recently calculated by the Collection Agent at such time. All Ad
vances made by the Seller to the Purchaser shall be evidenced by a
single subordinated note, duly executed on behalf of the Purchaser, in
substantially the form of Exhibit B annexed hereto, delivered and
payable to the Seller in a principal amount equal to $50,000,000 (the
"Subordinated Note"). The Seller is hereby authorized by the Purchaser
to endorse on the schedule attached to the Subordinated Note (or a
continuation of such schedule attached thereto and made a part thereof)
an appropriate notation evidencing the date and amount of each Advance,
as well as the date and amount of each payment with respect thereto;
provided, however, that the failure of any Person to make such a
notation shall not affect any obligations of the Purchaser thereunder.
Any such notation shall be conclusive and binding as to the date and
amount of such Advance, or payment of principal or interest thereon,
absent manifest error.
(c) The terms and conditions of the Subordinated Note and
all Advances thereunder shall be as follows:
(i) Repayment of Advances. All amounts paid by the
Purchaser with respect to the Advances shall be allocated first to the
repayment of accrued interest until all such interest is paid, and then
to the outstanding principal amount of the Advances. Subject to the
provisions of this Agreement, the Purchaser may borrow, repay and
reborrow Advances on and after the date hereof and prior to the
termination of this Agreement, subject to the terms, provisions and
limitations set forth herein.
(ii) Interest. The Subordinated Note shall bear
interest from its date on the outstanding principal balance thereof at
a rate per annum equal to one month LIBOR plus one and one-quarter
(1.25%) percent as published in the Money Rates Section of The Wall
Street Journal. Interest on each Advance shall be computed based on
the number of days elapsed in a year of 360 days and shall be payable
monthly.
(iii) Sole and Exclusive Remedy/Subordination. The
Purchaser shall be obligated to repay Advances to the Seller only to
the extent of funds available to the Purchaser after making any
required payments to the Company under the Transfer Agreement and, to
the extent that such payments are insufficient to pay all amounts owing
to the Seller under the Subordinated Note, the Seller shall not be
entitled to enforce any claim against the Purchaser for payment of such
amounts unless and until such date following the Termination Date when
the Net Investment has been reduced to zero. The Subordinated Note
shall be fully subordinated to any rights of the Company, and its per
mitted assigns pursuant to the Transfer Agreement, and shall not evi
dence any rights in the Receivables.
(iv) Offsets, etc. The Purchaser may offset any amount
due and owing by the Seller against any amount due and owing by Pur
chaser to the Seller under the terms of the Subordinated Note.
SECTION 3.3. Daily and Monthly Reports. (a) On
each Determination Date, the Seller shall deliver to the Purchaser a
report covering the preceding Collection Period, substantially in the
form of the Investor Report attached as Exhibit E to the Transfer Agree
ment, showing (i) the aggregate Purchase Price of Receivables acquired
or generated by the Seller in the preceding Collection Period and (ii)
the aggregate Outstanding Balance of such Receivables that are Eligible
Receivables as of the last day of such preceding Collection Period.
(b) The Seller will provide to the Purchaser on each Busi
ness Day a report of daily sales and a report of daily cash receipts.
Prior to the fifteenth day of each month, the Seller will provide to
the Purchaser a report which reconciles Receivables purchased by the
Purchaser during the preceding calendar month and cash payments made by
the Purchaser to the Seller during such month. If, as a result of the
foregoing reconciliation, it is discovered that the Seller retained
Collections on any day which it was not otherwise entitled to retain
(whether as Purchase Price for Receivables, repayments of principal or
payments of interest on the Subordinated Note, servicing compensation,
returns of capital or otherwise), the Seller shall pay interest to the
Purchaser on the average daily amount of the excess funds so retained
by the Seller during the prior month. Such interest shall be payable
on the second Business Day following receipt of the reconciliation
report and shall accrue at an interest rate equal to that then payable
by the Purchaser under the Subordinated Note. Prior to the Termination
Date, unless Seller has received notice from the Company that the
Purchaser is in default of its payment obligations under the Transfer
Agreement, the Seller's interest obligation may be paid by a reduction
in the Purchase Price otherwise paid by the Purchaser on such date or
by a reduction in amounts otherwise owed by the Purchaser under the
Subordinated Note.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. Seller's Representations and Warranties. The
Seller represents and warrants to the Purchaser as of the Closing Date
and shall be deemed to represent and warrant as of the date of the
creation of any sale of any interest in Receivables to the Purchaser
pursuant to this Agreement that:
(a) Corporate Existence and Power. The Seller is a general
partnership formed and validly existing under the laws of the State of
Delaware and has all power and all material governmental licenses,
authorizations, consents and approvals required to carry on its
business in each jurisdiction in which its business is now conducted
where the failure to have such governmental licenses, authorizations,
consents and approvals would have a material adverse effect on (i) the
Seller's business or properties, (ii) the Seller's ability to perform
its obligations hereunder or (iii) the Purchaser's interest in the
Receivables.
(b) Partnership and Governmental Authorization; Contraven
tion. The execution, delivery and performance by the Seller of this
Agreement are within the Seller's partnership powers, have been duly
authorized by all necessary partnership action, require no action by or
in respect of, or filing with, any Official Body or official thereof
(except for the filing of UCC financing statements as required by this
Agreement), and do not contravene, or constitute a default under, any
provision of applicable law, rule or regulation or of the partnership
agreement of the Seller or of any agreement, judgment, injunction,
order, writ, decree or other instrument binding upon the Seller or
result in the creation or imposition of any Adverse Claim on the assets
of the Seller or any of its Subsidiaries (except those created by this
Agreement).
(c) Binding Effect. This Agreement will constitute the
legal, valid and binding obligation of the Seller, enforceable against
the Seller in accordance with its terms, subject to applicable bank
ruptcy, insolvency, moratorium or other similar laws affecting the
rights of creditors generally.
(d) Perfection. Immediately preceding the sale of the Re
ceivables and related property pursuant to this Agreement, the Seller
was the owner of all of the Receivables, free and clear of all Adverse
Claims. On or prior to the date of each sale of Receivables pursuant
to this Agreement, all financing statements and other documents re
quired to be recorded or filed in order to perfect and protect the
ownership interest of the Purchaser in and to the Receivables against
all creditors of and purchasers from the Seller will have been duly
filed in each filing office necessary for such purpose and all filing
fees and taxes, if any, payable in connection with such filings shall
have been paid in full.
(e) Accuracy of Information. To the best of its knowledge,
all information heretofore furnished by the Seller to the Purchaser,
the Administrative Agent or the Company for purposes of or in connec
tion with this Agreement or any transaction contemplated hereby is, and
all such information hereafter furnished by the Seller to the Purchas
er, the Administrative Agent and the Company will be, true and accurate
in every material respect, on the date such information is stated or
certified.
(f) Tax Status. The Seller has filed all material tax re
turns (federal, state and local) required to be filed and has paid or
made adequate provision for the payment of all taxes, assessments and
other governmental charges on or before the date such taxes were due,
taking into account any extension of such due date.
(g) Action, Suits. Except as set forth in Exhibit H-2 of
the Transfer Agreement, there are no actions, suits or proceedings
pending or, to the knowledge of the Seller, probable of assertion,
against the Seller or any Affiliate of the Seller or their respective
properties, in or before any court, arbitrator or other body, which
question the validity of the transactions contemplated hereby or which,
individually or in the aggregate, could be reasonably expected to have
a material adverse effect of the Seller's ability to perform its obliga
tions under this Agreement.
(h) Place of Business. The principal place of business and
chief executive office of the Seller is located at 2345 Waukegan Road,
Suite E-200, Bannockburn, IL 60015, and the offices where the Seller
keeps all its Records, are located at the address(es) described on
Exhibit C hereto or such other locations notified to the Purchaser in
accordance with this Agreement in jurisdictions where all action re
quired by the terms of this Agreement has been taken and completed.
(i) Good Title. Upon the sale of the Receivables and relat
ed property to the Purchaser pursuant to this Agreement, assuming that
the Purchaser takes all action required under this Agreement, the Pur
chaser shall acquire a valid and perfected first priority ownership
interest in such Receivables and Related Security, which interest, to
the extent such interest can be created under Article 9 of the UCC and
perfected by the filing of financing statements, constitutes a valid
and perfected first priority security interest in each Receivable (and
in the Related Security, Collections and Proceeds with respect thereto)
that exists on the date of this Agreement and in each Receivable there
after owned by the Seller and in the Related Security, Collections and
Proceeds with respect thereto until the Termination Date in each case
free and clear of any Adverse Claim.
(j) Tradenames, Etc. As of the date hereof: (i) the
Seller's chief executive office is located at the address for notices
set forth in Section 9.3; (ii) the Seller has only the subsidiaries and
divisions listed on Exhibit D hereto; and (iii) the Seller has, within
the last five (5) years, operated only under the tradenames identified
in Exhibit D hereto, and, within the last five (5) years, has not
changed its name, merged with or into or consolidated with any other
corporation or been the subject of any proceeding under Title 11,
United States Code (Bankruptcy), except as disclosed in Exhibit D
hereto.
(k) Nature of Receivables. Each Receivable (x) represented
by the Seller to be an Eligible Receivable or (y) included in the
calculation of the Net Receivables Balance, in fact satisfies at such
time the definition of "Eligible Receivable" set forth in the Transfer
Agreement and is an "eligible asset" as defined in Rule 3a-7 under the
Investment Company Act of 1940, as amended.
(l) Amount of Receivables. As of the Cut-Off Date, the
aggregate Outstanding Balance of the Receivables in existence was at
least $77,556,653.71.
(m) Credit and Collection Policy. Since February 20, 1997,
there have been no material changes in the Credit and Collection
Policy.
(n) Collections and Servicing. Since February 20, 1997,
there has been no material adverse change in the ability of the Seller
to service and collect the Receivables.
(o) Not an Investment Company. The Seller is not, and is
not controlled by, an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, or is exempt from all provi
sions of such Act.
(p) ERISA. The Seller is in compliance in all material
respects with ERISA and no lien in favor of the Pension Benefit
Guaranty Corporation on any of the Receivables shall exist.
(q) Lock-Box Accounts. The names and addresses of all the
Lock-Box Banks, together with the account numbers of the Lock-Box
Accounts at such Lock-Box Banks, are specified in Exhibit C to the
Transfer Agreement (or at such other Lock-Box Banks and/or with such
other Lock-Box Accounts as have been notified to the Administrative
Agent and for which Lock-Box Agreements have been executed in accor
dance with Section 2.8(b) of the Transfer Agreement and delivered to
the Collateral Agent). All Obligors have been instructed to make pay
ment to a Lock-Box Account and only Collections are deposited into the
Lock-Box Accounts.
(r) Bulk Sales. No transaction contemplated by this
Agreement requires compliance with any bulk sales act or similar law.
(s) Preference; Voidability. The Seller warrants that the
conveyance of the applicable Receivables and Collections and Related
Security to the Purchaser, and each such conveyance, shall not have
been made for or on account of an antecedent debt owed by the Seller to
the Purchaser and no such transfer is or may be voidable under any
Section of the Bankruptcy Reform Act of 1978 (11 U.S.C. 101 et
seq.), as amended.
(t) Use of Proceeds. No proceeds of any purchase hereunder
will be used by the Seller to acquire any security in any transaction
which is subject to Section 13 or 14 of the Securities and Exchange Act
of 1934, as amended;
SECTION 4.2. Reaffirmation of Representations and Warranties
by the Seller; Notice of Breach. On each sale date, the Seller, by ac
cepting the proceeds of such sale, shall be deemed to have certified
that all representations and warranties described in Section 4.1 are
true and correct on and as of such day as though made on and as of such
day. The representations and warranties set forth in Section 4.1 shall
survive the conveyance of the Receivables to the Purchaser, and termina
tion of the rights and obligations of the Purchaser and the Seller
under this Agreement. Upon discovery by the Purchaser or the Seller of
a breach of any of the foregoing representations and warranties, the
party discovering such breach shall give prompt written notice to the
other within three Business Days of such discovery.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
ARTICLE V
COVENANTS OF THE SELLER
SECTION 5.1. Covenants of the Seller. The Seller hereby
covenants and agrees with the Purchaser that, for so long as this Agree
ment is in effect, and until all Receivables have been sold to the
Purchaser pursuant hereto, shall have been paid in full or written-off
as uncollectible, and any amounts owed by the Seller pursuant to this
Agreement have been paid in full, unless the Purchaser otherwise
consents in writing, the Seller covenants and agrees as follows:
(a) Conduct of Business. The Seller will, and will cause
each of its Subsidiaries to, carry on and conduct its business in sub
stantially the same manner and in substantially the same fields of
enterprise as it is presently conducted and do all things necessary to
remain duly incorporated, validly existing and in good standing as a
domestic partnership in its jurisdiction of formation and will maintain
all requisite authority to conduct its business in each jurisdiction in
which its business is conducted.
(b) Compliance with Laws. The Seller will, and will cause
each of its Subsidiaries to, comply in all material respects with all
laws, rules, regulations, orders, writs, judgments, injunctions,
decrees or awards to which it or its properties may be subject.
(c) Furnishing of Information and Inspection of Records.
The Seller will furnish to the Purchaser from time to time such informa
tion with respect to the Receivables as the Purchaser may reasonably re
quest, including, without limitation, listings identifying the Obligor
and the Outstanding Balance for each Receivable. The Seller will at
any time and from time to time during regular business hours permit the
Purchaser, or its agents or representatives, (i) to examine and make
copies of and abstracts from all Records and (ii) to visit the offices
and properties of the Seller for the purpose of examining such Records,
and to discuss matters relating to Receivables or the Seller's perfor
mance hereunder with any of the officers, directors, employees or inde
pendent public accountants of the Seller having knowledge of such mat
ters.
(d) Keeping of Records and Books of Account. The Seller
will maintain a system of accounting established and administered in
accordance with generally accepted accounting principles, consistently
applied, and will maintain and implement administrative and operating
procedures (including, without limitation, an ability to recreate
records evidencing Receivables in the event of the destruction of the
originals thereof), and keep and maintain, all documents, books,
records and other information reasonably necessary or advisable for the
collection of all Receivables (including, without limitation, records
adequate to permit the daily identification of each new Receivable and
all Collections of and to permit the periodic identification of adjust
ments to each existing Receivable). The Seller will give the Purchaser
and the Administrative Agent notice of any material change in the admin
istrative and operating procedures of the Seller referred to in the
previous sentence.
(e) Performance and Compliance with Receivables and
Contracts. The Seller, at its expense, will timely and fully perform
and comply with all material provisions, covenants and other promises
required to be observed by it under the Contracts related to the Receiv
ables.
(f) Credit and Collection Policies. The Seller will comply
in all material respects with the Credit and Collection Policy in
regard to each Receivable and the related Account.
(g) Collections. The Seller shall instruct all Obligors to
cause all Collections to be deposited directly to a Lock-Box Account.
(h) Collections Received. The Seller shall hold in trust,
and deposit, immediately, but in any event not later than the close of
business on the second Business Day following its receipt thereof, to a
Lock-Box Account all Collections received from time to time by the
Seller.
(i) Sale Treatment. The Seller agrees to treat this
conveyance for all purposes (including, without limitation, tax and
financial accounting purposes) as a sale and, to the extent any such
reporting is required, shall report the transactions contemplated by
this Agreement on all relevant books, records, tax returns, financial
statements and other applicable documents as a sale of the Receivables
to the Purchaser.
(j) ERISA. The Seller shall promptly give the Purchaser
written notice upon becoming aware that the Seller or any of its
Subsidiaries is not in compliance in all material respects with ERISA
or that any ERISA lien on any of the Receivables exists.
(k) The Seller shall provide to the Purchaser all financial
statements required by Section 5.l(a)(i) of the Transfer Agreement.
SECTION 5.2. Negative Covenants of the Seller. During the
term of this Agreement, unless the Administrative Agent and the
Purchaser shall otherwise consent in writing:
(a) No Sales, Liens, Etc. Except as otherwise provided
herein, the Seller will not sell, assign (by operation of law or other
wise) or otherwise dispose of, or create or suffer to exist any Adverse
Claim upon (or the filing of any financing statement) or with respect
to, any inventory or goods, the sale of which will give rise to a Re
ceivable, or any Receivable or related Contract, or upon or with
respect to any account which concentrates in a Lock-Box Bank to which
any Collections of any Receivable are sent, or assign any right to re
ceive income in respect thereof.
(b) No Extension or Amendment of Receivables. The Seller
will not extend, amend or otherwise modify the terms of any Receivable,
or amend, modify or waive any term or condition of any Account related
thereto, except as provided in Sections 5.2 and 6.2 of the Transfer
Agreement.
(c) No Change in Business or Credit and
Collection Policy. The Seller will not make any material change in the
character of its business or in the Credit and Collection Policy, which
change would, in either case, impair the collectibility of any Receiv
able.
(d) Change in Payment Instructions to Obligors. The Seller
will not add or terminate any bank as a Lock-Box Bank or any account as
a Lock-Box Account to or from those listed in Exhibit C to the Transfer
Agreement or make any change in its instructions to Obligors regarding
payments to be made to any Lock-Box Account, unless (i) such instruc
tions are to deposit such payments to another existing Lock-Box Account
or (ii) the Administrative Agent shall have received written notice of
such addition, termination or change at least 30 days prior thereto and
the Administrative Agent shall have received a Lock-Box Agreement exe
cuted by each new Lock-Box Bank or an existing Lock-Box Bank with
respect to each new Lock-Box Account, as applicable.
(e) Deposits to Lock-Box Accounts. The Seller will not
deposit or otherwise credit, or cause or permit to be so deposited or
credited, to any Lock-Box Account cash or cash proceeds other than
Collections of Receivables.
(f) Change of Name, Etc. The Seller will not change its
name, identity or structure or its chief executive office, unless at
least 10 days prior to the effective date of any such change the Seller
delivers to the Purchaser and the Collateral Agent (i) such documents,
instruments or agreements, including, without limitation, appropriate
financing statements under the Relevant UCC, executed by the Seller
necessary to reflect such change and to continue the perfection of the
Purchaser's and any assignee's interest in the Receivables and (ii) new
or revised Lock-Box Agreements which reflect such change and enable the
Collateral Agent to exercise its rights under Section 2.8 of the Trans
fer Agreement.
(g) Separate Business. The Seller shall not: (i) fail to
maintain separate books, financial statements, accounting records and
other corporate documents from those of the Purchaser, (ii) commingle
any of its assets or the assets of any of its Affiliates with those of
the Purchaser, (iii) pay from its own assets any obligation or
indebtedness of any kind incurred by the Purchaser, (iv) directly, or
through any of its Affiliates, borrow funds or accept credit or
guaranties from the Purchaser except pursuant to this Agreement in con
nection with the purchase of the Receivables.
(h) No Mergers, Etc. The Seller will not (i) consolidate or
merge with or into any other Person, or (ii) sell, lease or transfer
all or substantially all of its assets to any other person.
SECTION 5.3. Indemnification. The Seller agrees to indem
nify, defend and hold the Purchaser harmless from and against any and
all loss, liability, damage, judgment, claim, deficiency, or expense
(including interest, penalties, reasonable attorneys' fees and amounts
paid in settlement) to which the Purchaser or any assignee thereof may
become subject insofar as such loss, liability, damage, judgment,
claim, deficiency, or expense arises out of or is based upon a breach
by the Seller of its representations, warranties and covenants con
tained herein, or any information certified in any schedule or
certificate delivered by the Seller hereunder, being untrue in any
material respect at any time. The obligations of the Seller under this
Section 5.3 shall be considered to have been relied upon by the
Purchaser and the Company and shall survive the execution, delivery,
performance and termination of this Agreement, regardless of any inves
tigation made by the Purchaser, the Company or the Administrative Agent
or on behalf of any of them.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
ARTICLE VI
REPURCHASE OBLIGATION
SECTION 6.1. Mandatory Repurchase.
(a) Breach of Warranty. If on any day any Receivable which
has been sold by the Seller hereunder and which has been reported by
the Seller as an Eligible Receivable, shall fail to meet the conditions
set forth in the definition of "Eligible Receivable" (except to the
extent such conditions expressly relate to an earlier date or such
failure relates to the Obligor becoming subject to an Event of
Bankruptcy from and after the date of sale) or for which any representa
tion or warranty made herein in respect of such Receivable shall no
longer be true, the Seller shall be deemed to have received on such day
a Collection of such Receivable in full and shall on such day pay to
the Purchaser an amount equal to the aggregate Outstanding Balance of
such Receivable; provided that, prior to the Termination Date, such
amount may be paid by a reduction in the Purchase Price otherwise paid
to the Seller on the next occurring Purchase Date, unless the Seller
has received notice from the Company that the Purchaser is required to
make a payment in respect of such breach pursuant to the Transfer Agree
ment.
(b) Reconveyance Under Certain Circumstances. The Seller
agrees that, with respect to any Receivable sold hereunder, in the
event of a breach of any of the representations and warranties set
forth in Sections 4.1(d), 4.1(k) or 4.1(i), the Seller shall accept the
reconveyance of such Receivable upon receipt by the Seller of notice
given in writing by the Purchaser and the Seller's failure to cure such
breach within three (3) Business Days of such notice. In the event of
a reconveyance under this Section 6.1(b), the Seller shall pay to the
Purchaser in immediately available funds on such third day an amount
equal to the Outstanding Balance of any such Receivable; provided that,
prior to the Termination Date, such amount may be paid by a reduction
in the Purchase Price paid to the Seller on the next occurring Purchase
Date, unless the Seller has received notice from the Company that the
Purchaser is required to make a payment in respect of such breach pursu
ant to the Transfer Agreement.
SECTION 6.2. Dilutions, Etc. The Seller agrees that if on
any day the Outstanding Balance of a Receivable sold by the Seller here
under is either (x) reduced as a result of any defective, rejected or
returned merchandise or services, any discount, credit, rebate,
dispute, warranty claim, repossessed or returned goods, chargeback,
allowance or any billing adjustment, or (y) reduced or canceled as a
result of a setoff or offset in respect of any claim by any Person
(whether such claim arises out of the same or a related transaction or
an unrelated transaction) then the Seller shall be deemed to have re
ceived on such day a collection of such Receivable in the amount of
such reduction, cancellation or payment made by the Obligor and shall
on such day pay to the Purchaser an amount equal to such reduction or
cancellation; provided that, prior to the Termination Date, such amount
may be paid by a reduction in the Purchase Price paid to the Seller on
the next occurring Purchase Date, unless the Seller has received notice
from the Company that the Purchaser is required to make a payment in re
spect of such breach pursuant to the Transfer Agreement.
SECTION 6.3 Repurchases of Phos-Chem Receivables. If, on
any day, any Receivable originated by Phosphate Chemical Export Asso
ciation, Inc. becomes a Delinquent Receivable or Defaulted Receivable,
then the Seller shall, within two (2) Business Days thereafter,
repurchase each such Receivable by paying to the Purchaser in
immediately available funds on such second Business Day an amount equal
to the product of (i) the Outstanding Balance of each such Receivable
times (ii) one minus the Purchase Discount then in effect or, if less,
the amount owed by the Purchaser to the Company under Section 2.9(d) of
the Transfer Agreement.
SECTION 6.4 No Recourse. Except as otherwise provided in
this Article VI, the Purchaser's purchase and the Seller's sale,
assignment, transfer and conveyance of the Receivables under this Agree
ment shall be without recourse to the Seller.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
ARTICLE VII
CONDITIONS PRECEDENT
SECTION 7.1. Conditions to the Purchaser's Obligations
Regarding Receivables. The obligations of the Purchaser to purchase
the Receivables on the Closing date and any Purchase Date shall be
subject to the satisfaction of the following conditions:
(a) All representations and warranties of the Seller con
tained in this Agreement shall be true and correct on the Closing Date
and on each Purchase Date thereafter with the same effect as though
such representations and warranties had been made on such date;
(b) All information concerning the Receivables provided to
the Purchaser shall be true and correct in all material respects as of
the Closing Date, in the case of any Receivables existing on the Clos
ing Date, or the Purchase Date, in the case of any Receivables created
after the Closing Date;
(c) The Seller shall have substantially performed all other
obligations required to be performed by the provisions of this Agree
ment;
(d) The Seller shall have filed or caused to be filed the fi
nancing statement(s) required to be filed pursuant to Section 2.1(b);
(e) All partnership and legal proceedings and all instru
ments in connection with the transactions contemplated by this
Agreement shall be satisfactory in form and substance to the Purchaser,
and the Purchaser shall have received from the Seller copies of all
documents (including, without limitation, records of partnership pro
ceedings) relevant to the transactions herein contemplated as the
Purchaser may reasonably have requested; and
(f) On the Closing Date, the Seller shall deliver to the
Purchaser and the Administrative Agent a Purchaser Certificate as of
the Cut-Off Date.
ARTICLE VIII
TERM AND TERMINATION
SECTION 8.1. Term. This Agreement shall commence as of the
date of execution and delivery hereof and shall continue in full force
and effect until the date following the earliest of (i) the date desig
nated by the Purchaser or the Seller as the termination date at any
time following thirty (30) day's written notice to the other (with a
copy thereof to the Administrative Agent), (ii) the occurrence of the
"Termination Date" under the Transfer Agreement, (iii) upon the occur
rence of an Event of Bankruptcy with respect to either the Purchaser or
the Seller, (iv) the close of business on the third Business Day
following a conveyance of Receivables to the Purchaser for which the
Purchaser does not pay the Purchase Price in accordance with the
provisions hereof, or (v) the date on which either the Purchaser or the
Seller becomes unable for any reason to purchase or re-purchase any
Receivable in accordance with the provisions of this Agreement or
defaults on its obligations hereunder, which default continues
unremedied for more than thirty (30) days after written notice (any
such date being a "Termination Date"); provided, however, that the
termination of this Agreement pursuant to this Section 8.1 hereof shall
not discharge any Person from any obligations incurred prior to such
termination, including, without limitation, any obligations to make any
payments with respect to the interest of the Purchaser in any Receiv
able sold prior to such termination.
SECTION 8.2. Effect of Termination. Following the
termination of this Agreement pursuant to Section 8.1, the Seller shall
not sell, and the Purchaser shall not purchase, any Receivables. No
termination or rejection or failure to assume the executory obligations
of this Agreement in any Event of Bankruptcy with respect to the Seller
or the Purchaser shall be deemed to impair or affect the obligations
pertaining to any executed sale or executed obligations, including,
without limitation, pre-termination breaches of representations and
warranties by the Seller or the Purchaser. Without limiting the forego
ing, prior to termination, the failure of the Seller to deliver comput
er records of Receivables or any reports regarding the Receivables
shall not render such transfer or obligation executory, nor shall the
continued duties of the parties pursuant to Article V or Section 9.1 of
this Agreement render an executed sale executory.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
ARTICLE IX
MISCELLANEOUS PROVISIONS
SECTION 9.1. Amendment. This Agreement and the rights and
obligations of the parties hereunder may not be changed orally, but
only by an instrument in writing signed by the Purchaser and the Seller
and consented to in writing by the Administrative Agent. Any reconvey
ance executed in accordance with the provisions hereof shall not be con
sidered amendments to this Agreement.
SECTION 9.2. GOVERNING LAW; Submission to Jurisdiction.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK EXCEPT THAT THE
PERFECTION AND THE EFFECT OF PERFECTION OR NON-PERFECTION OF ANY
SECURITY INTEREST CREATED HEREUNDER SHALL BE GOVERNED BY THE LAWS OF
THE STATE OF ILLINOIS.
(b) The parties hereto hereby submit to the nonexclu
sive jurisdiction of the United States District Court for the Southern
District of New York and of any New York state court sitting in The
City of New York for purposes of all legal proceedings arising out of
or relating to this Agreement or the transactions contemplated hereby.
Each party hereto hereby irrevocably waives, to the fullest extent it
may effectively do so, any objection which it may now or hereafter have
to the laying of the venue of any such proceeding brought in such a
court and any claim that any such proceeding brought in such a court
has been brought in an inconvenient forum. Nothing in this Section 9.2
shall affect the right of the Purchaser to bring any other action or
proceeding against the Seller or its property in the courts of other
jurisdictions.
SECTION 9.3. Notices. Except as provided below, all
communications and notices provided for hereunder shall be in writing
(including telecopy or electronic facsimile transmission or similar
writing) and shall be given to the other party at its address or
telecopy number set forth below or at such other address or telecopy
number as such party may hereafter specify for the purposes of notice
to such party. Each such notice or other communication shall be effec
tive (i) if given by telecopy, when such telecopy is transmitted to the
telecopy number specified in this Section 9.3 and confirmation is
received, (ii) if given by mail three Business Days following such
posting, postage prepaid, U.S. certified or registered, (iii) if given
by overnight courier, one Business Day after deposit thereof with a
national overnight courier service, or (iv) if given by any other
means, when received at the address specified in this Section 9.3.
(a) in the case of the Purchaser:
IMC-AGRICO RECEIVABLES COMPANY L.L.C.
2345 Waukegan Road
Suite E-200
Bannockburn, IL 60015
Telephone:
Telecopy: (847) 607-3529
Attention: Vice-President Finance
Payment Information:
ABA 071000152
Account 83666
Reference IMC-Agrico Receivables Company
L.L.C.
with a copy to:
NationsBank, N.A.
NationsBank Corporate Center
100 North Tryon Street
NC1-007-10-07
Charlotte, NC 28255
Attention: Michelle M. Heath
Structured Finance
Telephone: (704) 386-7922
Telecopy: (704) 388-9169
(b) in the case of the Seller:
IMC-AGRICO COMPANY
2345 Waukegan Road
Suite E-200
Bannockburn, IL 60015
Telephone: (847) 607-3000
Telecopy: (847) 607-3529
Attn: Vice President-Finance
Payment Information:
Nationsbank of North Carolina, N.A.
ABA 071000152
Account 65595
Reference IMC-Agrico Company
or, as to each party, at such other address as shall be designated by
such party in a written notice to each other party.
SECTION 9.4. Severability of Provisions. If any one or more
of the covenants, agreements, provisions or terms of this Agreement or
any other Transaction Document shall for any reason whatsoever be held
invalid, then such covenants, agreements, provisions, or terms shall be
deemed severable from the remaining covenants, agreements, provisions,
or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement.
SECTION 9.5. Assignment. This Agreement may not be assigned
by the parties hereto, except that the Purchaser may assign its rights
hereunder pursuant to the Transfer Agreement to the Company, and that
the Company may assign any or all of its rights to any Liquidity Provid
er. The Purchaser hereby notifies (and the Seller hereby acknowledges
that) the Purchaser, pursuant to the Transfer Agreement, has assigned
its rights hereunder to the Company. All rights of the Purchaser here
under may be exercised by the Company, its designees or assignees, to
the extent of their respective rights pursuant to such assignments.
SECTION 9.6. Further Assurances. The Purchaser and the
Seller agree to do and perform, from time to time, any and all acts and
to execute any and all further instruments required or reasonably
requested by the other party more fully to effect the purposes of this
Agreement, including, without limitation, the execution of any
financing statements or continuation statements or equivalent documents
relating to the Receivables for filing under the provisions of the
Relevant UCC or other laws of any applicable jurisdiction.
SECTION 9.7. No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Purchaser, the
Seller, the Company or the Administrative Agent, any right, remedy,
power or privilege hereunder, shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The
rights, remedies, powers and privileges herein provided are cumulative
and not exhaustive of any rights, remedies, powers and privilege pro
vided by law.
SECTION 9.8. Counterparts. This Agreement may be executed
in two or more counterparts including telecopy transmission thereof
(and by different parties on separate counterparts), each of which
shall be an original, but all of which together shall constitute one
and the same instrument.
SECTION 9.9. Binding Effect; Third-Party Beneficiaries.
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns.
The Company and any Liquidity Provider is intended by the parties
hereto to be a third-party beneficiary of this Agreement.
SECTION 9.10. Merger and Integration. Except as
specifically stated otherwise herein, this Agreement sets forth the
entire understanding of the parties relating to the subject matter
hereof, and all prior understandings, written or oral, are superseded
by this Agreement. This Agreement may not be modified, amended, waived
or supplemented except as provided herein.
SECTION 9.11. Headings. The headings herein are for
purposes of reference only and shall not otherwise affect the meaning
or interpretation of any provision hereof.
SECTION 9.12. Exhibits. The schedules and exhibits referred
to herein shall constitute a part of this Agreement and are incor
porated into this Agreement for all purposes.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Purchaser and the Seller each have
caused this Receivables Purchase Agreement to be duly executed by their
respective officers as of the day and year first above written.
IMC-AGRICO COMPANY
as Seller
By: IMC-AGRICO MP, INC.,
its managing partner
By:
Name:
Title:
IMC-AGRICO RECEIVABLES COMPANY L.L.C.,
as Purchaser
By: IMC-AGRICO COMPANY,
its operating manager
By: IMC-AGRICO MP, INC.
its managing partner
By:
Name:
Title:
Acknowledged and agreed as
of the date first above written:
ENTERPRISE FUNDING CORPORATION
By:_____________________________
Name:
Title:
EXHIBIT A
[FORM OF MONTHLY REPORT]
EXHIBIT B
FORM OF SUBORDINATED NOTE
__________________
_________ __, 199_
FOR VALUE RECEIVED, the undersigned, IMC-Agrico Receivables
Company, L.L.C., a Delaware limited liability company (the "Maker"),
hereby promises to pay to the order of IMC-AGRICO COMPANY (the "Pay
ee"), on _________, ____ or earlier as provided for in the Receivables
Purchase Agreement dated as of the date hereof between the Maker and
the Payee (as such agreement may from time to time be amended, supple
mented or otherwise modified and in effect, the "Receivables Purchase
Agreement"), the lesser of the principal sum of FIFTY MILLION AND
NO/100 DOLLARS ($50,000,000) or the aggregate unpaid principal amount
of all Advances to the Maker from the Payee pursuant to the terms of
the Receivables Purchase Agreement, in lawful money of the United
States of America in immediately available funds, and to pay interest
from the date thereof on the principal amount hereof from time to time
outstanding, in like funds, at said office, at the rate per annum set
forth in the Receivables Purchase Agreement and shall be payable in
arrears on the first day of each calendar month (or if any such day is
not a Business Day, on the succeeding Business Day).
The Maker hereby waives diligence, presentment, demand,
protest and notice of any kind whatsoever. The non-exercise by the
holder hereof of any of its rights hereunder in any particular instance
shall not constitute a waiver thereof in that or any subsequent
instance.
All borrowings evidenced by this Subordinated Note and all
payments and prepayments of the principal hereof and interest hereon
and the respective dates thereof shall be endorsed by the holder hereof
on the schedule attached hereto and made a part hereof, or on a
continuation thereof which shall be attached hereto and made a part
hereof, or otherwise recorded by such holder in its internal records;
provided, however, that the failure of the holder hereof to make such a
notation or any error in such a notation shall not in any manner affect
the obligation of the Maker to make payments of principal and interest
in accordance with the terms of this Subordinated Note and the
Receivables Purchase Agreement.
The Maker shall have the right to prepay and, subject to the
limitations set forth in the Receivables Purchase Agreement, reborrow
Advances made to it without penalty or premium.
This Subordinated Note is the Subordinated Note referred to
in the Receivables Purchase Agreement, which, among other things,
contains provisions for the subordination of this Subordinated Note to
the rights of certain parties under the Transfer Agreement, all upon
the terms and conditions therein specified.
This Note shall be governed by, and construed in accordance
with, the laws of the State of New York.
IMC-AGRICO RECEIVABLES COMPANY L.L.C.
By: IMC-Agrico Company,
its Operating Manager
By: IMC-Agrico MP, Inc.,
its managing general partner
By:
Name:
Title:
Advances and Payments
Amount of Payments Unpaid Principal Name of Person
Date Advance Principal/Interest Balance of Note Making Notation
______ $____________
EXHIBIT C
LOCATION OF RECORDS, PRINCIPAL PLACE OF BUSINESS, ETC.
1.
2.
EXHIBIT D
TRADENAMES, ETC.
None
<PAGE>
Exhibit 11.1
EARNINGS (CHARGE) PER SHARE
FULLY DILUTED COMPUTATION
FOR THE YEARS ENDED JUNE 30, 1997, 1996 and 1995
(IN MILLIONS EXCEPT SHARE AND PER SHARE AMOUNTS)
At June 30,
-------------------------------------
1997 1996 1995
---- ---- ----
Basis for computation of fully
diluted earnings per share:
Earnings before extraordinary
item and cumulative effect
of accounting change, as
reported $ 204.5 $ 144.3 $ 193.3
Add interest charges on
convertible debt - 7.2 7.2
Less provision for taxes - (2.8) (2.8)
---------- --------- ----------
Earnings before extraordinary
item and cumulative effect
of accounting change, as
adjusted 204.5 148.7 197.7
Extraordinary charge - debt
retirement (11.4) - (6.5)
Cumulative effect of
accounting change - - (5.9)
---------- ---------- ----------
Net earnings applicable
to common stock $ 193.1 $ 148.7 $ 185.3
========== ========== ==========
Number of shares:
Weighted average shares
outstanding 94,997,786 92,796,630 91,486,778
Conversion of convertible
subordinated notes into
common stock - 3,621,012 3,622,048
----------- ---------- ----------
Total common and common
equivalent shares assuming
full dilution 94,997,786 96,417,642 95,108,826
=========== ========== ==========
Fully diluted earnings per share:
Earnings before extraordinary
item and cumulative effect
of accounting change $ 2.15 $ 1.54 $ 2.08
Extraordinary charge - debt
retirement (.12) - (.07)
Cumulative effect of
accounting change - - (.06)
---------- ---------- ----------
Net earnings $ 2.03 $ 1.54 $ 1.95
========== ========== ==========
<PAGE>
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.
<PAGE>
EXHIBIT 12
IMC Global Inc.
Computation of Ratio of Earnings to Fixed Charges
Fiscal Year Ended June 30,
-----------------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- -------
Fixed charges:
Interest charges $ 51.1 $ 64.8 $ 70.2 $ 91.2 $ 55.6
======= ======= ======= ======= =======
Earnings:
Net earnings (loss) $ 193.1 $ 144.3 $ 180.9 $ 19.2 $(127.0)
Extraordinary charge 11.4 - 6.5 25.2 2.0
Cumulative effect of
accounting change - - 5.9 - 47.1(1)
Provision (credit) for
income taxes 117.5 94.1 115.5 34.8 (39.1)
Minority interest 155.4 191.5 130.4 55.6 -
Interest charges 51.1 64.8 70.2 91.2 55.6
------- ------- ------- ------- -------
Total earnings $ 528.5 $ 494.7 $ 509.4 $ 226.0 $ (61.4)
======= ======= ======= ======= =======
Ratio of earnings to
fixed charges $ 10.34 $ 7.63 $ 7.26 $ 2.48 $ (1.10)
======= ======= ======= ======= =======
Ratio of earnings to
fixed charges (2) $ 10.34 $ 9.16 $ 7.26 $ 2.48 $ 1.94
======= ======= ======= ======= =======
(1) Cumulative effect of SFAS No. 109, "Accounting for Income Taxes," on
July 1, 1991.
(2)The ratio of earning to fixed charges for the fiscal year ended June 30,
1996 excludes a charge of $98.6 million relating to the merger of The
Vigoro Corporation into a wholly-owned subsidiary of the Company. The
ratio of earnings to fixed charges for the fiscal year ended June 30,1993
excludes a charge of $169.1 million relating to the settlement of
litigation resulting from a May 1991 explosion at a nitroparaffins plant
in Sterlington, Louisiana.
<PAGE>
Exhibit 13.1
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of The Vigoro Corporation:
We have audited the accompanying consolidated balance sheet of The
Vigoro Corporation (a Delaware corporation) and subsidiaries as of June
30, 1995, and the consolidated statements of income, changes in
shareholders' equity and cash flows for the year then ended. These
consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audit. We did not
audit the financial statements of Central Canada Potash, Inc. which
statements reflect total assets and net sales of 20 percent and 6
percent, respectively, in 1995 of the consolidated totals. Those
statements were audited by other auditors whose report has been
furnished to us and our opinion, insofar as it relates to the amounts
included for that entity, is based solely on the report of the other
auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audits and the report of other auditors provide a reasonable
basis for our opinion.
In our opinion, based on our audits and the report of other auditors,
the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of The Vigoro
Corporation and subsidiaries as of June 30, 1995, and the results of
its operations and cash flows for the year then ended in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Arthur Andersen LLP
Chicago, Illinois
January 22, 1996
<PAGE>
EXHIBIT 21.1
SUBSIDIARIES OF THE REGISTRANT
Certain of IMC Global Inc.'s subsidiaries are listed below. These
subsidiaries are all included in the Company's consolidated financial
statements, and collectively, together with IMC Global Inc., account
for more than 90 percent of consolidated net sales, earnings (loss)
before income taxes, extraordinary items and cumulative effect of a
change in accounting principal, and total assets.
Jurisdiction of Percent
Incorporation Ownership
--------------- ----------
IMC Global Operations Inc. Delaware 100%
IMC-Agrico Company Delaware 53.5%
IMC Global Potash Holdings Inc. Delaware 100%
International Minerals & Chemical
(Canada) Global Limited Canada 100%
The Vigoro Corporation Delaware 100%
IMC AgriBusiness Inc. Delaware 100%
KCL Holdings, Inc. Delaware 100%
IMC Kalium Ltd. Delaware 100%
IMC Central Canada Potash Inc. Delaware 100%
VNH, Inc. Delaware 100%
IMC Nitrogen Company Delaware 100%
IMC Kalium Carlsbad Potash Company Delaware 100%
IMC Kalium Canada Ltd. Canada 100%
Western Ag-Minerals Company Nevada 100%
A number of subsidiaries are not shown, but even as a whole they
do not constitute a significant subsidiary.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the following
registration statements and related prospectuses filed by IMC Global
Inc. under the Securities Act of 1933 of our report dated July 23, 1997
(except Note 22, as to which the date is September 5, 1997) with
respect to the consolidated financial statements of IMC Global Inc.
included in this Annual Report (Form 10-K) for the year ended June 30,
1997.
Commission File No.
--------------------
Form S-8, No. 33-22079
Form S-8, No. 33-22080
Form S-8, No. 33-38423
Form S-8, No. 33-42074
Form S-8, No. 33-56911
Form S-8, No. 333-189
Form S-3, No. 333-04831
Form S-3, No. 333-27827
ERNST & YOUNG LLP
Ernst & Young LLP
Chicago, Illinois
September 23, 1997
Docket No. 100397
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Form 10-K of our report dated
January 22, 1996. It should be noted that we have not audited any
financial statements of the company subsequent to June 30, 1995 or
performed any audit procedures subsequent to the date of our report.
ARTHUR ANDERSEN LLP
Arthur Andersen LLP
Chicago, IL
September 23, 1997
EXHIBIT 24
POWER OF ATTORNEY
The undersigned, being a Director and/or Officer of IMC
Global Inc., a Delaware corporation (the "Company"), hereby constitutes
and appoints Robert E. Fowler, Jr., Marschall I. Smith and Rose Marie
Williams his or her true and lawful attorneys and agents, each with
full power and authority (acting alone and without the other) to
execute and deliver in the name and on behalf of the undersigned as
such Director and/or Officer, the Annual Report of the Company on Form
10-K for the fiscal year ended June 30, 1997 (the "Annual Report")
under the Securities Exchange Act of 1934, as amended, and to execute
and deliver any and all amendments to the Annual Report for filing with
the Securities and Exchange Commission; and in connection with the
foregoing, to do any and all acts and things and execute any and all
instruments which such attorneys and agents may deem necessary or
advisable to enable the Company to comply with the securities laws of
the United States. The undersigned hereby grants unto such attorney
and agents, and each of them, full power of substitution and revocation
in the premises and hereby ratifies and confirms all that such
attorneys and agents may do or cause to be done by virtue of these
presents.
Dated this 26th day of August, 1997.
______________________________
Wendell F. Bueche
POWER OF ATTORNEY
The undersigned, being a Director and/or Officer of IMC
Global Inc., a Delaware corporation (the "Company"), hereby constitutes
and appoints Robert E. Fowler, Jr., Marschall I. Smith and Rose Marie
Williams his or her true and lawful attorneys and agents, each with
full power and authority (acting alone and without the other) to
execute and deliver in the name and on behalf of the undersigned as
such Director and/or Officer, the Annual Report of the Company on Form
10-K for the fiscal year ended June 30, 1997 (the "Annual Report")
under the Securities Exchange Act of 1934, as amended, and to execute
and deliver any and all amendments to the Annual Report for filing with
the Securities and Exchange Commission; and in connection with the
foregoing, to do any and all acts and things and execute any and all
instruments which such attorneys and agents may deem necessary or
advisable to enable the Company to comply with the securities laws of
the United States. The undersigned hereby grants unto such attorney
and agents, and each of them, full power of substitution and revocation
in the premises and hereby ratifies and confirms all that such
attorneys and agents may do or cause to be done by virtue of these
presents.
Dated this 26th day of August, 1997.
______________________________
Raymond F. Bentele
POWER OF ATTORNEY
The undersigned, being a Director and/or Officer of IMC
Global Inc., a Delaware corporation (the "Company"), hereby constitutes
and appoints Robert E. Fowler, Jr., Marschall I. Smith and Rose Marie
Williams his or her true and lawful attorneys and agents, each with
full power and authority (acting alone and without the other) to
execute and deliver in the name and on behalf of the undersigned as
such Director and/or Officer, the Annual Report of the Company on Form
10-K for the fiscal year ended June 30, 1997 (the "Annual Report")
under the Securities Exchange Act of 1934, as amended, and to execute
and deliver any and all amendments to the Annual Report for filing with
the Securities and Exchange Commission; and in connection with the
foregoing, to do any and all acts and things and execute any and all
instruments which such attorneys and agents may deem necessary or
advisable to enable the Company to comply with the securities laws of
the United States. The undersigned hereby grants unto such attorney
and agents, and each of them, full power of substitution and revocation
in the premises and hereby ratifies and confirms all that such
attorneys and agents may do or cause to be done by virtue of these
presents.
Dated this 26th day of August, 1997.
______________________________
Rod F. Dammeyer
POWER OF ATTORNEY
The undersigned, being a Director and/or Officer of IMC
Global Inc., a Delaware corporation (the "Company"), hereby constitutes
and appoints Robert E. Fowler, Jr., Marschall I. Smith and Rose Marie
Williams his or her true and lawful attorneys and agents, each with
full power and authority (acting alone and without the other) to
execute and deliver in the name and on behalf of the undersigned as
such Director and/or Officer, the Annual Report of the Company on Form
10-K for the fiscal year ended June 30, 1997 (the "Annual Report")
under the Securities Exchange Act of 1934, as amended, and to execute
and deliver any and all amendments to the Annual Report for filing with
the Securities and Exchange Commission; and in connection with the
foregoing, to do any and all acts and things and execute any and all
instruments which such attorneys and agents may deem necessary or
advisable to enable the Company to comply with the securities laws of
the United States. The undersigned hereby grants unto such attorney
and agents, and each of them, full power of substitution and revocation
in the premises and hereby ratifies and confirms all that such
attorneys and agents may do or cause to be done by virtue of these
presents.
Dated this 26th day of August, 1997.
______________________________
James M. Davidson
POWER OF ATTORNEY
The undersigned, being a Director and/or Officer of IMC
Global Inc., a Delaware corporation (the "Company"), hereby constitutes
and appoints Robert E. Fowler, Jr., Marschall I. Smith and Rose Marie
Williams his or her true and lawful attorneys and agents, each with
full power and authority (acting alone and without the other) to
execute and deliver in the name and on behalf of the undersigned as
such Director and/or Officer, the Annual Report of the Company on Form
10-K for the fiscal year ended June 30, 1997 (the "Annual Report")
under the Securities Exchange Act of 1934, as amended, and to execute
and deliver any and all amendments to the Annual Report for filing with
the Securities and Exchange Commission; and in connection with the
foregoing, to do any and all acts and things and execute any and all
instruments which such attorneys and agents may deem necessary or
advisable to enable the Company to comply with the securities laws of
the United States. The undersigned hereby grants unto such attorney
and agents, and each of them, full power of substitution and revocation
in the premises and hereby ratifies and confirms all that such
attorneys and agents may do or cause to be done by virtue of these
presents.
Dated this 26th day of August, 1997.
______________________________
Robert E. Fowler, Jr.
POWER OF ATTORNEY
The undersigned, being a Director and/or Officer of IMC
Global Inc., a Delaware corporation (the "Company"), hereby constitutes
and appoints Robert E. Fowler, Jr., Marschall I. Smith and Rose Marie
Williams his or her true and lawful attorneys and agents, each with
full power and authority (acting alone and without the other) to
execute and deliver in the name and on behalf of the undersigned as
such Director and/or Officer, the Annual Report of the Company on Form
10-K for the fiscal year ended June 30, 1997 (the "Annual Report")
under the Securities Exchange Act of 1934, as amended, and to execute
and deliver any and all amendments to the Annual Report for filing with
the Securities and Exchange Commission; and in connection with the
foregoing, to do any and all acts and things and execute any and all
instruments which such attorneys and agents may deem necessary or
advisable to enable the Company to comply with the securities laws of
the United States. The undersigned hereby grants unto such attorney
and agents, and each of them, full power of substitution and revocation
in the premises and hereby ratifies and confirms all that such
attorneys and agents may do or cause to be done by virtue of these
presents.
Dated this 26th day of August, 1997.
______________________________
Harold H. MacKay
POWER OF ATTORNEY
The undersigned, being a Director and/or Officer of IMC
Global Inc., a Delaware corporation (the "Company"), hereby constitutes
and appoints Robert E. Fowler, Jr., Marschall I. Smith and Rose Marie
Williams his or her true and lawful attorneys and agents, each with
full power and authority (acting alone and without the other) to
execute and deliver in the name and on behalf of the undersigned as
such Director and/or Officer, the Annual Report of the Company on Form
10-K for the fiscal year ended June 30, 1997 (the "Annual Report")
under the Securities Exchange Act of 1934, as amended, and to execute
and deliver any and all amendments to the Annual Report for filing with
the Securities and Exchange Commission; and in connection with the
foregoing, to do any and all acts and things and execute any and all
instruments which such attorneys and agents may deem necessary or
advisable to enable the Company to comply with the securities laws of
the United States. The undersigned hereby grants unto such attorney
and agents, and each of them, full power of substitution and revocation
in the premises and hereby ratifies and confirms all that such
attorneys and agents may do or cause to be done by virtue of these
presents.
Dated this 26th day of August, 1997.
______________________________
David B. Mathis
POWER OF ATTORNEY
The undersigned, being a Director and/or Officer of IMC
Global Inc., a Delaware corporation (the "Company"), hereby constitutes
and appoints Robert E. Fowler, Jr., Marschall I. Smith and Rose Marie
Williams his or her true and lawful attorneys and agents, each with
full power and authority (acting alone and without the other) to
execute and deliver in the name and on behalf of the undersigned as
such Director and/or Officer, the Annual Report of the Company on Form
10-K for the fiscal year ended June 30, 1997 (the "Annual Report")
under the Securities Exchange Act of 1934, as amended, and to execute
and deliver any and all amendments to the Annual Report for filing with
the Securities and Exchange Commission; and in connection with the
foregoing, to do any and all acts and things and execute any and all
instruments which such attorneys and agents may deem necessary or
advisable to enable the Company to comply with the securities laws of
the United States. The undersigned hereby grants unto such attorney
and agents, and each of them, full power of substitution and revocation
in the premises and hereby ratifies and confirms all that such
attorneys and agents may do or cause to be done by virtue of these
presents.
Dated this 26th day of August, 1997.
______________________________
Thomas H. Roberts, Jr.
POWER OF ATTORNEY
The undersigned, being a Director and/or Officer of IMC
Global Inc., a Delaware corporation (the "Company"), hereby constitutes
and appoints Robert E. Fowler, Jr., Marschall I. Smith and Rose Marie
Williams his or her true and lawful attorneys and agents, each with
full power and authority (acting alone and without the other) to
execute and deliver in the name and on behalf of the undersigned as
such Director and/or Officer, the Annual Report of the Company on Form
10-K for the fiscal year ended June 30, 1997 (the "Annual Report")
under the Securities Exchange Act of 1934, as amended, and to execute
and deliver any and all amendments to the Annual Report for filing with
the Securities and Exchange Commission; and in connection with the
foregoing, to do any and all acts and things and execute any and all
instruments which such attorneys and agents may deem necessary or
advisable to enable the Company to comply with the securities laws of
the United States. The undersigned hereby grants unto such attorney
and agents, and each of them, full power of substitution and revocation
in the premises and hereby ratifies and confirms all that such
attorneys and agents may do or cause to be done by virtue of these
presents.
Dated this 26th day of August, 1997.
______________________________
Joseph P. Sullivan
POWER OF ATTORNEY
The undersigned, being a Director and/or Officer of IMC
Global Inc., a Delaware corporation (the "Company"), hereby constitutes
and appoints Robert E. Fowler, Jr., Marschall I. Smith and Rose Marie
Williams his or her true and lawful attorneys and agents, each with
full power and authority (acting alone and without the other) to
execute and deliver in the name and on behalf of the undersigned as
such Director and/or Officer, the Annual Report of the Company on Form
10-K for the fiscal year ended June 30, 1997 (the "Annual Report")
under the Securities Exchange Act of 1934, as amended, and to execute
and deliver any and all amendments to the Annual Report for filing with
the Securities and Exchange Commission; and in connection with the
foregoing, to do any and all acts and things and execute any and all
instruments which such attorneys and agents may deem necessary or
advisable to enable the Company to comply with the securities laws of
the United States. The undersigned hereby grants unto such attorney
and agents, and each of them, full power of substitution and revocation
in the premises and hereby ratifies and confirms all that such
attorneys and agents may do or cause to be done by virtue of these
presents.
Dated this 26th day of August, 1997.
______________________________
Richard L. Thomas
POWER OF ATTORNEY
The undersigned, being a Director and/or Officer of IMC
Global Inc., a Delaware corporation (the "Company"), hereby constitutes
and appoints Robert E. Fowler, Jr., Marschall I. Smith and Rose Marie
Williams his or her true and lawful attorneys and agents, each with
full power and authority (acting alone and without the other) to
execute and deliver in the name and on behalf of the undersigned as
such Director and/or Officer, the Annual Report of the Company on Form
10-K for the fiscal year ended June 30, 1997 (the "Annual Report")
under the Securities Exchange Act of 1934, as amended, and to execute
and deliver any and all amendments to the Annual Report for filing with
the Securities and Exchange Commission; and in connection with the
foregoing, to do any and all acts and things and execute any and all
instruments which such attorneys and agents may deem necessary or
advisable to enable the Company to comply with the securities laws of
the United States. The undersigned hereby grants unto such attorney
and agents, and each of them, full power of substitution and revocation
in the premises and hereby ratifies and confirms all that such
attorneys and agents may do or cause to be done by virtue of these
presents.
Dated this 26th day of August, 1997.
______________________________
Billie B. Turner
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1000
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<CASH> 20,600
<SECURITIES> 22,600
<RECEIVABLES> 369,300
<ALLOWANCES> 6,800
<INVENTORY> 534,200
<CURRENT-ASSETS> 1,014,400
<PP&E> 4,337,200
<DEPRECIATION> 1,928,000
<TOTAL-ASSETS> 3,611,600
<CURRENT-LIABILITIES> 421,800
<BONDS> 694,800
<COMMON> 101,800
0
0
<OTHER-SE> 1,238,100
<TOTAL-LIABILITY-AND-EQUITY> 3,611,600
<SALES> 2,982,000
<TOTAL-REVENUES> 2,982,000
<CGS> 2,212,000
<TOTAL-COSTS> 2,459,200
<OTHER-EXPENSES> 149,700
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 51,100
<INCOME-PRETAX> 322,000
<INCOME-TAX> 117,500
<INCOME-CONTINUING> 204,500
<DISCONTINUED> 0
<EXTRAORDINARY> (11,400)
<CHANGES> 0
<NET-INCOME> 193,100
<EPS-PRIMARY> 2.03
<EPS-DILUTED> 2.03
</TABLE>
