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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the year ended December 31, 1999
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 60062
Northbrook, Illinois (Zip Code)
(Address of principal executive
offices)
Registrant's telephone number, including area code: (847) 272-9200
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
- ------------------- -----------------------------------------
Common Stock, par value $1 per share New York and Chicago Stock Exchanges
Preferred Share Purchase Rights New York and Chicago Stock Exchanges
Warrants to Purchase Common Stock New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
------- -------
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
State the aggregate market value of the voting stock held by non-affiliates
of the Registrant: $1,820,529,072 as of February 15, 2000. Market value
is based on the February 15, 2000 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:
114,477,296 shares, excluding 10,686,276 treasury shares as of March 15,
2000.
DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of the Registrant's Annual Report to Shareholders for the year
ended December 31, 1999 (Parts I, Item 1 and Part II, Items 6, 7, 7a
and 8)
2. Portions of the Registrant's definitive proxy statement dated March 17,
2000 issued in conjunction with the Annual Meeting of Stockholders
(Part III, Items 10, 11, 12 and 13)
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1999 FORM 10-K CONTENTS
Item Page
- ----------------------------------------------------------------------
Part I:
1. Business
Company Profile 1
Business Unit Information 2
Factors Affecting Demand 12
Other Matters 12
Executive Officers of the Registrant 13
2. Properties 14
3. Legal Proceedings 15
4. Submission of Matters to a Vote of Security Holders 16
Part II:
5. Market for the Registrant's Common Stock and Related 16
Stockholder Matters
6. Selected Financial Data 17
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 17
7a. Quantitative and Qualitative Disclosures about 17
Market Risk
8. Financial Statements and Supplementary Data 17
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 17
Part III:
10. Directors and Executive Officers of the Registrant 17
11. Executive Compensation 17
12. Security Ownership of Certain Beneficial Owners and 17
Management
13. Certain Relationships and Related Transactions 18
Part IV:
14. Exhibits, Financial Statement Schedules and Reports 18
on Form 8-K
Signatures 24
PART I.
Item 1.Business.(1)
COMPANY PROFILE
IMC Global Inc. (Company or IMC) is one of the world's leading
producers and distributors of crop nutrients to the international
agricultural community and one of the foremost manufacturers and
distributors of animal feed ingredients to the worldwide industry.
The Company mines, processes and distributes potash in the United
States and Canada and is the majority 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 also mines, processes and distributes salt products in
the United States, Canada and Europe to the following markets: water
conditioning, agricultural, industrial, consumer deicing and food
and road deicing salt. The Company's current operational structure
consists of four continuing business units corresponding to its
major product lines, as follows: IMC Phosphates (Phosphates), IMC
Potash (Potash), IMC Salt (Salt) and IMC Feed Ingredients (Feed
Ingredients). As a result of the planned divestiture of IMC
Chemicals (Chemicals), all financial information for Chemicals is
reflected as discontinued operations. In early 2000, the Company
decided to explore strategic options, including divestiture or a
joint venture, for the Salt business unit and a production facility
located in Ogden, Utah.
IMC and Phosphate Resource Partners Limited Partnership (PLP), have
a 56.5 percent and 43.5 percent, respectively, direct economic
interest in IMC-Agrico over the term of the joint venture. IMC owns
51.6 percent of the outstanding PLP limited partnership units. As a
result, the Company's total interest in IMC-Agrico is approximately
78.9 percent.
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. Nitrogen is an essential element for most
organic compounds in plants. These elements occur naturally in the
soil but need to be replaced as crops remove them from the soil.
Currently, no viable substitutes exist to replace the role of
phosphate, potash and nitrogen in the development and maintenance of
high-yield crops. Salt serves several high volume applications where
there is either no substitute or no economical substitute. It is an
essential nutrient for animal health and is used universally as a
food seasoning, as a food preservative and as an additive to
livestock feed products. It also is the primary material used to
provide safe highways, walkways and parking lots. It is used
extensively in manufacturing many chemicals where it is the most
economical source of both sodium and chlorine. Another large volume
application is for both industrial and consumer water conditioning
where it removes other minerals and hence "softens" or conditions
water.
The Company believes that it is one of the most efficient North
American producers of concentrated phosphates, potash, animal feed
ingredients and salt. IMC's business strategy focuses on
maintaining and growing its leading position as a crop nutrient and
animal feed producer and distributor through extensive customer
service, efficient distribution and transportation as well as
supplying products worldwide at competitive prices, largely by
capitalizing on economies of scale and state-of-the-art technology
to reduce costs.
For additional information on the Company's business structure, see
Note 4, "Discontinued Operations," Note 5, "Other Divestitures,"
Note 6, "Acquisitions" and Note 18, "Subsequent Events," of Notes to
Consolidated Financial Statements included in Part II, Item 8,
"Financial Statements and Supplementary Data," of this Annual Report
on Form 10-K, which is incorporated herein by reference.
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, competitive and weather
conditions as well as technological developments.
In 1999, the Company implemented a Company-wide rightsizing program
(Rightsizing Program) which was designed to simplify and focus the
core businesses through a facilities optimization and asset
rightsizing program. In 1998, the Company initiated a plan to
improve profitability (Project Profit). The initiative of Project
Profit consisted primarily of a restructuring of operations at the
Phosphates business unit.
For additional information on the Rightsizing Program and Project
Profit, see Part II, Item 7, "Management's Discussion and Analysis
of Financial Condition and Results of Operations," of this Annual
Report on Form 10-K, which is incorporated herein by reference.
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 Financial Condition and Results of
Operations," and Note 17, "Operating Segments," of Notes to
Consolidated Financial Statements included in Part II, Item 8, of
this Annual Report on Form 10-K, which is incorporated herein by
reference.
Phosphates
----------
Net sales for Phosphates were $1,332.4 million, $1,572.8 million and
$1,484.8 million for the years ended December 31, 1999, 1998 and
1997, respectively. Phosphates is a leading United States miner of
phosphate rock, one of the primary raw materials used in the
production of concentrated phosphates, with 18.0 million tons of
annual capacity. Phosphates is also a leading United States
producer of concentrated phosphates with an annual capacity of
approximately four million tons of phosphoric acid (P2O5). P2O5 is
an industry term indicating a product's phosphate content measured
chemically in units of phosphorous pentoxide. Phosphates'
concentrated phosphate products are marketed worldwide to crop
nutrient manufacturers, distributors and retailers.
Phosphates' facilities, which produce concentrated phosphates, are
located in central Florida and Louisiana. Its annual capacity
represents approximately 31 percent of total United States
concentrated phosphate production capacity and approximately ten
percent of world capacity. The Florida concentrated phosphate
facilities consist of two plants: New Wales and South Pierce. The
New Wales complex is the largest concentrated phosphate plant in the
world with an estimated annual capacity of 1.9 million tons of
phosphoric acid (P2O5 equivalent). New Wales primarily produces
three forms of concentrated phosphates: diammonium phosphate (DAP),
monoammonium phosphate (MAP) and merchant grade phosphoric acid.
The South Pierce plant produces phosphoric acid and granular triple
superphosphate (GTSP). A third facility, Nichols, which
manufactured phosphoric acid, DAP and granular MAP (GMAP), was
permanently closed as part of the Rightsizing Program and will be
dismantled.
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 GMAP. The Faustina plant
manufactures phosphoric acid, DAP, GMAP and ammonia. The Taft
facility manufactures DAP and GMAP. Concentrated phosphate
operations are managed in order to balance Phosphates' output with
customer needs. Phosphates suspended phosphoric acid production at
its Faustina facility in November 1999 and suspended production at
its Taft facility in July 1999 in response to reduced market
demands.
Summarized below are descriptions of the principal raw materials
used in the production of concentrated phosphates: phosphate rock,
sulphur and ammonia.
Phosphate Rock
All of the Company's phosphate mines and related mining operations
are located in central Florida. Phosphates 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
beneficiation plants where the ore goes through washing, screening,
sizing and flotation procedures designed to separate it from sands,
clays and other foreign materials. In conjunction with the
Rightsizing Program and Project Profit, the Company permanently
closed two phosphate mines during 1999, Payne Creek and Noralyn,
respectively. As a result of the permanent mine closures,
Phosphates currently maintains four operational mines. The
Rightsizing Program and Project Profit, as they pertain to the
facilities optimization program and strategic mining plan, were
developed to maximize available resources, lower the cost of
producing rock and enhance the management of phosphate rock
inventory.
Phosphates' rock production volume was 16.4 million tons for the
year ended December 31, 1999 and 20.0 million tons for each of the
years ended December 31, 1998 and 1997. Anticipated production in
2000 will be less than the average of the prior three years.
Although Phosphates 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 internally, primarily in the manufacture of concentrated
phosphates, totaled 13.4 million, 14.8 million and 14.1 million for
the years ended December 31, 1999, 1998 and 1997, respectively,
representing 82 percent, 74 percent and 70 percent, respectively, of
total tons produced. Rock shipments to customers totaled 4.8
million, 5.0 million and 4.6 million tons for the years ended
December 31, 1999, 1998 and 1997, respectively.
Phosphates estimates its proven reserves to be 493.3 million tons of
phosphate rock as of December 31, 1999. Phosphates controls these
reserves through ownership, long-term lease, royalty or purchase
option agreements. Reserve grades range from 58 percent to 78
percent bone phosphate of lime (BPL), with an average grade of 66
percent BPL. BPL is the standard industry term used to grade the
quality of phosphate rock. The phosphate rock mined by Phosphates
in the last three years averaged 65 percent BPL, which management
believes is typical for phosphate rock mined in Florida during this
period. Phosphates estimates its reserves based upon the
performance of exploration core drilling as well as 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.
Phosphates also owns or controls phosphate rock resources in the
southern extension of the central Florida phosphate district
(Resources). Resources are mineralized deposits that may be
economically recoverable; however, additional geostatistical
analyses, including further explorations, permitting and mining
feasibility studies, are required before such deposits may be
classified as reserves. Based upon its preliminary analyses of
these Resources, Phosphates believes that these mineralized deposits
differ in physical and chemical characteristics from those
historically mined by Phosphates but are similar to certain of the
reserves being mined in current operations. These Resources contain
estimated recoverable phosphate rock of approximately 113.0 million
tons. 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, and consequently, the Company's ability to mine these
Resources may be restricted.
Sulphur
A significant portion of Phosphates' sulphur requirements is
provided by the sulphur subsidiary of McMoRan Exploration Company
(MMR) under a supply agreement with the Company. Phosphates'
remaining sulphur requirements are provided by market contracts.
Additionally, in late 1999, the Company, CF Industries, Inc. and
Cargill Fertilizer executed a letter of intent to form a joint
venture that will remelt sulphur for use at their respective Florida
phosphate fertilizer operations.
Ammonia
Phosphates' ammonia needs are supplied by its Faustina ammonia
production facility and by world suppliers, primarily under annual
and multi-year contracts. Production from the Faustina plant, which
has an estimated annual capacity of 560,000 tons of anhydrous
ammonia, is used internally to produce certain concentrated
phosphates.
Sales and Marketing
Domestically, Phosphates sells its concentrated phosphates to crop
nutrient manufacturers, distributors and retailers. The Company
also uses concentrated phosphates internally for the production of
animal feed ingredients (see Feed Ingredients). Virtually all of
Phosphates' export sales of phosphate crop nutrients are marketed
through the Phosphate Chemicals Export Association (PhosChem), a
Webb-Pomerene Act organization, which the Company administers on
behalf of itself and three other member companies. PhosChem
believes that its sales represent approximately 51 percent of total
United States exports of concentrated phosphates. The countries that
account for the largest amount of PhosChem's sales of concentrated
phosphates include China, Australia, India, Japan and Brazil. In
1999, Phosphates' exports to Asia were 44 percent of total
shipments, with China representing 29 percent of those shipments.
The table below shows Phosphates' shipments of concentrated
phosphates in thousands of dry product tons, primarily DAP:
<TABLE>
<CAPTION>
1999 1998 1997
Tons % Tons % Tons %
---- --- ---- --- ---- ---
<S> <C> <C> <C> <C> <C> <C>
Domestic
Customers 2,552 38 2,373 32 2,065 29
Captive, to other business
units 92 1 563 8 615 9
----- --- ----- --- ----- ---
2,644 39 2,936 40 2,680 38
Export 4,055 61 4,377 60 4,425 62
----- --- ----- --- ----- ---
Total shipments 6,699 100 7,313 100 7,105 100
===== === ===== === ===== ===
</TABLE>
As of December 31, 1999, Phosphates had contractual commitments from
non-affiliated customers for the shipment of concentrated phosphates
and phosphate rock amounting to approximately 2.7 million tons and
4.7 million tons, respectively, in 2000. Captive sales have
decreased in 1999 as a result of the sale of the IMC AgriBusiness
business unit (AgriBusiness) in April 1999. However, since April
1999, sales to AgriBusiness have been reflected as sales to
customers.
Competition
Phosphates 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, product quality
and innovation.
Feed Ingredients
----------------
Net sales for Feed Ingredients were $173.5 million, $164.4 million
and $163.5 million for the years ended December 31, 1999, 1998 and
1997, respectively.
Feed Ingredients is one of the world's foremost producers and
marketers of phosphate-based animal feed ingredients with a total
annual capacity approaching 800,000 tons. In the fourth quarter of
1999, Feed Ingredients completed construction of an expansion of its
deflourinated phosphate (Multifos(Registered Trademark)) capacity.
The expansion increases capacity for Multifos(Registered Trademark)
to 200,000 tons annually, which is approximately 25 percent of total
capacity. The principal production facilities of Feed Ingredients
are located adjacent to, and utilize raw materials from, Phosphates'
concentrated phosphate complex at New Wales.
Sales and Marketing
Feed Ingredients supplies phosphate and potassium-based feed
ingredients for poultry and livestock to markets in North America,
Latin America and Asia. Feed Ingredients sources phosphate and
potassium raw materials from the Company's respective production
facilities. Feed Ingredients has a strong brand position in a $1.0
billion global market with products such as Biofos(Registered
Trademark), Dynafos(Registered Trademark), Multifos(Registered
Trademark), Dyna-K(Registered Trademark) and Dynamate(Registered
Trademark).
The table below shows Feed Ingredients' shipments of phosphate and
potassium-based feed ingredients in thousands of tons:
<TABLE>
<CAPTION>
1999 1998 1997
Tons % Tons % Tons %
---- --- ---- --- ---- ---
<S> <C> <C> <C> <C> <C> <C>
Domestic 767 84 724 85 708 86
Export 147 16 129 15 116 14
--- --- --- --- --- ---
Total shipments 914 100 853 100 824 100
=== === === === === ===
</TABLE>
As of December 31, 1999, Feed Ingredients had contractual
commitments from non-affiliated customers for the shipment of
phosphate feed and feed grade potassium products amounting to
approximately 0.6 million tons in 2000.
Competition
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. Many of these smaller
producers are not manufacturers of phosphoric acid and are required
to purchase this raw material on the open market. Competition in
this global market is driven by price, quality and service.
Potash
------
Net sales for the Potash business unit were $692.1 million, $700.1
million and $617.4 million for the years ended December 31, 1999,
1998 and 1997, respectively.
Potash mines, processes and distributes potash in the United States
and Canada. The term "potash" applies generally to the common salts
of potassium. Potash's products are marketed worldwide to crop
nutrient manufacturers, distributors and retailers and are also used
in the manufacture of mixed crop nutrients and, to a lesser extent,
animal feed ingredients (see Feed Ingredients). Potash's products
are also used for icemelter and water softener regenerant (see
Salt). Potash also sells potash to customers for industrial use.
Potash operates four potash mines in Canada as well as three potash
mines and a solar evaporation facility in the United States. In
early 2000, the Company decided to explore strategic options,
including divestiture or a joint venture, for the solar evaporation
facility. With a total capacity in excess of ten million tons of
product per year, management believes that Potash is one of the
leading private-enterprise potash producers in the world. In 1999,
these operations accounted for approximately nine percent of world
capacity on a K2O basis(2).
Canadian Operations
Potash's four mines in Canada produce muriate of potash exclusively
and 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. Traditional 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, moved to storage bins
and then hoisted to refineries above ground. In contrast, Potash'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 proprietary processes.
Potash Corporation of Saskatchewan Inc. (PCS) controls several
potash-producing properties located in the vicinity of Potash's
Esterhazy mines. Under a long-term contract with PCS, the Company
mines and refines 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
1,050,000 tons and the minimum is 500,000 tons per year. The
current contract extends through June 30, 2001 and is renewable at
the option of PCS for five additional five-year periods.
Potash controls the rights to mine 323,070 acres of potash-bearing
land in Saskatchewan. This land, of which 72,964 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 approximately 21 percent K2O. The Company believes
that 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 percent.
Potash's mineral rights in Saskatchewan consist of 123,953 acres
owned in fee, 175,959 acres leased from the province of Saskatchewan
and 23,158 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 $9.1 million, $9.8 million
and $8.2 million in 1999, 1998 and 1997, respectively.
Since December 1985, the Company has experienced an inflow of water
into one of its two interconnected potash mines at Esterhazy,
Saskatchewan. As a result, the Company has incurred expenditures,
certain of which, due to their nature, have been capitalized while
others have been 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 alternatives to the operational methods
employed at Esterhazy. However, 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 measures, there can be no assurance
that the amounts required for remedial efforts will not increase in
future years or that the water inflow, risk to employees or
remediation costs will not increase to a level which would cause the
Company to change its mining process or abandon the mines.
Potash's underground mine operations are presently insured against
business interruption and risk from catastrophic perils, including
collapse, floods and other property damage with the exception of
flood coverage at Esterhazy. Due to the ongoing water inflow
problem at Esterhazy, underground operations at this facility are
currently not insurable for water incursion problems. Like other
potash producers' shaft mines, the Colonsay mine is also subject to
the risks of inflow of water as a result of its shaft mining
operations.
The Saskatchewan Department of Environmental and Resource Management
(Saskatchewan Department) has 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. See "Other Matters - Environmental Matters,"
for further detail.
United States Operations
Potash has three United States potash facilities: the Carlsbad shaft
mine located in Carlsbad, New Mexico; the Hersey solution mine
located in Hersey, Michigan; and the solar evaporation facility
located in Ogden, Utah.
The Carlsbad mine has an annual production capacity of over 1.7
million tons of finished product. The 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 underground mining methods are utilized for 95 percent of
the ore extraction with conventional underground mining methods used
for the remaining five percent. In the continuous mining sections,
drum type mining machines are used to cut sylvinite and langbeinite
ore from the face. Mining heights are as low as four and one-half
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 K-Mag(Registered Trademark), containing
significant amounts of sulphur, potassium and magnesium, with low
levels of chloride; and sulphate of potash, supplying a high
concentration of potassium with low levels of chloride.
At the Carlsbad facility, potash is mined and refined from 60,364
acres of reserves that are controlled under long-term leases. These
reserves contain an estimated total of 223.3 million tons of potash
mineralization (calculated after estimated extraction losses) in
four mining beds evaluated at thicknesses ranging from four and one-
half feet to in excess of 11 feet. At average refinery rates, these
ore reserves are estimated to be sufficient to yield 16.0 million
tons of concentrate from sylvinite with an average grade of 60
percent K2O and 41.1 million tons of langbeinite concentrate with an
average grade of approximately 22 percent K2O. At projected rates
of production, management estimates that Potash's reserves of
sylvinite and langbeinite are sufficient to support operations for
more than 25 years and 27 years, respectively. Pursuant to
potassium mineral lease arrangements with the federal government,
the State of New Mexico and other third parties, the Company paid
royalties of $3.4 million, $3.5 million and $3.3 million in 1999,
1998 and 1997, respectively.
Potash made mine modifications and constructed a new state-of-the-
art, world class langbeinite refinery at Carlsbad at a cost of
approximately $77.0 million which began production during 1999. The
production capacity at the Carlsbad facility was increased by 35
percent as a result of constructing the new K-Mag(Registered
Trademark) processing plant.
Production was discontinued at the Western Ag facility during 1999.
This facility, which is adjacent to Carlsbad, was acquired in 1997.
Western Ag had an annual capacity of 400,000 tons of double sulfate
of potash magnesia that was marketed under the brand name K-
Mag(Registered Trademark). The underground mine was connected to
Carlsbad during the year with the ore directed to the new refinery.
By consolidating the process operations of Western Ag and Carlsbad,
substantial cost reductions were realized as well as improved
process efficiency.
At Hersey, Michigan, Potash operates a solution mining facility with
annual potash production capacity of approximately 160,000 tons, and
annual salt capacity of approximately 300,000 tons. The salt from
this facility is marketed by Salt (see Salt). At Hersey, Potash's
mineral rights consist of 1,093 acres owned in fee and 10,537 acres
controlled under long-term leases. These lands contain an estimated
300.0 million tons of potash mineralization contained in two beds
ranging in thickness from 14 to 30 feet. Management estimates that
these reserves are sufficient to yield 62.0 million tons of
concentrate from sylvinite with an average grade of 60 percent K2O.
At current rates of production, management estimates that these
reserves are sufficient to support operations for more than 300
years.
The solar evaporation facility, located west of Ogden, Utah,
utilizes solar energy and nearly 60,000 acres of evaporation ponds
to manufacture sulfate of potash, sodium chloride (salt) and
magnesium chloride from the brines of the Great Salt Lake. This
facility has the capacity to annually produce approximately 450,000
tons of sulfate of potash, in excess of 300,000 tons of magnesium
chloride and over one million tons of salt. Sulfate of potash and
solid magnesium chloride hexahydrate for industrial applications is
marketed by Potash's sales force while the salt and liquid magnesium
chloride, which is primarily used for dust control, ice control and
some industrial uses, is marketed by the Salt sales force (see
Salt). At the Ogden facility, Potash's mineral rights consist of
1,499 acres owned in fee and 117,244 acres controlled under long-
term leases with the State of Utah. The leases continue in effect
so long as the salts are produced or the State of Utah receives a
minimum royalty and rent. Management estimates that reserves are
adequate to support current capacity for more than a century and
yield more than 49.0 million tons of sulfate of potash product with
a K2O content of approximately 50 percent.
Sales and Marketing
Potash's North American potash sales are made through Potash's sales
force. North American agricultural sales are primarily to
independent accounts, co-operatives and large regional fertilizer
buyers while non-agricultural sales are primarily to large
industrial accounts and the animal feed industry. Additionally,
potash is used as an ingredient in icemelter and as a water softener
regenerant.
Potash is sold throughout the world, with Potash's largest amount of
sales outside of North America made to China, Japan, Malaysia,
Korea, Australia, New Zealand and Latin America. Potash is also
used internally by the Salt business unit as a major ingredient in
its icemelter products. The Salt business unit also markets potash
as a water softener regenerant along with its traditional salt
products (see Salt). Potash's exports from Canada, except to the
United States, are made through Canpotex Limited (Canpotex), an
export association of Saskatchewan potash producers. In general,
Canpotex sales are allocated among the producer members based on
production capacity. The Company currently supplies approximately
35 percent of Canpotex's requirements. Potash exports from Carlsbad
are sold through the Company's sales force. In 1999, 83 percent of
the potash produced by Potash was sold as crop nutrients, while 17
percent was sold for non-agricultural uses.
The table below shows Potash's shipments of potash in thousands of
tons:
<TABLE>
<CAPTION>
1999 1998 1997
Tons % Tons % Tons %
---- --- ---- --- ---- ---
<S> <C> <C> <C> <C> <C> <C>
Domestic
Customers 4,938 61 4,623 55 5,097 57
Captive, to other business
units 416 5 1,116 13 1,306 15
----- --- ----- --- ----- ---
5,354 66 5,739 68 6,403 72
Export 2,756 34 2,663 32 2,538 28
----- --- ----- --- ----- ---
Total shipments 8,110 100 8,402 100 8,941 100
====== === ===== === ===== ===
</TABLE>
As of December 31, 1999, Potash had contractual commitments from non-
affiliated customers for the shipment of potash amounting to
approximately 2.9 million tons in 2000. Captive sales have
decreased in 1999 as a result of the sale of AgriBusiness in April
1999. However, since April 1999, sales to AgriBusiness have been
reflected as sales to customers.
Competition
Potash is a commodity available from many sources and consequently,
the market is highly competitive. In addition to the Potash
business unit, there are four North American producers: two in the
United States and two in Canada, one of which may have greater
production capacity than Potash. Through its participation in
Canpotex, the Potash business unit competes outside of North America
with various independent potash producers and consortia and other
export organizations, including state-owned organizations. Potash'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.
Salt
----
Concurrent with the Harris Chemical Group, Inc. (Harris) acquisition
in April 1998 (Harris Acquisition), the Company established the Salt
business unit. Net sales for Salt were $321.7 million and $177.4
million for the year ended December 31, 1999 and the nine months
ended December 31, 1998, respectively.
The Salt business unit mines, produces, processes and distributes
salt in North America and Europe. The products are marketed
primarily in the United States, Canada and the United Kingdom. Salt
is used in a variety of applications, including as a deicer for both
highway and consumer use; an ingredient in the production of
chemicals for paper bleaching and plastic production; a flavor
enhancer and preservative in food; an ingredient and nutrient in
animal feeds; and an essential component in both industrial and
consumer water softeners. The demand for salt has historically
remained relatively stable during economic cycles due to its
relatively low cost and high value in a large variety of uses.
However, demand in the highway deicing market is affected by changes
in winter weather. Approximately 50 percent of Salt's annual
revenues are generated from December through March when highway
deicing is at its peak.
Production Operations
Salt has a production capacity of approximately 15.0 million tons of
salt. Production activities are currently conducted at fourteen
facilities, five located in the United States, seven located in
Canada and two located in the United Kingdom.
Summarized below are the three processing methods used to produce
salt. Salt utilizes all three methods.
Rock Salt Mining
The Company employs a drill and blast mining technique at its rock
salt mines. Mining machinery moves salt from the salt face to
conveyor belts where it is then crushed and screened. Salt is then
hoisted to the surface where it is loaded onto shipping vessels.
Mechanical Evaporation
The mechanical evaporation method involves subjecting salt-saturated
brine to vacuum pressure and heat to precipitate salt. The salt
brine is obtained from underground salt deposits through a series of
wells. The resulting product has both a high purity and a uniform
physical shape.
Solar Evaporation
The solar evaporation method is used in areas of the world where
high salinity brines are available and where weather conditions
provide for a high natural evaporation rate. The brine is pumped
into a series of large open ponds where sun and wind evaporate the
water and crystallize the salt, which is then mechanically
harvested.
United States Operations
Salt's central and midwestern United States general trade customer
base is served by mechanical evaporation plants in Kansas and
Tennessee. Additionally, salt is produced as a co-product by Potash
in its Michigan operations. The Cote Blanche, Louisiana rock salt
mine serves chemical customers in the southern and western United
States as well as highway deicing customers through a series of
depots located along the Mississippi and Ohio Rivers. The
evaporation plants, rock salt mine and co-product production have a
combined annual production capacity of 3.3 million tons. Salt's
solar evaporation facility located in Ogden, Utah is the largest
solar salt production site in the United States. This facility
principally serves the western general trade markets, but also
provides salt for chemical applications and highway deicing.
Production capacity is currently only limited by demand. The
Company also owns and operates two salt packaging facilities in
Illinois and Wisconsin which also serve customers in the central and
midwestern United States as well as parts of the northeastern United
States.
Canadian Operations
Salt is produced at seven different locations in Canada.
Mechanically evaporated salt is produced at three facilities
strategically located throughout Canada: Amherst, Nova Scotia in
eastern Canada; Goderich, Ontario in central Canada; and Unity,
Saskatchewan in western Canada. From the Goderich, Ontario rock
salt mine, Salt also serves the highway deicing market in Canada and
the Great Lakes region of the United States. The Company also
produces salt as a co-product from its Esterhazy, Colonsay and Belle
Plaine potash facilities which serve both the general trade and the
highway deicing markets. The evaporation plants, the rock salt mine
and other production facilities have a combined annual capacity of
7.4 million tons.
United Kingdom Operations
Salt's United Kingdom customer base is served by two facilities with
a combined annual production capacity of 2.9 million tons. Highway
deicing customers throughout the United Kingdom are served by the
Winsford rock salt mine in west central England. Also, in west
central England is the Weston Point mechanical evaporation plant
servicing the general trade and chemical customers in the United
Kingdom as well as continental Europe.
Sales and Marketing
The Company separates sales of salt into three major market seg
ments: general trade, highway deicing and chemical. The general
trade segment is Salt's largest segment and accounted for
approximately 50 percent of 1999 sales. This segment includes
consumer applications such as table salt, water conditioning,
consumer ice control, food and meat processing, agricultural
applications, including feed mixes, as well as a variety of
industrial applications such as oil refining and drilling, metal
processing and tanning.
Salt has maintained a significant presence in the general trade
business over recent years due to its strong focus on: (i) the
midwestern region of the United States; (ii) all of Canada and the
United Kingdom; (iii) its distribution network to the grocery trade;
and (iv) its relationships with large distributors of water
conditioning salt. In order to continue to expand its volume and
profitability in the general trade segment, Salt has focused its
efforts on improving its marketing programs. These programs
include: (i) differentiating various brand names through promotional
activities; (ii) developing an exclusive distributor network in the
United States; and (iii) consolidating the product offerings to
customers with products available from the Potash business unit.
The general trade market is driven by strong customer relationships.
Sales in the general trade segment occur through retail channels
such as grocery; building supply and hardware stores; automotive
stores; feed suppliers; as well as industrial manufacturers in
various industries. Distribution in the general trade segment is
channeled through a direct sales force located in various parts of
Salt's service territories, who sell products to distributors,
dealers and end-users. The Company also maintains a network of
brokers who sell table salt, consumer deicing and water conditioning
products. These brokers service wholesalers, chain grocers and
retailers as well as the food service industry.
Highway deicing constitutes Salt's second largest segment,
accounting for approximately 40 percent of 1999 salt sales.
Principal customers are states, provinces, counties, municipalities
and road maintenance contractors that purchase bulk salt for ice
control on public roadways. Highway salt is sold mostly via a
tendered bid contract system with price, product quality and
delivery being the primary market factors when purchasers are
selecting a supplier. Supply contracts generally are awarded
annually on the basis of tendered bids once the purchaser is assured
that the minimum requirements for purity, service and delivery can
be met. The bidding process eliminates the need to invest
significant time and effort in marketing and advertising. Location
of the source of salt and distribution outlets also play a
significant role in determining a supplier. Salt's North American
operations have an extensive network of approximately 80 depots for
storage and distribution of highway deicing salt. The majority of
these depots are located on the Great Lakes and the Mississippi
River system.
Winter weather variability is the most significant factor affecting
salt sales for deicing applications because mild winters reduce the
need for salt used in ice and snow control. Unusually mild or harsh
weather can significantly affect Salt's sales and earnings. The
vast majority of North American deicing sales are made in Canada and
the northern United States where winter weather is generally harsher
than in other parts of North America.
The chemical segment accounted for approximately ten percent of
Salt's 1999 salt sales. Principal customers are producers of
intermediate chemical products used in pulp bleaching and plastic
production that do not have a captive source of brine. Distribution
into the chemical market is made primarily through long-term supply
agreements, which are negotiated privately. Price, service and
product quality are the major market requirements.
The table below shows Salt's shipments of salt in thousands of tons:
<TABLE>
<CAPTION>
1999 1998(a) 1997(a)
Tons % Tons % Tons %
---- --- ---- --- ---- ---
<S> <C> <C> <C> <C> <C> <C>
Domestic
Customers 9,872 86 4,893 85 - -
Captive, to other business units 11 - 6 - - -
------ --- ----- --- ----- ---
9,883 86 4,899 85 - -
Export/Foreign 1,628 14 862 15 - -
------ --- ----- --- ----- ---
Total shipments 11,511 100 5,761 100 - -
====== === ===== === ===== ===
(a)Acquired as part of the Harris Acquisition in April 1998.
</TABLE>
Competition
Salt has significant competition in each of the markets in which it
operates. In North America, three other large, nationally recognized
companies compete against Salt in production and marketing of rock,
evaporated and solar salt. In addition, there are several smaller
regional producers of evaporated and solar salt. In spite of the
high relative cost of transportation in the distribution of salt,
there are also several importers of salt. Most of these imports
impact the eastern seaboard where IMC has a minimum position. In
the United Kingdom, there is one other large domestic producer of
evaporated salt, several small local producers as well as some
imports from continental Europe. There are two other companies that
produce rock salt - one in northern England and the other in
Ireland. There are no significant imports of rock salt into the
United Kingdom. Salt also exports salt from the United Kingdom to
Scandinavia and continental Europe and competes with many other
European producers.
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 operating results. Revenues 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, the
Company's crop nutrients business is seasonal to the extent North
American farmers and agricultural enterprises purchase more crop
nutrient products during the spring and fall. The Company's salt
business is seasonal and it can be significantly affected by the
severity of winter weather in North America and the United Kingdom.
A high percentage of Salt's income is derived in the first and the
fourth quarter of each year when sales of salt for deicing is the
greatest.
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 affecting
foreign trade and investment. Due to economic and political
factors, customer needs can change dramatically from year to year.
OTHER MATTERS
Environmental Matters
---------------------
Information regarding environmental matters of the Company is
included in Part II, Item 7, "Management's Discussion and Analysis
of Financial Condition and Results of Operations," of this Annual
Report on Form 10-K, which is incorporated herein by reference.
Employees
---------
The Company had 8,976 employees as of December 31, 1999. The work
force consisted of 2,802 salaried, 6,167 hourly and seven temporary
or part-time employees.
Labor Relations
---------------
Within North America, the Company has 15 collective bargaining
agreements with the affiliated local chapters of four international
unions. As of December 31, 1999, approximately 90 percent of the
hourly work force was covered under collective bargaining
agreements. Two plant closure negotiations were successfully
completed in 1999 at the Hutchinson, Kansas and Western Ag/Carlsbad,
New Mexico facilities. Eight agreements covering 56 percent of the
union hourly workforce will expire in 2000. The Company has not
experienced a significant work stoppage in recent years and
considers its labor relations to be good.
EXECUTIVE OFFICERS OF THE REGISTRANT
The ages and five-year employment history of the Company's executive
officers as of March 15, 2000 was as follows:
Robert F. Clark
---------------
Age 57. Senior Vice President of the Company since April 1999 and
President of Salt since joining the Company in April 1998 as a
result of the Harris Acquisition. From 1993 to 1998 Mr. Clark
served as President of Great Salt Lake Minerals, a division of
Harris Chemical Group, Inc.
Steven J. Demetriou
-------------------
Age 41. Senior Vice President of the Company since October 1999 and
President of Phosphates since June 1999, when he joined the Company.
Prior to joining the Company, Mr. Demetriou served as Vice
President, Global Specialty Resins and President, Cytec Asia-Pacific
of Cytec Industries, Inc., a manufacturer of specialty materials,
principally aerospace materials, from December 1997 to June 1999.
From July 1996 to December 1997, Mr. Demetriou served as Vice
President, Global Adhesives Business, for Exxon Chemical Company, a
manufacturer of basic petrochemicals, including olefins and
aromatics, and a supplier of specialty rubbers and of additives for
fuels and lubricants. From July 1993 to July 1996, Mr. Demetriou
was Director, Europe Olefins and Aromatics Marketing, for Exxon
Chemical Company.
E. Paul Dunn, Jr.
-----------------
Age 46. Vice President and Treasurer of the Company since joining
the Company in May 1998. Prior to joining the Company, Mr. Dunn
served as Vice President, Finance and Information Technology for
GATX Terminals Corporation, a provider of storage, handling and
transportation of petroleum and chemical commodities, from 1995 to
1998. He also served as Treasurer of GATX Corporation from 1990 to
1995.
C. Steven Hoffman
-----------------
Age 51. Senior Vice President of the Company since 1990 and
President, International since September 1998. From 1995 to August
1998, Mr. Hoffman served as Senior Vice President, International of
the Company.
John U. Huber
-------------
Age 61. Executive Vice President of the Company since October 1999
and President of Potash since joining the Company in March 1996.
Mr. Huber also served as President of IMC Phosphates from September
1998 to May 1999. Prior to joining the Company, Mr. Huber served as
Executive Vice President of The Vigoro Corporation from June 1993 to
March 1996.
Mary Ann Hynes
--------------
Age 52. Senior Vice President and General Counsel of the Company
since joining the Company in July 1999. Prior to joining the
Company, Ms. Hynes served as Vice President, General Counsel and
Secretary of Sundstrand Corporation, a designer and manufacturer of
aerospace and industrial technology-based components, from 1998 to
July 1999. From 1997 to 1998 Ms. Hynes served as General Counsel
and Assistant Secretary of Wolters Kluwer U.S. Corporation, the
parent company of numerous technical print and electronic
publishers. From 1980 to 1996 Ms. Hynes served as General Counsel of
CCH Incorporated, a global provider of tax and business law
information through publications and software.
J. Bradford James
-----------------
Age 53. Executive Vice President and Chief Financial Officer of the
Company since October 1999. Mr. James served as Senior Vice
President and Chief Financial Officer of the Company from February
1998 to September 1999. Prior to joining the Company in February
1998, Mr. James served as Executive Vice President of USG
Corporation, a manufacturer and distributor of residential and
industrial building materials, from 1995 through 1997.
Stephen P. Malia
----------------
Age 45. Senior Vice President, Human Resources of the Company since
joining the Company in January 2000. Prior to joining the Company,
Mr. Malia served as Vice President, Human Resources-Exterior Systems
Business for Owens Corning, a manufacturer of consumer and
industrial building materials and composite systems, from 1997
through 1999 and Vice President, Human Resources-Planning, Staffing
and Development from 1995 through 1997.
Carolyn W. Merritt
------------------
Age 53. Senior Vice President, Environment, Health and Safety of
the Company since August 1998. Ms. Merritt served as Vice
President, Environment, Health and Safety from March 1996 to August
1998. Prior to joining the Company, Ms. Merritt served as Vice
President, Environmental Affairs for The Vigoro Corporation from
July 1994 to March 1996.
Douglas A. Pertz
----------------
Age 45. President and Chief Executive Officer of the Company since
October 1999. From October 1998 to October 1999, Mr. Pertz served
as President and Chief Operating Officer of the Company. From 1995
to 1998, Mr. Pertz served as President and Chief Executive Officer
and as a director of Culligan Water Technologies, Inc., a leading
manufacturer and distributor of water purification and treatment
products. From 1994 until January 1995, he was Corporate Vice
President and Group Executive of the Danaher Corporation (Danaher),
a manufacturer of products in the tool, process/environmental
controls and transportation industries and was also President, Chief
Executive Officer and a director of Danaher's subsidiaries, Matco
Tools, a manufacturer of hand tools, and Hennessy Industries, a
manufacturer of transportation equipment.
Anne M. Scavone
---------------
Age 36. Vice President and Controller of the Company since April
1996. 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.
All of the Company's executive officers are elected annually, with
the terms of the officers listed above to expire in April 2000. No
"family relationships," as that term is defined in Item 401(d) of
Regulation S-K, exist among any of the listed officers.
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.(1)
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 was appealed by the plaintiffs to the United
States Court of Appeals for the Eighth Circuit (Court of Appeals).
The Court of Appeals in a divided opinion (2 to 1) rendered its
decision reversing the grant of summary judgment as to certain
defendants, including the Company, and affirming as to certain other
defendants. The dissent strongly disagreed with the majority
opinion, stating that the majority had erred in not affirming the
dismissal of the case as to all defendants. According to the
dissent, all of the defendants were entitled to summary judgment.
The Company, along with the other defendants remaining in the case,
obtained a rehearing of the case from the entire Court of Appeals
and the decision of the Court of Appeals was vacated. The case was
reargued before the entire Court of Appeals on September 13, 1999,
and the Court of Appeals found that the class had failed to present
evidence of collusion sufficient to create a genuine issue of
material fact and affirmed the dismissal of the complaint by summary
judgment.
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
litigation, all proceedings have been stayed pending the decision of
the Court of Appeals.
FTX Merger Litigation
---------------------
In August 1997, five identical class action lawsuits were filed in
Chancery Court in Delaware by unitholders of PLP. Each case named
the same defendants and broadly alleged that Freeport-McMoRan, Inc.
(FTX) and FMRP Inc. (FMRP) had breached fiduciary duties owed to the
public unitholders of PLP. The Company was alleged to have aided
and abetted these breaches of fiduciary duty. In November 1997, an
amended class action complaint was filed with respect to all cases.
The amended complaint named the same defendants and raised the same
broad allegations. The defendants' moved the court to dismiss the
amended complaint in November 1998, and the cases were dismissed in
May 1999.
In May 1998, the Company and PLP (collectively, Plaintiffs) filed a
lawsuit (IMC Action) in Delaware Chancery Court against certain
former directors of FTX (Director Defendants), and MMR, a former
affiliate of FTX. The Plaintiffs alleged that the Director
Defendants, as the directors of PLP's administrative managing
general partner FTX, owed duties of loyalty to PLP and its limited
partnership unitholders. The Plaintiffs further alleged that the
Director Defendants breached their duties by causing PLP to enter
into a series of interrelated non-arm's-length transactions with
MMR. The Plaintiffs also alleged that MMR knowingly aided and
abetted and conspired with the Director Defendants to breach their
fiduciary duties. On behalf of the PLP public unitholders, the
Plaintiffs sought to reform or rescind the contracts that PLP
entered into with MMR and to recoup the monies expended as a result
of PLP's participation in those agreements. On November 10, 1999,
the Plaintiffs and MMR announced a settlement of the IMC Action
pursuant to which MMR agreed to purchase PLP's 47.0 percent interest
in the Company's multi-year oil and natural gas exploration program
with MMR, which includes three producing oil and gas fields plus an
inventory of exploration prospects and leases, for a total of $32.0
million.
In May 1998, Jacob Gottlieb filed an action (Gottlieb Action) on
behalf of himself and all other PLP unitholders against the Director
Defendants, MMR and IMC asserting the same claims that IMC asserted
in the IMC Action. Because IMC and PLP had already asserted these
claims, in July 1998 IMC filed a motion to dismiss the Gottlieb
Action. The court has not set a briefing schedule for IMC's motion
to dismiss, and plaintiff has made no substantial activity in this
case within the past year. IMC has recently been advised that the
plaintiff intends to withdraw the complaint without prejudice.
For information on environmental proceedings, see Note 16,
"Contingencies," of Notes to Consolidated Financial Statements
included in Part II, Item 8, of this Annual Report on Form 10-K,
which is incorporated herein by reference.
Other
-----
In the ordinary course of its business, the Company is and will from
time to time be involved in other legal proceedings of a character
normally incident to its business. The Company believes that its
potential liability in any such pending or threatened proceedings
will not have a material adverse effect on the financial condition
or results of operations of the Company.
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 December 31, 1999.
PART II.
Item 5.Market for the Registrant's Common Stock and Related Stockholder
Matters.
<TABLE>
Common Stock Prices and Dividends
<CAPTION>
Quarter
--------------------------------------
1999 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 $22.313 $27.125 $20.125 $17.063
Low 18.000 17.375 14.313 12.750
Quarter
---------------------------------------
1998 First Second Third Fourth
---------------------------------------------------------------
Dividends per common
share $ 0.08 $ 0.08 $ 0.08 $ 0.08
Common stock prices:
High $39.500 $39.125 $30.375 $27.312
Low 28.562 29.375 17.812 18.125
</TABLE>
The Company's common stock is traded on the New York Stock Exchange
and the Chicago Stock Exchange under the symbol IGL. As of March
15, 2000, the Company had 114,477,296 shares of common stock
outstanding, excluding 10,686,276 treasury shares. Common stock
prices are from the composite tape for New York Stock Exchange
issues as reported in The Wall Street Journal. As of March 15,
2000, the number of registered holders of common stock as reported
by the Company's registrar was 10,399. However, an indeterminable
number of stockholders beneficially own shares of the Company's
common stock through investment funds and brokers. For the year
ended December 31, 1999, the Company paid cash dividends of $36.6
million.
Item 6.Selected Financial Data.
For information related to the years 1995 through 1999 contained
under the heading "Five Year Comparison," reference is made to page
73 of the Company's 1999 Annual Report to Stockholders incorporated
herein by reference.
Item 7.Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Reference is made to "Management's Discussion and Analysis of
Financial Condition and Results of Operations," appearing on pages
27 through 40 of the Company's 1999 Annual Report to Stockholders
incorporated herein by reference.
Item 7a.Quantitative and Qualitative Disclosures about Market Risk.
Reference is made to "Market Risk," of "Management's Discussion and
Analysis of Financial Condition and Results of Operations,"
appearing on page 35 of the Company's 1999 Annual Report to
Stockholders incorporated herein by reference.
Item 8.Financial Statements and Supplementary Data.
Reference is made to the Company's Consolidated Financial Statements
and Notes thereto appearing on pages 42 through 71 of the Company's
1999 Annual Report to Stockholders, together with the report thereon
of Ernst & Young LLP dated January 31, 2000, appearing on page 41 of
such Annual Report and the information contained under the heading
"Quarterly Results (unaudited)," appearing on page 72 of such Annual
Report incorporated herein by reference.
Item 9.Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
PART III.
Item 10.Directors and Executive Officers of the Registrant.
The information contained under the headings "The Annual Meeting--
Election of Directors" and "Beneficial Ownership of Common Stock--
Section 16(a) Beneficial Ownership Reporting Compliance," included
in the Company's definitive Proxy Statement for the 2000 Annual
Meeting of Stockholders and the information contained under the
heading "Executive Officers of the Registrant," in Part I, Item 1,
hereof is incorporated herein by reference.
Item 11.Executive Compensation.
The information under the heading "Policies Relating to the Board of
Directors - Compensation of Directors" and "Executive Compensation,"
included in the Company's definitive Proxy Statement for the 2000
Annual Meeting of Stockholders is incorporated herein by reference.
Item 12.Security Ownership of Certain Beneficial Owners and Management.
The information under the heading "Beneficial Ownership of Common
Stock," included in the Company's definitive Proxy Statement for the
2000 Annual Meeting of Stockholders is incorporated herein by
reference.
Item 13.Certain Relationships and Related Transactions.
The information under the heading "Executive Compensation," included
in the Company's definitive Proxy Statement for the 2000 Annual
Meeting of Stockholders is incorporated herein by reference.
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.
(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.
(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.
Filed
Incorporated with
Herein by Electronic
Exhibit No. Description Reference to Submission
- ------------------------------------------------------------------------------
3.i.(a) Restated Certificate of X
Incorporation, as amended and
restated through January 6, 1998
3.i.(b) Certificate of Designations for the Exhibit A to
Series D Junior Participating Exhibit 3 to the
Preferred Stock Current Report on
Form 8-K dated
May 27, 1999*
3.ii. Amended and Restated By-Laws Exhibit 3 to the
Current Report on
Form 8-K dated
May 27, 1999*
3.iii. Rights Agreement dated May 27, Exhibit 4 to the
1999, with The First National Bank Current Report on
of Chicago (including the Form 8-K dated
Shareholder Rights Plan) May 27, 1999*
4.ii.(a) Indenture, dated as of July 17, Exhibit 4.1 to
1997, between IMC Global Inc. and the Company's
The Bank of New York, relating to Report on Form 8-
the issuance of 6.875% Senior K dated July 23,
Debentures due July 15, 2007; 1997*
7.30% Senior Debentures due
January 15, 2028; and 6.55% Senior
Notes due January 15, 2005
4.ii.(b) Indenture, dated as of August 1, Exhibit 4.10 to
1998, between IMC Global Inc. and the Registration
The Bank of New York, relating to Statement No. 333-
the issuance of 6.625% Notes due 63503
2001; 7.40% Notes due 2002; 7.625%
Notes due 2005; 6.50% Notes due
2003; and 7.375% Debentures due
2018
4.ii.(c) Amended and Restated Five-Year X
Credit Agreement, dated as of
December 8, 1999 among IMC Global
Inc., a Delaware corporation, as
borrower, the financial
institutions parties thereto, and
Bank of America, N.A., as
Administrative Agent
10.i.(a) Agreement dated June 27, 1985, Exhibit 10.6
supplementing, amending and Amendment No. 2
continuing Potash Resource Payment to Registration
Agreement dated October 15, 1979, Statement No. 33-
between Mallinckrodt and the 22914
Province of Saskatchewan
10.i.(b) Mining and Processing Agreement Exhibit 10.7 to
dated January 31, 1978, between Registration
Potash Corporation of Saskatchewan Statement No. 33-
Inc. and International Minerals & 17091
Chemical (Canada) Global Limited
10.i.(c) Memorandum of Agreement as of Exhibit 10.51 to
December 21, 1990, amending Mining the Annual Report
and Processing Agreement of on Form 10-K for
January 31, 1978, between Potash the Fiscal Year
Corporation of Saskatchewan Inc. Ended June 30,
and International Minerals & 1991*
Chemical (Canada) Global Limited
10.i.(d) Division of Proceeds Agreement Exhibit 10.52 to
dated December 21, 1990, between the Annual Report
Potash Corporation of Saskatchewan on Form 10-K for
Inc. and International Minerals & the Fiscal Year
Chemical (Canada) Global Limited Ended June 30,
1991
10.i.(e) Form of Partnership Agreement, Exhibit 10.29 to
dated as of July 1, 1993, as the Company's
further amended and restated as of Annual Report on
May 26, 1995, between IMC-Agrico Form 10-K for the
GP Company, Agrico Limited Fiscal Year Ended
Partnership and IMC-Agrico MP June 20, 1995*
Inc., including definitions
10.i.(f) Form of Parent Agreement, dated as Exhibit 10.30 to
of July 1, 1993, as further the Company's
amended and restated as of May 26, Annual Report on
1995, between IMC Global Form 10-K for the
Operations Inc., Freeport-McMoRan Fiscal Year Ended
Resource Partners, Limited June 30, 1995*
Partnership, Freeport-McMoRan Inc.
and IMC-Agrico Company
10.i.(g) Amendment, Waiver and Consent, Exhibit 10.31 to
dated May 26, 1995, among IMC the Company's
Global Inc.; IMC Global Operations Annual Report on
Inc.; IMC-Agrico GP Company; IMC- Form 10-K for the
Agrico MP, Inc.; IMC-Agrico Fiscal Year Ended
Company; Freeport-McMoRan Inc.; June 30, 1995*
Freeport-McMoRan Resource
Partners, Limited Partnership; and
Agrico, Limited Partnership
10.i.(h) Agreement and Plan of Complete Exhibit 10.32 to
Liquidation and Dissolution, dated the Company's
May 26, 1995, among IMC Global Annual Report on
Operations Inc., IMC-Agrico GP Form 10-K for the
Company, and IMC-Agrico MP, Inc. Fiscal Year Ended
June 30, 1995*
10.i.(i) Agreement Under the Parent Exhibit 10.63 to
Agreement, dated as of January 23, the Company's
1996, among IMC Global Inc.; IMC Quarterly Report
Global Operations Inc.; Freeport- on Form 10-Q for
McMoRan Resource Partners, Limited the Quarterly
Partnership; Freeport-McMoRan Period Ended
Inc.; and IMC-Agrico Company, a December 31,
Delaware general partnership 1995*
10.i.(j) Amendment and Agreement Under the Exhibit 10.64 to
Partnership Agreement, dated as of the Company's
January 23, 1996, by and among IMC- Quarterly Report
Agrico GP Company; Agrico, Limited on Form 10-Q for
Partnership; IMC-Agrico MP, Inc.; the Quarterly
IMC Global Operations Inc. and IMC- Period Ended
Agrico Company December 31,
1995*
10.i.(k) Registration Rights Agreement Exhibit 99.6 to
dated as of March 1, 1996 among the Company's
IMC Global Inc. and certain former Quarterly Report
stockholders of The Vigoro on Form 10-Q for
Corporation the Quarterly
Period Ended
March 31, 1996*
10.iii.(a)** 1996 Long-Term Performance Exhibit 10.77 to
Incentive Plan the Company's
Quarterly Report
on Form 10-Q for
the Quarterly
Period Ended
September 30,
1996*
10.iii.(b)** 1988 Stock Option & Award Plan, as Exhibit B to
amended and restated Proxy Statement
dated March 25,
1999*
10.iii.(c)** 1994 Stock Option Plan for Non- Exhibit 4(a) to
Employee Directors Registration
Statement No. 33-
56911
10.iii.(d)** Supplemental Benefit Plan Exhibit 10.12 to
Registration
Statement No. 33-
17091
10.iii.(e)** Supplemental Defined Benefit Exhibit 10.7 to
Executive Retirement Plan, as Registration
amended through June 30, 1992 Statement No. 33-
17091
10.iii.(f)** Management Compensation and Exhibit 10.14 to
Benefit Assurance Program, as the Company's
amended through August 17, 1995 Annual Report on
Form 10-K for the
Fiscal Year Ended
June 30, 1996*
10.iii.(g)** Form of Trust Agreement with Exhibit 10.33 to
Wachovia Bank & Trust Co., N.A., the Company's
as amended through August 15, 1991 Annual Report on
Form 10-K for the
Fiscal Year Ended
June 30, 1992*
10.iii.(h)** Employment Agreement dated as of Exhibit 10.62 to
January 29, 1998 between IMC the Company's
Global Inc. and Robert E. Fowler, Annual Report on
Jr. Form 10-K for the
Year Ended
December 31, 1997*
10.iii.(i)** Employment Agreement dated as of Exhibit 10.1 to
September 15, 1998 between IMC the Company's
Global Inc. and Douglas A. Pertz Quarterly Report
on Form 10-Q for
the Quarterly
Period Ended
September 30,
1998*
10.iii.(j)** 1998 Stock Option Plan for Non- Exhibit 10.7 to
Employee Directors the Company's
Current Report on
Form 8-K dated
May 14, 1998*
10.iii.(k)** Non-competition Agreement dated as Exhibit 10.81 to
of August 1, 1998 between IMC the Company's
Global Inc. and Robert M. Van Annual Report on
Patten Form 10-K for the
Year Ended
December 31, 1998*
10.iii.(l)** Severance Agreement dated as of Exhibit 10.83 to
August 1, 1998 between IMC Global the Company's
Inc. and Robert M. Van Patten Annual Report on
Form 10-K for the
Year Ended
December 31, 1998*
10.iii.(m)** Form of IMC Global Inc. and IMC- X
Agrico MP, Inc. 1998 Defined
Contribution Supplemental
Executive Retirement Plan
10.iii.(n)** Form of IMC Global Inc. and IMC- X
Agrico MP, Inc. 1998 Supplemental
Retirement Plan, Restoration Plan
and Excess Benefit Plan Trust
10.iii.(o)** Retirement Agreement dated October Exhibit 10.1 to
7, 1999 between IMC Global Inc. the Company's
and Robert E. Fowler, Jr. Quarterly Report
on Form 10-Q for
the Quarterly
Period Ended
September 30,
1999*
10.iii.(p)** Form of Executive Severance X
Agreement between IMC Global Inc.
and S.J. Demetriou, C.S. Hoffman,
M.A. Hynes, J.B. James, S.P. Malia
and C.W. Merritt
10.iii.(q)** Employment Agreement dated July X
13, 1999 between IMC Global Inc.
and E. Paul Dunn
10.iii.(r)** "Gross-up" Agreement dated July X
13, 1999 between IMC Global Inc.
and E. Paul Dunn
10.iii.(s)** IMC Global Inc. Deferred X
Compensation Plan for Non-Employee
Directors
10.iii.(t)** Form of IMC Global Inc. and IMC- X
Agrico MP, Inc. Restoration Plan
10.iii.(u)** IMC Global Inc. Voluntary Non- X
Qualified Deferred Compensation
Plan
10.iii.(v)** First amendment to the IMC Global X
Inc. 1998 Restoration Plan
12 Ratio of Earnings to Fixed Charges X
13 The portions of IMC Global Inc.'s X
1999 Annual Report to Stockholders
which are specifically
incorporated by reference
18 Letter Regarding Change in X
Accounting Principle
21 Subsidiaries of the Registrant X
23 Consent of Ernst & Young LLP, X
Independent Auditors
24 Power of Attorney X
27 Financial Data Schedule X
* SEC File No. 1-9759.
** Denotes management contract or compensatory plan.
(b) Reports on Form 8-K.
The Company filed a Current Report on Form 8-K for December 7, 1999,
to report, under "Item 5, Other Events," the issuance of a press
release on December 7, 1999.
(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.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
IMC GLOBAL INC.
(Registrant)
/s/ Douglas A. Pertz
--------------------------
Douglas A. Pertz
Chief Executive Officer
and President
Date: March 28, 2000
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:
* Chairman and Director March 28, 2000
- ---------------------
Joseph P. Sullivan
/s/ Douglas A. Pertz Chief Executive Officer (principal March 28, 2000
- --------------------- executive officer), President
Douglas A. Pertz (principal operating officer) and
Director
/s/ J. Bradford James Executive Vice President and Chief March 28, 2000
- --------------------- Financial Officer (principal
J. Bradford James financial officer)
/s/ Anne M. Scavone Vice President and Controller March 28, 2000
- --------------------- (principal accounting officer)
Anne M. Scavone
* Director March 28, 2000
- ---------------------
Raymond F. Bentele
* Director March 28, 2000
- ---------------------
Rod F. Dammeyer
* Director March 28, 2000
- ---------------------
James M. Davidson
* Director March 28, 2000
- ---------------------
Harold H. MacKay
* Director March 28, 2000
- ---------------------
David B. Mathis
* Director March 28, 2000
- ---------------------
Donald F. Mazankowski
* Director March 28, 2000
- ---------------------
Richard L. Thomas
* Director March 28, 2000
- ---------------------
Pamela B. Strobel
*By: /s/ Rose Marie Williams
------------------------
Rose Marie Williams
Attorney-in-fact
- -------------------------------
(1)All statements, other than statements of historical fact contained
within this Form 10-K 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: general business and economic conditions
and governmental policies affecting the agricultural industry in
localities where the Company or its customers operate; weather
conditions; the impact of competitive products; pressure on prices
realized by the Company for its products; constraints on supplies of
raw materials used in manufacturing certain of the Company's products;
capacity constraints limiting the production of certain products;
difficulties or delays in the development, production, testing and
marketing of products; difficulties or delays in receiving required
governmental and regulatory approvals; market acceptance issues,
including the failure of products to generate anticipated sales levels;
difficulties in integrating acquired businesses and in realizing
related cost savings and other benefits; the effects of and change in
trade, monetary, environmental and fiscal policies, laws and
regulations; foreign exchange rates and fluctuations in those rates;
the costs and effects of legal proceedings, including environmental,
and administrative proceedings involving the Company; success in
implementing the Company's various initiatives including the
divestiture of Chemicals and achieving successful strategic
alternatives for the Salt business unit and a production facility
located in Ogden, Utah; and other risk factors reported from time to
time in the Company's Securities and Exchange Commission reports.
(2)Since the amount of potassium in the common salts of potassium varies,
the industry has established a common standard of measurement by
defining a product's potassium content, or grade, in terms of
equivalent percentages of potassium oxide (K2O). A K2O equivalent of
60 percent, 50 percent and 22 percent is the customary minimum standard
for muriate of potash, sulphate of potash and double sulphate of potash
magnesia products, respectively.
Exhibit 3.1.(a)
CERTIFICATE OF INCORPORATION
OF
IMC GLOBAL INC.
(as amended and restated though January 6, 1998)
ARTICLE FIRST
The name of the corporation is IMC Global Inc.
ARTICLE SECOND
The address of the registered office of the Corporation in the State
of Delaware is 1209 Orange Street in the City of Wilmington, County of New
Castle. The name of the registered agent of the Corporation at such
address is The Corporation Trust Company.
ARTICLE THIRD
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General
Corporation law of the State of Delaware either alone or with others
through wholly or partially owned subsidiaries, as a partner (limited or
general) in any partnership, as a joint venturer in any joint venture, or
otherwise.
ARTICLE FOURTH
The aggregate number of shares which the Corporation shall have
authority to issue is 312,000,000 divided into 12,000,000 shares of Series
Preferred Stock, $1.00 par value per share (hereafter called "Series
Preferred Stock", and 300,000,000 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.
The designations, powers, preferences and rights of the shares of each
class and the qualifications, limitations or restrictions thereof shall be
as follows:
(a) SERIES PREFERRED STOCK
The Board of Directors of the Corporation is authorized, subject to
limitations prescribed by law and the provisions of this ARTICLE FOURTH, to
provide for the issuance of the shares of the Series Preferred Stock in
series, and by filing a certificate pursuant to the Delaware General
Corporation Law, to establish from time to time the number of shares to be
included in each such series, and to fix the designation, powers,
preferences and rights of the shares of each such series and the
qualifications, limitations or restrictions thereof. Shares of any series
of Series Preferred Stock which shall be issued and thereafter acquired by
the Corporation through purchase, redemption, exchange, conversion or
otherwise, shall return to the status of authorized but unissued Series
Preferred Stock unless otherwise provided in the resolution or resolutions
of the Board of Directors. Unless otherwise provided in the resolution or
resolutions of the Board of Directors providing for the issuance thereof,
the number of authorized shares of stock of any such series may be
increased or decreased (but not below the number of shares thereof then
outstanding) by resolution or resolutions of the Board of Directors. In
case the number of shares of any such series of Series Preferred Stock
shall be decreased, the shares representing such decrease shall, unless
otherwise provided in the resolution or resolutions of the Board of
Directors providing for the issuance thereof, resume the status of
authorized but unissued Series Preferred Stock, undesignated as to series.
(b) COMMON STOCK
1. Dividends. Subject to the rights of each series of the Series
Preferred Stock, dividends may be declared and paid or set apart for
payment upon the Common Stock out of any assets or funds of the Corporation
legally available for the payment of dividends.
2. Voting Rights. Except as otherwise expressly provided with
respect to any series of the Series Preferred Stock, the Common Stock shall
have the exclusive right to vote for the election of directors and for all
other purposes, each holder of the Common Stock being entitled to one vote
for each share thereof held.
3. Liquidation. Upon any liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, and after the holders of
the Series Preferred Stock of each series shall have been paid in full the
amount to which they respectively shall be entitled, or an amount
sufficient to pay the aggregate amount to which the holders of the Series
Preferred Stock of each series shall be entitled shall have been deposited
with a bank or trust company having its principal office in the Borough of
Manhattan, The City of New York, and having capital, surplus and undivided
profits of a least Twenty-Five Million Dollars ($25,000,000) as a trust
fund for the benefit of the holders of such Series Preferred Stock, the
remaining net assets of the Corporation shall be distributed pro rata to
the holders of the Common Stock in accordance with their respective rights
and interests, to the exclusion of the holders of such Series Preferred
Stock.
(c) GENERAL PROVISIONS
A consolidation or merger of the Corporation with or into another
Corporation or Corporations or a sale, whether for cash, shares of stock,
securities or properties, of all or substantially all of the assets of the
Corporation shall not be deemed or construed to be a liquidation,
dissolution or winding up of the Corporation within the meaning of this
Article.
No holder of Common Stock or Series Preferred Stock of the Corporation
shall be entitled, as such, as a matter of right, to subscribe for or
purchase any part of any new or additional issue of stock of any class or
series whatsoever or of securities convertible into stock of any class
whatsoever, whether now or hereafter authorized and whether issued for cash
or other consideration, or by way of dividend.
(d) JUNIOR PARTICIPATING PREFERRED STOCK, SERIES C:
SECTION 1. Designation and Amount. The shares of this series
shall be designated as "Junior Participating Preferred Stock, Series C"
(the "Series C Preferred Stock") and the number of shares constituting the
Series C Preferred Stock shall be 3,000,000. Such number of shares may be
increased or decreased by resolution of the Board of Directors; provided,
that no decrease shall reduce the number of shares of Series C Preferred
Stock to a number less than the number of shares then outstanding plus the
number of shares reserved for issuance upon the exercise of outstanding
options, rights or warrants or upon the conversion of any outstanding
securities issued by the Corporation convertible into Series C Preferred
Stock.
SECTION 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series
of Preferred Stock or any other stock ranking prior and superior to the
Series C Preferred Stock with respect to dividends, the holders of shares
of Series C Preferred Stock shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the thirtieth day of March,
June, September and December in each year (each such date being referred
to herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series C Preferred Stock, in an amount (if any) per
share rounded to the nearest cent), subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate per share amount of
all cash dividends, and 100 times the aggregate per share amount (payable
in kind) of all non-cash dividends or other distributions, other than a
dividend payable in shares of Common Stock, par value $1.00 per share (the
"Common Stock"), of the Company or a subdivision of the outstanding shares
of Common Stock (by reclassification or otherwise), declared on the Common
Stock since the immediately preceding Quarterly Dividend Payment Date or,
with respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series C Preferred Stock,
In the event the Corporation shall at any time declare or pay any dividend
on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the amount to which holders
of shares of Series C Preferred Stock were entitled immediately prior to
such event under the preceding sentence shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of shares
of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Series C Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock).
(C) Dividends due pursuant to paragraph (A) of this Section shall
begin to accrue and be cumulative on outstanding shares of Series C
Preferred Stock from the Quarterly Dividend Payment Date next preceding the
date of issue of such shares, unless the date of issue of such shares is
prior to the record date for the first Quarterly Dividend Payment Date, in
which case dividends on such shares shall begin to accrue from the date of
issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of
holders of shares of Series C Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date, in
either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series
C Preferred Stock in an amount less than the total amount of such dividends
at the time accrued and payable on such shares shall be allocated pro rata
on a share-by-share basis among all such shares at the time outstanding.
The Board of Directors may fix a record date for the determination of
holders of shares of Series C Preferred Stock entitled to receive a payment
of a dividend or distribution declared thereon, which record date shall be
not more than 60 days prior to the date fixed for the payment thereof.
SECTION 3. Voting Rights. The holders of shares of Series C
Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series C Preferred Stock shall entitle the holder thereof to
100 votes on all matters submitted to a vote of the stockholders of the
Corporation. In the event the Corporation shall at any time declare or pay
any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by payment of
a dividend in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the number of votes per
share to which holders of shares of Series C Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such
number by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(B) Except as otherwise provided in the Restated Certificate of
Incorporation of the Company, including any other Certificate of
Designations creating a series of Preferred Stock or any similar stock, or
by law, the holders of shares of Series C Preferred Stock and the holders
of shares of Common Stock and any other capital stock of the Corporation
having general voting rights shall vote together as one class on all
matters submitted to a vote of stockholders of the Corporation.
(C) Except as set forth herein, or as otherwise provided by law,
holders of Series C Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled
to vote with holders of Common Stock as set forth herein) for taking any
corporate action.
SECTION 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series C Preferred Stock as provided in Section 2 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series C Preferred
Stock outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on any
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series C Preferred Stock;
(ii) declare or pay dividends, or make any other distributions, on any
shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series C Preferred Stock,
except dividends paid ratably on the Series C Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then
entitled; or
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series C Preferred Stock,
provided that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for shares of any stock
of the Corporation ranking junior (as to dividends and upon dissolution,
liquidation or winding up) to the Series C Preferred Stock.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares
of stock of the Corporation unless the Corporation could, under paragraph
(A) of this Section 4, purchase or otherwise acquire such shares at such
time and in such manner.
SECTION 5. Reacquired Shares.
Any shares of Series C Preferred Stock purchased or otherwise acquired
by the Corporation in any manner whatsoever shall be retired and cancelled
promptly after the acquisition thereof. All such shares shall upon their
cancellation become authorized but unissued shares of Preferred Stock and
may be reissued as part of a new series of Preferred Stock subject to the
conditions and restrictions on issuance set forth herein, in the Restated
Certificate of Incorporation of the Company, including any Certificate of
Designations creating a series of Preferred Stock or any similar stock or
as otherwise required by law.
SECTION 6. Liquidation, Dissolution or Winding Up.
Upon any liquidation, dissolution or winding up of the Corporation the
holders of shares of Series C Preferred Stock shall be entitled to receive
an aggregate amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount to be
distributed per share to holders of shares of Common Stock plus an amount
equal to any accrued and unpaid dividends. In the event the Corporation
shall at any time declare or pay any dividend on the Common Stock payable
in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of
Common Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the aggregate amount to which holders of shares of
Series C Preferred Stock were entitled immediately prior to such event
under the preceding sentence shall be adjusted by multiplying such amount
by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which
is the number of shares of Common Stock that were outstanding immediately
prior to such event.
SECTION 7. Consolidation, Merger, etc.
In case the Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any
other property, then in any such case each share of Series C Preferred
Stock shall at the same time be similarly exchanged or changed into an
amount per share, subject to the provision for adjustment hereinafter set
forth, equal to 100 times the aggregate amount of stock, securities, cash
and/or any other property (payable in kind), as the case may be, into which
or for which each share of Common Stock is changed or exchanged. In the
event the Corporation shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of
Common Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the amount set forth in the preceding sentence with
respect to the exchange or change of shares of Series C Preferred Stock
shall be adjusted by multiplying such amount by a fraction, the numerator
of which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to such event.
SECTION 8. Amendment.
The Restated Certificate of Incorporation of the Corporation shall not
be amended in any manner, including in a merger or consolidation, which
would alter, change or repeal the powers, preferences or special rights of
the Series C Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of a least two-thirds of the outstanding
shares of Series C Preferred Stock, voting together as a single class.
ARTICLE FIFTH
The business and affairs of the Corporation shall be managed by the
Board of Directors, and the directors need not be elected by ballot unless
required by the By-Laws of the Corporation.
ARTICLE SIXTH
Action shall be taken by stockholders of the Corporation only at
annual or special meetings of stockholders, and stockholders may not act by
written consent. Special meetings of the Corporation may be called only as
provided in the By-Laws.
ARTICLE SEVENTH
The following provisions are inserted for the regulation and conduct
of the affairs of the Corporation, and it is expressly provided that they
are intended to be in furtherance and not in limitation or exclusion of the
powers conferred by statute:
(a) The Board of Directors is expressly authorized to adopt, amend or
repeal the By-Laws of the Corporation.
(b) Subject to the provisions of the By-Laws, meeting of the stockholders
and directors of the Corporation for all purposes may be held at any place
within the State of Delaware and, unless otherwise provided by law, at any
place without such State.
(c) All corporate powers, including the sale, mortgage, hypothecation and
pledge of the whole or any part of the corporate property, shall be
exercised by the Board of Directors, except as otherwise expressly provided
by law.
(d) The Corporation may have one or more offices within or without the
State of Delaware and may keep the books of the Corporation, subject to the
provisions of the laws of the State of Delaware, at such place or places
within or without the State of Delaware as the Board of Directors shall
from time to time determine.
(e) The Board of Directors shall from time to time decide whether and to
what extent and at what times and under what conditions and requirements
the accounts and books of the Corporation, or any of them, except the stock
book, shall be open to the inspection of the stockholders, and no
stockholder shall have right to inspect any books or documents of the
Corporation except as conferred by the laws of the State of Delaware or as
authorized by the Board of Directors.
(f) The Board of Directors shall have power from time to time to fix and
determine and vary the amount of the working capital of the Corporation,
and to direct and determine the use and disposition of any surplus or net
profits over and above the capital stock paid in; and in its discretion the
Board of Directors may use and apply any such surplus or accumulated
profits in purchasing or acquiring bonds or other obligations of the
Corporation, to such extent and in such manner and upon such terms as the
Board of Directors shall deem expedient.
(g) Directors elected by holders of stock of the Corporation entitle to
vote generally in the election of directors may be removed at any time by a
majority vote of such stockholders, provided that such removal may only be
for cause. Directors elected by any class of stock, voting separately as a
class, may be removed only by a majority vote of such class, voting
separately as a class, so long as the voting power of such class shall
continue, provided such removal may only be for a cause.
ARTICLE EIGHTH
The Corporation shall indemnify each officer and director of the
Corporation to the fullest extent permitted by applicable law, except as
may be otherwise provided in the Corporation's By-Laws, and in furtherance
hereof the Board of Directors is expressly authorized to amend the
Corporation's By-Laws from time to time to give full effect hereto,
notwithstanding possible self-interest of the Directors in the action being
taken. The modification or repeal of this ARTICLE EIGHTH shall not
adversely affect the right to indemnification of any officer or director
hereunder with respect to any act or omission occurring prior to such
modification or repeal.
ARTICLE NINTH
(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 eighteen.
Subject to such limitation, such number may be fixed by the By-Laws, or by
action of the stockholders or of the Board of Directors under the specific
provisions of a By-Law adopted by the stockholders. The directors of the
Corporation shall be divided into three classes, as nearly equal in number
as practicable. The term of office of the first class shall expire at the
first annual meeting of stockholders succeeding the initial classification
of directors, the term of office of the second class shall expire at the
second annual meeting succeeding such classification and the term of office
of the third class shall expire at the third annual meeting succeeding such
classification. At each annual meeting, directors to replace those whose
terms of office expire at such annual meeting shall be elected to hold
office until the third succeeding annual meeting or until his successor
shall be elected and qualify or until his earlier death, resignation or
removal. If the number of directors is changed, the number of
directorships shall be apportioned among the classes as to make each class
as nearly equal in size as practicable.
(b) Any vacancies on the Board of Directors occurring for any reason,
or any newly created directorships resulting from any increase in the
number of directors, shall be filled by the Board of Directors, the
appointee to any such vacancy to serve for the unexpired portion of the
term of the director whose leaving the Board created the vacancy, and the
appointee to any newly created directorship to be assigned by the Board to
such class of the Board so as to make the classes as nearly equal in size
as practicable.
ARTICLE TENTH
(a) The affirmative vote of the holders of not less than a majority
of the Voting Stock (as hereinafter defined) of the Corporation shall be
required before the Corporation may purchase any outstanding shares of
Common Stock of the Corporation at a price known by the Corporation to be
above Market Price (as hereinafter defined) from a person known by the
Corporation to be a Selling Stockholder (a hereinafter defined), unless the
purchase is made by the Corporation on the same terms and as a result of a
duly authorized offer to purchase any and all of the outstanding shares of
Common Stock of the Corporation.
(b) For purposes of this ARTICLE TENTH:
(1) The term "Voting Stock" shall mean the outstanding shares of
stock of the Corporation entitled to vote in elections of directors of the
Corporation considered as one class.
(2) The majority vote required by Section (a), when applicable, shall
be in addition to any lesser vote or no vote required or permitted by law
or this Certificate of Incorporation exclusive of this ARTICLE TENTH and
the shares of the Selling Stockholder shall, for this purpose, be counted
as having abstained regardless of how they have been voted.
(3) The term "Market Price" shall mean the highest closing sale
price, during the thirty (30) day period immediately preceding the date in
question, of a share of the Common Stock of the Corporation on the
Composite Tape for New York Stock Exchange Issues, or, if such stock is not
quoted on the Composite Tape or is not listed on such Exchange, on the
principal United States securities exchange registered under the Securities
Exchange Act of 1934 on which such stock is listed, or, if such stock is
not listed on any such exchange, the highest closing bid quotation with
respect to a share of such stock during the thirty (30) day period
preceding the date in question on the National Association of Securities
Dealers, Inc. Automated Quotations System or any system then in use, or if
no such quotations are available, the fair market value on the date in
question of a share of such stock.
(4) The term "Selling Stockholder" shall mean and include any person
who or which is the beneficial owner of in the aggregate more than three
percent (3%) of the outstanding shares of Common Stock of the Corporation
and who or which has purchased or agreed to purchase any of such shares
within the most recent two-year period (other than any stockholder who
owned in excess of 50% of the voting power of the capital stock of the
Corporation on the date of the filing of this Amended and Restated
Certificate of Incorporation).
(5) A "person" shall mean any individual, firm, partnership,
Corporation or other entity.
(6) A person shall be the "beneficial owner" of any shares of Common
Stock of the Corporation:
(i) which such person or any of its Affiliates or Associates (as
hereinafter defined) beneficially owns, directly or indirectly; or
(ii) which such person or any of its Affiliates or Associates has
(a) the right to acquire (whether such right is conditional or exercisable
immediately or only after the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of conversion rights,
exchange rights, warrants or options, or otherwise, or (b) the right to
vote pursuant to any agreement, arrangement or understanding; or
(iii) which are beneficially owned, directly or indirectly, by any
other person with which such person or any of its Affiliates or Associates
has any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing thereof.
(7) The terms "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Act of 1934, as in effect on July 1, 1984.
(8) For the purposes of determining whether a person is a Selling
stockholder, the number of shares of Common Stock deemed to be outstanding
and the number of shares beneficially owned by the person shall include
shares respectively deemed owned through application of paragraph (6) of
this Section (b) but shall not include any other shares of Common Stock
which may be issuable pursuant to any agreement, arrangement or
understanding, or upon exercise of conversion rights, warrants or options,
or otherwise, or shares of the Selling Stockholder whose acquisition of
more than three percent of the outstanding shares of Common Stock of the
Corporation within the most recent two-year period results from other than
a purchase or agreement to purchase or vote shares of the Corporation.
(9) Nothing contained in this ARTICLE TENTH shall be construed to
relieve any Selling Stockholders from any fiduciary obligation imposed by
law.
(10) The Board of Directors of the Corporation shall have the power to
determine the application of or compliance with this ARTICLE TENTH,
including, without limitation, (a) whether a person is a Selling
Stockholder; (b) whether a person is an Affiliate or Associate of another;
(c) whether Section (a) is or has become applicable in respect of a
proposed transaction; (d) what is the Market Price and whether a price is
above Market Price; and (e) when or whether a purchase or agreement to
purchase any share or shares of Common Stock of the Corporation has
occurred and when or whether a person has become a beneficial owner of any
share or shares of Common Stock of the Corporation. Any decision or action
taken by the Board of Directors arising out of or in connection with the
construction, interpretation and effect of this ARTICLE TENTH shall lie
within their absolute discretion and shall be conclusive and binding except
in circumstances involving bad faith.
ARTICLE ELEVENTH
SECTION 1. Vote Required for Certain Business Combinations.
(a) Higher Vote for Certain Business Combinations. In addition to
any affirmative vote required by law or this Certificate of Incorporation,
and except as otherwise expressly provided in Section 2 of this ARTICLE
ELEVENTH, any transaction or contract which involves or includes:
(i) any merger or consolidation of the Corporation or any Subsidiary
(as hereinafter defined) with (a) any Interested Stockholder (as
hereinafter defined) or (b) any other Corporation (whether or not itself an
Interested Stockholder) which is, or after such merger or consolidation
would be, an Affiliate (as hereinafter defined) of an Interested
Stockholder; or
(ii) the issuance or transfer by the Corporation or any Subsidiary (in
one transaction or a series of transactions) to or with any Interested
Stockholder or any Affiliate of any Interested Stockholder of any assets of
the Corporation or any Subsidiary having an aggregate Fair Market Value of
$50 million or more; or
(iii) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of transactions) of any
securities of the Corporation or any Subsidiary to any Interested
Stockholder or any Affiliate of any Interested Stockholder in exchange for
cash, securities (to the extent the acquisition thereof does not come
within the requirements of ARTICLE TENTH) or other property (or a
combination thereof) having an aggregate Fair Market Value of $50 million
or more; or
(iv) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation proposed by or on behalf of any Interested
Stockholder or any Affiliate of any Interested Stockholder; or
(v) any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or any other
transaction (whether or not with or into or otherwise involving an
Interested Stockholder) which has the effect, directly or indirectly, of
increasing the proportionate share of the outstanding shares of any class
of Equity Security (as hereinafter defined) of the Corporation or any
Subsidiary which is directly or indirectly owned by any Interested
Stockholder or any Affiliate of any Interested Stockholder: shall require
the affirmative vote of the holders of at least 80% of the voting power of
the then outstanding shares of capital stock of the Corporation entitled to
vote generally in the election of directors (the "Voting Stock"), voting
together as a single class. Such affirmative vote shall be required
notwithstanding the fact that no vote may be required, or that a lesser
percentage may be specified by law or in any agreement with any national
securities exchange or this Certificate of Incorporation exclusive of this
ARTICLE ELEVENTH.
(b) Definition of "Business Combination". The term "Business
Combination" used in this ARTICLE ELEVENTH shall mean any transaction or
contract which is referred to in any one or more of clauses (i) through (v)
of paragraph (a) of this Section 1.
SECTION 2. When Higher Vote is Not Required.
The provisions of Section 1 of this ARTICLE ELEVENTH shall not be
applicable to any particular Business Combination, and such Business
Combination shall require only such affirmative vote as is required by law
and any other provision of this Certificate of Incorporation, if all of the
conditions specified in either of the following paragraphs (a) or (b) are
met:
(a) Approval by Directors. The Business Combination shall have been
approved by a majority of the Disinterested Directors (as hereinafter
defined).
(b) Price and Procedure Requirements. All of the following conditions
shall have been met:
(i) The aggregate amount of the cash and the Fair Market Value (as
hereinafter defined), as of the date of the consummation of the Business
Combination, of consideration other than cash to be received per share by
holders of Common Stock in such Business Combination shall be at least
equal to the higher of the following:
(a) (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers' fees) paid by
the Interested Stockholder for any shares of Common Stock acquired by it
(1) within the two-year period immediately prior to the first public
announcement of the terms of the proposed Business Combination (the
"Announcement Date") or (2) in the transaction in which it became an
Interested stockholder, whichever is higher; or
(b) the Fair Market Value per share of Common Stock on the
Announcement Date or on the date on which the Interested Stockholder became
an Interested Stockholder (such latter date is referred to in this ARTICLE
ELEVENTH as the "Determination Date"), whichever is higher.
(ii) The aggregate amount of the cash and the Fair Market Value, as of
the date of the consummation of the Business Combination, of consideration
other than cash to be received per share by holders of shares of any other
class of outstanding Voting Stock shall be at least equal to the higher of
the following (it being intended that the requirements of this
paragraph (b)(ii) shall be required to be met with respect to every class
of outstanding Voting Stock, whether or not the Interested Stockholder has
previously acquired any shares of a particular class of Voting Stock):
(a) (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers' fees) paid by
the Interested Stockholder for any shares of such class of Voting Stock
acquired by it (1) within the two-year period immediately prior to the
Announcement Date or (2) in the transaction in which it became an
Interested Stockholder, whichever is higher;
(b) (if applicable) the highest preferential amount per share to
which the holders of shares of such class of Voting Stock are entitled in
the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation; and
(c) the Fair Market Value per share of such class of Voting Stock on
the Announcement Date or on the Determination Date, whichever is higher.
(iii) The consideration to be received by holders of a particular
class of outstanding Voting Stock (including Common Stock) shall be in cash
or in the same form as the Interested Stockholder has previously paid for
shares of such class of Voting Stock. If the Interested Stockholder has
paid for shares of any class of Voting Stock with varying forms of
consideration, the form of consideration for such class of Voting Stock
shall be either cash or the form used to acquire the largest number of
shares of such class of Voting Stock previously acquired by it. The price
determined in accordance with paragraph (b)(i) and (b)(ii) of this
Section 2 shall be subject to appropriate adjustment in the event of any
stock dividend, stock split, combination of shares of similar event.
(iv) After such Interested Stockholder has become an Interested
Stockholder and prior to the consummation of such Business Combination:
(a) except as approved by a majority of the Disinterested Directors, there
shall have been no failure to declare and pay at the regular date therefor
any full quarterly dividends (whether or not cumulative) on any outstanding
stock having preference over the Common Stock as to dividends or upon
liquidation; (b) there shall have been (1) no reduction in the annual rate
of dividends paid on the Common Stock (except as necessary to reflect any
subdivision of the Common Stock), except as approved by a majority of the
Disinterested Directors, and (2) an increase in such annual rate of
dividends as necessary to reflect any reclassification (including any
reverse stock split), recapitalization, reorganization or any similar
transaction which has the effect of reducing the number of outstanding
shares of the Common Stock, unless the failure so to increase such annual
rate is approved by a majority of the Disinterested Directors; and (c) such
Interested Stockholder shall not have become the beneficial owner of any
additional shares of Voting Stock or securities convertible into Voting
Stock except as part of the transaction which results in such Interested
Stockholder becoming an Interest Stockholder.
(v) After such Interested Stockholder has become an Interested
Stockholder, such Interested Stockholder shall not have received the
benefit, directly or indirectly (except proportionately as stockholder), of
any loans, advances, guarantees, ledges or other financial assistance or
any tax credits or other tax advantages provided by the Corporation,
whether in anticipation of or in connection with such Business Combinations
or otherwise.
(vi) A proxy or information statement describing the proposed Business
Combination and complying with the requirements of the Securities Exchange
Act of 1934 and the rules and regulations thereunder (or any subsequent
provisions replacing such Act, rules or regulations) shall be mailed to
public stockholders of the Corporation at least 30-days prior to the
consummation of such Business Combination (whether or not such proxy or
information statement is required to be mailed pursuant to such Act or
subsequent provisions).
SECTION 3. Certain Definitions. For the purpose of this ARTICLE
ELEVENTH:
A. "Person" shall mean any individual, firm, Corporation or other entity.
B. "Interested Stockholder" shall mean any person (other than (i) the
Corporation, (ii) any Subsidiary or (iii) any stockholder who on the date
of the filing of this Amended and Restated Certificate of Incorporation is
then the beneficial owner, directly or indirectly, of 50% or more of the
voting power of the outstanding Voting Stock who or which:
(i) is the beneficial owner, directly or indirectly, of 20% or more
of the voting power of the outstanding Voting Stock; or
(ii) is an Affiliate of the Corporation and at any time within the
two-year period immediately prior to the date in question was the
beneficial owner, directly or indirectly, of 20% or more of the voting
power of the then outstanding Voting Stock; or
(iii) is an assignee of or has otherwise succeeded to any shares of
Voting Stock which were at any time within the two-year period immediately
prior to the date in question beneficially owned by any Interested
Stockholder, if such assignment or succession shall have occurred in the
course of a transaction or series of transactions not involving a public
offering within the meaning of the Securities Act of 1933.
C. A person shall be a "beneficial owner" of any Voting Stock:
(i) which such person or any of its Affiliates or Associates (as
hereinafter defined) beneficially owns directly or indirectly; or
(ii) which such person or any of its Affiliates or Associates has (a) the
right to acquire (whether such right is exercisable immediately or only
after the passage of time), pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (b) the right to vote pursuant to any
agreement, arrangement or understanding;
(iii) which are beneficially owned, directly or indirectly, by any other
person with which such person or any of its Affiliates or Associates has
any agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares of Voting Stock.
D. For the purpose of determining whether a person is an Interested
Stockholder pursuant to paragraph B of this Section 3, the number of shares
of Voting Stock deemed to be outstanding shall include shares deemed owned
through application of paragraph C of this Section 3 but shall not include
any other shares of Voting Stock which may be issuable pursuant to any
agreement, arrangement or understanding, or upon exercise of conversion
rights, warrants or options, or otherwise.
E. "Affiliate" or "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on July 1, 1984.
F. "Subsidiary" means any Corporation of which a majority of any
class of Equity Security is owned, directly or indirectly, by the
Corporation, provided, however, that for the purposes of the definition of
Interested Stockholder set forth in paragraph B of this Section 3, the term
"Subsidiary" shall mean only a Corporation of which a majority of each
class of Equity Security is owned, directly or indirectly, by the
Corporation.
G. "Fair Market Value" means: (i) in the case of stock, the highest
closing sale price during the 30-day period immediately preceding the date
in question of a share of such stock on the Composite Tape for New York
Stock Exchange issues, or, if such stock is not quoted on the Composite
Tape, or the New York Stock Exchange, or, if such stock is not listed on
such Exchange, on the principal United States securities exchange
registered under the Securities Exchange Act of 1934 on which such stock is
listed, or, if such stock is not listed on any exchange, the highest
closing bid quotation with respect to a share of such stock during the 30-
day period preceding the date in question on the National Association of
Securities Dealers, Inc. Automated Quotations System or any system then in
use, or if no such quotations are available, the fair market value on the
date in question of a share of such stock as determined by the
Disinterested Directors in good faith; and (ii) in the case of property
other than cash or stock, the fair market value of such property on the
date in question as determined by a majority of the Disinterested
Directors.
H. In the event of any Business Combination in which the Corporation
survives, the phrase "consideration other than cash to be received" as used
in paragraph (b)(i) and (ii) of Section 2 of this ARTICLE ELEVENTH shall
include the share of Common Stock and/or the shares of any other class of
outstanding Voting Stock retained by the holders of such shares.
I. "Equity Security" shall have the meaning ascribed to such term in
Section 3(a)(11) of the Securities Exchange Act of 1934, as in effect on
July 1, 1984.
J. "Disinterested Director" means any member of the Board of
Directors who is unaffiliated with the Interested Stockholder and was a
member of the Board of Directors prior to the time that the Interested
Stockholder became an Interested Stockholder, and any successor of a
Disinterested Director who is unaffiliated with the Interested Stockholder
and is recommended to succeed a Disinterested Director by a majority of
Disinterested Directors then on the Board of Directors.
SECTION 4. Powers of the Board of Directors.
The Board of Directors shall have the power to interpret all of the
terms and provisions of this ARTICLE ELEVENTH, including, without
limitation, and on the basis of information known to the Board of Directors
after reasonable inquiry (A) whether a person is an Interested Stockholder,
(B) the number of shares of Voting Stock beneficially owned by any person,
(C) whether a person is an Affiliate or Associate of another, (D) whether
the assets which are the subject of any Business Combination have, or the
consideration to be received for the issuance or transfer of securities by
the Corporation or any Subsidiary in any Business Combination has, an
aggregate Fair Market Value of $50 million or more.
SECTION 5. No Effect on Fiduciary Obligations of Interested
Stockholders.
Nothing contained in this ARTICLE ELEVENTH shall be construed to relieve
any Interested Stockholder from any fiduciary obligations imposed by law.
SECTION 6. Amendment, Repeal, etc.
Notwithstanding any other provisions of this Certificate of
Incorporation or the By-Laws (and notwithstanding the fact that a lesser
percentage may be specified by law, this Certificate of Incorporation or
the By-Laws or otherwise) the affirmative vote or consent of the holders of
80% or more of the outstanding Voting Stock voting together as a single
class, shall be required to amend or repeal, or adopt any provisions
inconsistent with, this ARTICLE ELEVENTH or any provision hereof.
ARTICLE TWELFTH
To the fullest extent permitted by the Delaware General Corporation Law
as the same exists or may hereafter be amended, a director of this
Corporation shall not be liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director. The
modification or repeal of this ARTICLE TWELFTH shall not affect the
restriction hereunder of a director's personal liability for any breach,
act or omission occurring prior to such modification or repeal.
Exhibit 4.ii.(c)
Execution Copy
$650,000,000
AMENDED AND RESTATED FIVE-YEAR
CREDIT AGREEMENT
dated as of
December 8, 1999
among
IMC GLOBAL INC.,
Various Financial Institutions,
ROYAL BANK OF CANADA,
as Documentation Agent,
SUNTRUST BANK, ATLANTA,
as Co-Documentation Agent,
THE CHASE MANHATTAN BANK,
as Syndication Agent,
BANK ONE, NA,
as Co-Syndication Agent,
and
BANK OF AMERICA, N.A.,
as Administrative Agent
BANC OF AMERICA SECURITIES LLC,
Lead Arranger and Sole Book Manager
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions 1
SECTION 1.02. Accounting Terms and Determinations 12
SECTION 1.03. Types of Borrowing 13
ARTICLE 2
THE CREDITS
SECTION 2.01. Commitments to Lend 13
SECTION 2.02. Notice of Committed Borrowings 14
SECTION 2.03. Bid Rate Borrowings 14
SECTION 2.04. Notice to Banks; Funding of Loans 18
SECTION 2.05. Registry; Notes 19
SECTION 2.06. Maturity of Loans 19
SECTION 2.07. Interest Rates 19
SECTION 2.08. Fees 21
SECTION 2.09. Optional Termination or Reduction of Commitments 22
SECTION 2.10. Method of Electing Interest Rates 22
SECTION 2.11. Scheduled Termination of Commitments 23
SECTION 2.12. Optional Prepayments 23
SECTION 2.13. General Provisions as to Payments 24
SECTION 2.14. Funding Losses 24
SECTION 2.15. Computation of Interest and Fees 25
SECTION 2.16. Letters of Credit 25
SECTION 2.17. Regulation D Compensation 28
SECTION 2.18. Takeout of Swingline Loans 28
SECTION 2.19. Foreign Costs 29
ARTICLE 3
CONDITIONS
SECTION 3.01. Effectiveness 30
SECTION 3.02. Borrowings and Issuance of Letters of Credits 31
SECTION 3.03. First Borrowing by or Issuance of Letter of Credit
for Each Eligible Subsidiary 31
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Corporate Existence and Power 32
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention 32
SECTION 4.03. Binding Effect 32
SECTION 4.04. Financial Information 32
SECTION 4.05. Litigation 33
SECTION 4.06. Compliance with Laws 33
SECTION 4.07. Environmental Matters 34
SECTION 4.08. Taxes 34
SECTION 4.09. Subsidiaries 34
SECTION 4.10. Regulatory Restrictions on Borrowing 34
SECTION 4.11. Full Disclosure 34
SECTION 4.12. Year 2000 35
ARTICLE 5
COVENANTS
SECTION 5.01. Information 35
SECTION 5.02. Payment of Obligations 37
SECTION 5.03. Maintenance of Property; Insurance 37
SECTION 5.04. Conduct of Business and Maintenance of Existence 37
SECTION 5.05. Compliance with Laws 38
SECTION 5.06. Inspection of Property, Books and Records 38
SECTION 5.07. Mergers and Sales of Assets 38
SECTION 5.08. Use of Proceeds 39
SECTION 5.09. Negative Pledge 39
SECTION 5.10. Debt of Subsidiaries 40
SECTION 5.11. Transactions with Affiliates 40
SECTION 5.12. Leverage Ratio 40
ARTICLE 6
DEFAULTS
SECTION 6.01. Events of Default 41
SECTION 6.02. Notice of Default 43
SECTION 6.03. Cash Cover 43
ARTICLE 7
THE ADMINISTRATIVE AGENT
SECTION 7.01. Appointment and Authorization 44
SECTION 7.02. Administrative Agent and Affiliates 44
SECTION 7.03. Action by Administrative Agent 44
SECTION 7.04. Consultation with Experts 44
SECTION 7.05. Liability of Administrative Agent 44
SECTION 7.06. Indemnification 45
SECTION 7.07. Credit Decision 45
SECTION 7.08. Successor Administrative Agent 45
SECTION 7.09. Agents' Fees 45
SECTION 7.10. Other Agents 46
ARTICLE 8
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate
or Unfair 46
SECTION 8.02. Illegality 46
SECTION 8.03. Increased Cost and Reduced Return 47
SECTION 8.04. Taxes 48
SECTION 8.05. Base Rate Loans Substituted for Affected
Fixed Rate Loans 50
SECTION 8.06. Substitution of Bank 51
ARTICLE 9
REPRESENTATIONS AND WARRANTIES OF ELIGIBLE SUBSIDIARIES
SECTION 9.01. Corporate Existence and Power 51
SECTION 9.02. Corporate and Governmental Authorization;
Contravention 51
SECTION 9.03. Binding Effect 51
SECTION 9.04. Taxes 52
ARTICLE 10
GUARANTY
SECTION 10.01. The Guaranty 52
SECTION 10.02. Guaranty Unconditional 52
SECTION 10.03. Discharge Only Upon Payment In Full;
Reinstatement In Certain Circumstances 53
SECTION 10.04. Waiver by the Company 53
SECTION 10.05. Subrogation 53
SECTION 10.06. Stay of Acceleration 53
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. Notices 54
SECTION 11.02. No Waivers 54
SECTION 11.03. Expenses; Indemnification 54
SECTION 11.04. Sharing of Set-offs 55
SECTION 11.05. Amendments and Waivers 55
SECTION 11.06. Successors and Assigns 56
SECTION 11.07. Collateral 57
SECTION 11.08. Confidentiality 57
SECTION 11.09. Governing Law; Submission to Jurisdiction 58
SECTION 11.10. Counterparts; Integration 58
SECTION 11.11. Waiver of Jury Trial 58
SECTION 11.12. Effect of Amendment and Restatement;
Resignation of Resigning Agent 58
PRICING SCHEDULE
SCHEDULE I Existing Letters of Credit
EXHIBIT A - Note
EXHIBIT B - Form of Bid Rate Quote Request
EXHIBIT C - Form of Invitation for Bid Rate Quotes
EXHIBIT D - Form of Bid Rate Quote
EXHIBIT E-1 - Opinion of Special Counsel for the Company
EXHIBIT E-2 - Opinion of General Counsel of the Company
EXHIBIT F - Opinion of Mayer, Brown & Platt, Special Counsel for the
Administrative Agent
EXHIBIT G - Assignment and Assumption Agreement
EXHIBIT H - Form of Election to Participate
EXHIBIT I - Form of Election to Terminate
EXHIBIT J - Matters to be covered in Opinion of Counsel for Eligible
Subsidiaries
EXHIBIT K - Form of Notice of Borrowing
EXHIBIT L - Form of Notice of Interest Rate Election
AMENDED AND RESTATED FIVE-YEAR
CREDIT AGREEMENT
AMENDED AND RESTATED FIVE-YEAR CREDIT AGREEMENT dated as of
December 8, 1999 among IMC GLOBAL INC., a Delaware corporation (together
with its successors, the "Company"), various financial institutions, ROYAL
BANK OF CANADA, as Documentation Agent, SUNTRUST BANK, ATLANTA, as Co-
Documentation Agent, THE CHASE MANHATTAN BANK, as Syndication Agent, BANK
ONE, NA, as Co-Syndication Agent, and BANK OF AMERICA, N.A., as
Administrative Agent.
WHEREAS, the Company, the financial institutions listed on the
signature pages hereof and Morgan Guaranty Trust Company of New York, as
administrative agent (in such capacity, the "Resigning Administrative
Agent"), are parties to a Five-Year Credit Agreement dated as of December
15, 1997 (as amended prior to the date hereof, the "Existing Credit
Agreement"); and
WHEREAS, the signatories hereto have agreed (a) to amend the Existing
Credit Agreement in certain respects, including (i) appointing Bank of
America, N.A. as Administrative Agent in place of the Resigning
Administrative Agent, (ii) revising certain definitions and (iii) adding a
utilization fee, and (b) to restate the Existing Credit Agreement in its
entirety pursuant hereto;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE DEFINITIONS
1.1. SECTION Definitions . The following terms, as used herein,
have the following meanings:
1.2.
1.3. "Acquisition" means an acquisition by the Company or any of its
Consolidated Subsidiaries of a company, a division, a location or a line of
business or of all or substantially all of the assets of any of the
foregoing.
1.4.
1.5. "Administrative Agent" means Bank of America, N.A. in its
capacity as administrative agent for the Banks hereunder, and its
successors in such capacity.
1.6.
1.7. "Administrative Questionnaire" means, with respect to each Bank,
the administrative questionnaire in the form submitted to such Bank by the
Administrative Agent and submitted to the Administrative Agent (with a copy
to the Company) duly completed by such Bank.
1.8.
1.9. "Affiliate" means (i) any Person that directly, or indirectly
through one or more intermediaries, controls the Company (a "Controlling
Person") or (ii) any Person (other than the Company or a Subsidiary) which
is controlled by or is under common control with a Controlling Person. As
used herein, the term "control" means possession, directly or indirectly,
of the power to vote 10% or more of any class of voting securities of a
Person or to direct or cause the direction of the management or policies of
a Person, whether through the ownership of voting securities, by contract
or otherwise.
1.10.
1.11. "Agent" means any one of the Administrative Agent, the
Documentation Agent, the Co-Documentation Agent, the Syndication Agent or
the Co-Syndication Agent, and "Agents" means any two or more of the
foregoing.
1.12.
1.13. "Agrico" means IMC-Agrico Company, a Delaware general
partnership, and its successors.
1.14.
1.15. "Applicable Lending Office" means, with respect to any Bank, (i)
in the case of its Domestic Loans, its Domestic Lending Office, (ii) in the
case of its Euro-Dollar Loans, its Euro-Dollar Lending Office, (iii) in the
case of its Bid Rate Loans, its Bid Rate Lending Office and (iv) in the
case of its Swingline Loans, its Swingline Lending Office.
1.16.
1.17. "Approved Officer" means the president, the chief financial
officer, the acting chief financial officer, the treasurer, a vice
president, an assistant treasurer or the controller of the Company or such
other representative of the Company as may be designated by any one of the
foregoing with the consent of the Administrative Agent.
1.18.
1.19. "Assignee" has the meaning set forth in Section 11.06(c).
1.20.
1.21. "Bank" means each bank or other financial institution listed on
the signature pages hereof, each Assignee which becomes a Bank pursuant to
Section 11.06(c), and their respective successors.
1.22.
1.23. "Base Rate" means, for any day, a rate per annum equal to the
higher of (i) the Prime Rate for such day and (ii) the sum of 1/2 of 1%
plus the Federal Funds Rate for such day.
1.24.
1.25. "Base Rate Loan" means a Syndicated Loan which bears interest at
the Base Rate pursuant to the applicable Notice of Committed Borrowing or
Notice of Interest Rate Election or the provisions of Article 8.
1.26.
1.27. "Benefit Arrangement" means at any time an employee benefit plan
within the meaning of Section 3(3) of ERISA which is not a Plan or a
Multiemployer Plan and which is maintained or otherwise contributed to by
any member of the ERISA Group.
1.28.
1.29. "Bid Rate (General)" has the meaning set forth in Section
2.03(d).
1.30.
1.31. "Bid Rate (General) Auction" means a solicitation of Bid Rate
Quotes setting forth Bid Rates (General) pursuant to Section 2.03.
1.32.
1.33. "Bid Rate (General) Loan" means a loan made or to be made by a
Bank pursuant to a Bid Rate (General) Auction.
1.34. "Bid Rate (Indexed) Auction" means a solicitation of Bid Rate
Quotes setting forth Bid Rate (Indexed) Margins based on the London
Interbank Offered Rate pursuant to Section 2.03.
1.35.
1.36. "Bid Rate (Indexed) Loan" means a loan made or to be made by a
Bank pursuant to a Bid Rate (Indexed) Auction (including such a loan
bearing interest at the Base Rate pursuant to Section 8.01(a)).
1.37.
1.38. "Bid Rate (Indexed) Margin" has the meaning set forth in Section
2.03(d).
1.39.
1.40. "Bid Rate Lending Office" means, as to each Bank, its Domestic
Lending Office or such other office, branch or affiliate of such Bank as it
may hereafter designate as its Bid Rate Lending Office by notice to the
Company and the Administrative Agent; provided that any Bank may from time
to time by notice to the Company and the Administrative Agent designate
separate Bid Rate Lending Offices for its Bid Rate (Indexed) Loans, on the
one hand, and its Bid Rate (General) Loans, on the other hand, in which
case all references herein to the Bid Rate Lending Office of such Bank
shall be deemed to refer to either or both of such offices, as the context
may require.
1.41.
1.42. "Bid Rate Loan" means a Bid Rate (Indexed) Loan or a Bid Rate
(General) Loan.
1.43.
1.44. "Bid Rate Quote" means an offer by a Bank to make a Bid Rate
Loan in accordance with Section 2.03.
1.45.
1.46. "Borrower" means the Company or any Eligible Subsidiary, as the
context may require, and their respective successors, and "Borrowers" means
all of the foregoing. References to "the Borrower" in connection with any
Loan or Letter of Credit are to the Borrower to which such Loan is or is to
be made or at whose request such Letter of Credit is or is to be issued.
As the context may permit, the terms "Borrower" and "Borrowers" include
the Company in its capacity as guarantor of the obligations of the other
Borrowers hereunder.
1.47.
1.48. "Borrowing" has the meaning set forth in Section 1.03.
1.49.
1.50. "Co-Documentation Agent" means SunTrust Bank, Atlanta in its
capacity as co-documentation agent for the Banks hereunder, and its
successors in such capacity.
1.51.
1.52. "Commitment" means (i) with respect to each Bank listed on the
signature pages hereof, the amount set forth opposite the name of such Bank
on the signature pages hereof, and (ii) with respect to each Assignee which
becomes a Bank pursuant to Section 11.06(c), the amount of the Commitment
thereby assumed by it, in each case as such amount may from time to time be
reduced pursuant to Section 2.09 or 11.06(c) or increased pursuant to
Section 11.06(c).
1.53.
1.54. "Committed Loan" means a Syndicated Loan or a Swingline Loan.
1.55.
1.56. "Company" has the meaning set forth in the introductory
paragraph.
1.57. "Consolidated Net Worth" means at any date the consolidated
shareholders' equity of the Company and its Consolidated Subsidiaries
determined as of such date (other than any amount attributable to stock
which is required to be redeemed or is redeemable at the option of the
holder, if certain events or conditions occur or exist or otherwise).
1.58.
1.59. "Consolidated Subsidiary" means, for any Person, at any date any
Subsidiary or other entity the accounts of which would be consolidated with
those of such Person in its consolidated financial statements if such
statements were prepared as of such date; unless otherwise specified
"Consolidated Subsidiary" means a Consolidated Subsidiary of the Company.
1.60.
1.61. "Co-Syndication Agent" means Bank One, NA in its capacity as co-
syndication agent for the Banks hereunder, and its successors in such
capacity.
1.62.
1.63. "Debt" of any Person means at any date, without duplication, (i)
all obligations of such Person for borrowed money, (ii) all obligations of
such Person evidenced by bonds, debentures, notes or other similar
instruments, (iii) all obligations of such Person to pay the deferred
purchase price of property or services, except trade accounts payable and
similar items arising in the ordinary course of business, (iv) all
obligations of such Person as lessee which are capitalized in accordance
with generally accepted accounting principles, (v) all non-contingent
obligations (and, for purposes of Section 5.09 and the definition of
Material Financial Obligations, all contingent obligations) of such Person
to reimburse any bank or other Person in respect of amounts paid under a
letter of credit or similar instrument, (vi) all Debt secured by a Lien on
any asset of such Person, whether or not such Debt is otherwise an
obligation of such Person, provided that the amount of such Debt treated as
Debt of such Person solely pursuant to this clause (vi) shall not exceed
the greater of the book value or the fair market value of the collateral,
and (vii) all Debt of others Guaranteed by such Person. For purposes of
clause (v) above, a reimbursement obligation in respect of a letter of
credit or similar instrument is contingent unless and until there shall
have been a drawing under such letter of credit or instrument.
1.64.
1.65. "Default" means any condition or event which constitutes an
Event of Default or which with the giving of notice or lapse of time or
both would, unless cured or waived, become an Event of Default.
1.66.
1.67. "Derivatives Obligations" of any Person means all obligations of
such Person in respect of any rate swap transaction, basis swap, forward
rate transaction, commodity swap, commodity option, equity or equity index
swap, equity or equity index option, bond option, interest rate option,
foreign exchange transaction, cap transaction, floor transaction, collar
transaction, currency swap transaction, cross-currency rate swap
transaction, currency option or any other similar transaction (including
any option with respect to any of the foregoing transactions) or any
combination of the foregoing transactions.
1.68.
1.69. "Documentation Agent" means Royal Bank of Canada in its capacity
as documentation agent in respect of this Agreement.
1.70. "Domestic Business Day" means any day except a Saturday, Sunday
or other day on which commercial banks in New York City, Charlotte or
Chicago are authorized by law to close.
1.71.
1.72. "Domestic Lending Office" means, as to each Bank, its office
located at its address set forth in its Administrative Questionnaire (or
identified in its Administrative Questionnaire as its Domestic Lending
Office) or such other office as such Bank may hereafter designate as its
Domestic Lending Office by notice to the Company and the Administrative
Agent.
1.73.
1.74. "Effective Date" means the date this Agreement becomes effective
in accordance with Section 3.01.
1.75.
1.76. "Election to Participate" means an Election to Participate
substantially in the form of Exhibit H hereto.
1.77.
1.78. "Election to Terminate" means an Election to Terminate
substantially in the form of Exhibit I hereto.
1.79.
1.80. "Eligible Subsidiary" means any Substantially-Owned Consolidated
Subsidiary of the Company as to which an Election to Participate shall have
been delivered to the Administrative Agent and as to which an Election to
Terminate shall not have been delivered to the Administrative Agent. Each
such Election to Participate and Election to Terminate shall be duly
executed on behalf of such Consolidated Subsidiary and the Company in such
number of copies as the Administrative Agent may request. The delivery of
an Election to Terminate shall not affect any obligation of an Eligible
Subsidiary theretofore incurred. The Administrative Agent shall promptly
give notice to the Banks of the receipt of any Election to Participate or
Election to Terminate.
1.81.
1.82. "Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
other governmental restrictions relating to the environment or to
emissions, discharges or releases of pollutants, contaminants, chemicals,
or industrial, toxic or hazardous substances or wastes into the environment
including, without limitation, ambient air, surface water, ground water, or
land, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or
wastes.
1.83.
1.84. "ERISA" means the Employee Retirement Income Security Act of
1974, as amended, or any successor statute.
1.85.
1.86. "ERISA Group" means the Company, any Subsidiary and all members
of a controlled group of corporations and all trades or businesses (whether
or not incorporated) under common control which, together with the Company
or any Subsidiary, are treated as a single employer under Section 414 of
the Internal Revenue Code.
1.87.
1.88. "Euro-Dollar Business Day" means any Domestic Business Day on
which commercial banks are open for international business (including
dealings in dollar deposits) in London.
1.89.
1.90. "Euro-Dollar Lending Office" means, as to each Bank, its office,
branch or affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its
Euro-Dollar Lending Office) or such other office, branch or affiliate of
such Bank as it may hereafter designate as its Euro-Dollar Lending Office
by notice to the Company and the Administrative Agent.
1.91.
1.92. "Euro-Dollar Loan" means a Syndicated Loan which bears interest
at a Euro-Dollar Rate pursuant to the applicable Notice of Committed
Borrowing or Notice of Interest Rate Election.
1.93.
1.94. "Euro-Dollar Margin" means a rate per annum determined in
accordance with the Pricing Schedule.
1.95.
1.96. "Euro-Dollar Rate" means a rate of interest determined pursuant
to Section 2.07(b) on the basis of a London Interbank Offered Rate.
1.97.
1.98. "Euro-Dollar Reference Banks" means the principal London offices
of Royal Bank of Canada, The Chase Manhattan Bank and Bank of America, N.A.
1.99.
1.100. "Euro-Dollar Reserve Percentage" has the meaning set forth in
Section 2.17.
1.101.
1.102. "Events of Default" has the meaning set forth in Section 6.01.
1.103.
1.104. "Existing Credit Agreement" has the meaning set forth in the
recitals.
1.105.
1.106. "Existing Harris Debt" means Debt of Harris Chemical North
America, Inc., a Delaware corporation, under its outstanding $250,000,000
10.25% Senior Secured Discount Notes and its outstanding $335,000,000
10.75% Senior Subordinated Notes.
1.107.
1.108. "Existing Letters of Credit" means the letters of credit
identified in Schedule I.
1.109.
1.110. "Federal Funds Rate" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100th 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
Domestic Business Day next succeeding such day, provided that (i) if such
day is not a Domestic Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Domestic
Business Day as so published on the next succeeding Domestic Business Day,
and (ii) if no such rate is so published on such next succeeding Domestic
Business Day, the Federal Funds Rate for such day shall be the average rate
quoted to Bank of America, N.A. (or its successor as Administrative Agent)
on such day on such transactions as determined by the Administrative Agent.
1.111.
1.112. "Fixed Rate Loans" means Euro-Dollar Loans, Swingline Loans or
Bid Rate Loans (excluding Swingline Loans or Bid Rate (Indexed) Loans
bearing interest at the Base Rate) or any combination of the foregoing.
1.113.
1.114. "Group of Loans" means at any time a group of Loans consisting
of (i) all Loans to a single Borrower which are Base Rate Loans at such
time or (ii) all Euro-Dollar Loans to a single Borrower having the same
Interest Period at such time, provided that, if a Committed Loan of any
particular Bank is converted to or made as a Base Rate Loan pursuant to
Article 8, such Loan shall be included in the same Group or Groups of Loans
from time to time as it would have been if it had not been so converted or
made.
1.115.
1.116. "Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt of
any other Person, provided that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.
The term "Guarantee" used as a verb has a corresponding meaning.
1.117.
1.118. "Harris Chemical Acquisition" means, collectively, the merger of
Harris Chemical Group with and into IMC Merger Sub Inc., a wholly-owned
Subsidiary of the Company, with Harris Chemical Group as the survivor
thereof, pursuant to the certain Agreement and Plan of Merger, dated
December 11, 1997, by and among the Company, IMC Merger Sub, Inc. and
Harris Chemical Group, and the acquisition, directly or indirectly, by the
Company of all of the outstanding shares of Harris Chemical Australia Pty
Limited pursuant to the Sale and Purchase Agreement made as of December 11,
1997 among Prudential Asset Management Asia Limited, DGHA Persons and
Trusts named therein, Search Investment NV, Harris Chemical Australia Pty
Limited, Marsupial L.L.C., Marsupial-II L.L.C., Soda Ash (L) BHD, Manager
Shareholders named therein and the Company.
1.119.
1.120. "Harris Chemical Group" means Harris Chemical Group, Inc., a
Delaware corporation.
1.121.
1.122. "IMC Inorganic Chemicals Inc." means IMC Inorganic Chemicals
Inc., a Delaware corporation, formerly known as Harris Chemical Group, Inc.
1.123.
1.124. "Indemnitee" has the meaning set forth in Section 11.03(b).
1.125.
1.126. "Interest Period" means: (1) with respect to each Euro-Dollar
Loan, the period commencing on the date of borrowing specified in the
applicable Notice of Borrowing or on the date specified in an applicable
Notice of Interest Rate Election and ending one, two, three or six, or, if
deposits of a corresponding maturity are available to each Bank in the
London interbank market, nine or twelve, months thereafter, as the Borrower
may elect in such notice; provided that:
1.127.
(a) any Interest Period which would otherwise end on a day which is not a
Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case such Interest Period shall end on the
next preceding Euro-Dollar Business Day; and
(a) any Interest Period which begins on the last Euro-Dollar Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Euro-Dollar Business Day of a calendar month;
(2) with respect to each Swingline Loan, the period commencing on the
date of borrowing specified in the applicable Notice of Borrowing and
ending such number of days thereafter (but not more than 10 Euro-Dollar
Business Days) as the Borrower may elect in such notice; provided that any
Interest Period which would otherwise end on a day which is not a Euro-
Dollar Business Day shall be extended to the next succeeding Euro-Dollar
Business Day;
(3) with respect to each Bid Rate (Indexed) Loan, the period
commencing on the date of borrowing specified in the applicable Notice of
Borrowing and ending such number of months thereafter (but not less than
one month) as the Borrower may elect in accordance with Section 2.03;
provided that:
(a) any Interest Period which would otherwise end on a day which
is not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case such Interest Period shall end on the
next preceding Euro-Dollar Business Day; and
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Euro-Dollar Business Day of a
calendar month; and
(4) with respect to each Bid Rate (General) Loan, the period commencing
on the date of borrowing specified in the applicable Notice of Borrowing
and ending such number of days thereafter (but not less than 7 days) as the
Borrower may elect in accordance with Section 2.03; provided that any
Interest Period which would otherwise end on a day which is not a
Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day; and provided further that any Interest Period
which would otherwise end after the Termination Date shall end on the
Termination Date.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"Issuing Bank" means Morgan Guaranty Trust Company of New York,
Suntrust Bank, Atlanta, Bank of America, N.A., Cooperatieve Centrale
Raiffeisen-Boerenleenbank B.A., "Rabobank International", New York Branch,
Royal Bank of Canada, Harris Trust and Savings Bank and any other Bank that
may agree to issue letters of credit hereunder, in each case as issuer of a
Letter of Credit hereunder.
"Letter of Credit" means a letter of credit to be issued or issued
hereunder by the Issuing Bank in accordance with Section 2.16.
"Letter of Credit Liabilities" means, for any Bank and at any time,
such Bank's ratable participation in the sum of (x) the amounts then owing
by the Borrower in respect of amounts drawn under Letters of Credit and (y)
the aggregate amount then available for drawing under all Letters of
Credit.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge or security interest, or any other type of preferential arrangement
that has the practical effect of creating a security interest, in respect
of such asset. For the purposes of this Agreement, the Company or any
Subsidiary shall be deemed to own subject to a Lien any asset which it has
acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention
agreement relating to such asset.
"Loan" means a Committed Loan or a Bid Rate Loan and "Loans" means
Committed Loans or Bid Rate Loans or any combination of the foregoing.
"London Interbank Offered Rate" has the meaning set forth in Section
2.07(b).
"Material Adverse Effect" means a material adverse effect upon (i) the
financial condition, operations or properties of the Company and its
Consolidated Subsidiaries, taken as a whole, or (ii) the ability of the
Company to perform under, or the ability of the Banks to enforce repayment
of the Loans and the other obligations of the Company under, this
Agreement.
"Material Financial Obligations" means a principal or face amount of
Debt and/or payment or collateralization obligations in respect of
Derivatives Obligations of the Company and/or one or more of its
Subsidiaries, arising in one or more related or unrelated transactions,
exceeding in the aggregate $100,000,000.
"Material Plan" means at any time a Plan or Plans having aggregate
Unfunded Liabilities in excess of $100,000,000.
"Material Subsidiary" means, at any date, (i) any Subsidiary having (x)
at least 5% of the total consolidated assets of the Company and its
Consolidated Subsidiaries (determined as of the last day of the fiscal
quarter of such Person most recently ended on or prior to such date) or (y)
at least 5% of Consolidated EBITDA (as defined in Section 5.12) for the
four consecutive fiscal quarters most recently ended on or prior to such
date or (ii) collectively, any one or more Subsidiaries having (x) at least
10% of the total consolidated assets of the Company and its Consolidated
Subsidiaries (determined as of the last day of the fiscal quarter of such
Persons most recently ended on or prior to such date) or (y) at least 10%
of Consolidated EBITDA for the four consecutive fiscal quarters most
recently ended on or prior to such date.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means at any time an employee pension benefit plan
within the meaning of Section 4001(a)(3) of ERISA to which any member of
the ERISA Group either (i) is then making or accruing an obligation to make
contributions or (ii) has within the preceding five plan years made
contributions, including for these purposes any Person which was at the
time such contribution was made a member of the ERISA Group.
"Notes" means promissory notes of the Borrower, in the form required by
Section 2.05, evidencing the obligation of the Borrower to repay the Loans,
and "Note" means any one of such promissory notes issued hereunder.
"Notice of Borrowing" means a Notice of Committed Borrowing (as defined
in Section 2.02) or a Notice of Bid Rate Borrowing (as defined in Section
2.03(f)), in either case in substantially the form of Exhibit K.
"Notice of Interest Rate Election" has the meaning set forth in Section
2.10(a).
"Notice of Issuance" has the meaning set forth in Section 2.16(b).
"Parent" means, with respect to any Bank, any Person controlling such
Bank.
"Participant" has the meaning set forth in Section 11.06(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or an agency
or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code
and either (i) is maintained, or contributed to, by any member of the ERISA
Group for employees of any member of the ERISA Group or (ii) has at any
time within the preceding five years been maintained, or contributed to, by
any Person which was at such time a member of the ERISA Group for employees
of any Person which was at such time a member of the ERISA Group.
"PLP" means Phosphate Resource Partners Limited Partnership, a Delaware
limited partnership, and its successors.
"Pricing Schedule" means the schedule annexed hereto denominated as
such.
"Prime Rate" means the rate of interest publicly announced by Bank of
America, N.A. in Charlotte, North Carolina from time to time as its Prime
Rate. Each change in the Prime Rate shall be effective from and including
the day such change is publicly announced.
"Quarterly Payment Date" means the last Domestic Business Day of each
March, June, September and December.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Required Banks" means at any time Banks having more than 50% of the
aggregate amount of the Commitments or, if the Commitments shall have been
terminated, holding more than 50% of the sum of the aggregate unpaid
principal amount of the Loans and the aggregate Letter of Credit
Liabilities.
"Resigning Agent" has the meaning set forth in the recitals.
"Revolving Credit Period" means the period from and including the
Effective Date to but not including the Termination Date.
"S&P" means Standard & Poor's Rating Services, a division of The McGraw-
Hill Companies, Inc.
"Series E Preferred Stock" means the shares of preferred stock of The
Vigoro Corporation, a Delaware corporation and wholly-owned Subsidiary of
the Company, par value $100 per share, designated Series E.
"Subsidiary" means, as to any Person, 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 such Person; unless otherwise specified, "Subsidiary" means a Subsidiary
of the Company.
"Substantial Assets" means assets sold or otherwise disposed of in a
single transaction or a series of related transactions representing 25% or
more of the consolidated assets of the Company and its Consolidated
Subsidiaries, taken as a whole.
"Substantially-Owned Consolidated Subsidiary" means any Consolidated
Subsidiary at least 80% of the Voting Stock of which is at the time
directly or indirectly owned by the Company; provided that Agrico shall be
deemed a Substantially-Owned Consolidated Subsidiary for so long as it is a
Consolidated Subsidiary.
"Swingline Bank" means Bank of America, N.A., Suntrust Bank, Atlanta
and any other Bank that may agree to make Swingline Loans hereunder.
"Swingline Lending Office" means, as to any Swingline Bank, its office
located at its address set forth in its Administrative Questionnaire (or
identified in its Administrative Questionnaire as its Swingline Lending
Office) or such other office as such Swingline Bank may hereafter designate
as its Swingline Lending Office by notice to the Borrower and the
Administrative Agent.
"Swingline Loan" means a loan made by the Swingline Bank pursuant to
Section 2.01(b).
"Swingline Takeout Loan" means a Base Rate Loan made pursuant to
Section 2.18.
"Syndicated Loan" means a Loan made by a Bank pursuant to Section
2.01(a); provided that, if any loan or loans (or portions thereof) are
combined or subdivided pursuant to a Notice of Interest Rate Election, the
term "Syndicated Loan" shall refer to the combined principal amount
resulting from such combination or to each of the separate principal
amounts resulting from such subdivision, as the case may be.
"Syndication Agent" means The Chase Manhattan Bank in its capacity as
syndication agent in respect of this Agreement.
"Termination Date" means December 15, 2002, or, if such day is not a
Euro-Dollar Business Day, the next preceding Euro-Dollar Business Day.
"United States" means the United States of America, including the
States and the District of Columbia, but excluding its territories and
possessions.
"Unfunded Liabilities" means, with respect to any Plan at any time, the
amount (if any) by which (i) the value of all benefit liabilities under
such Plan, determined on a plan termination basis using the assumptions
prescribed by the PBGC for purposes of Section 4044 of ERISA (or other
applicable standard), exceeds (ii) the fair market value of all Plan assets
allocable to such liabilities under Title IV of ERISA (excluding any
accrued but unpaid contributions), all determined as of the then most
recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the ERISA Group to
the PBGC or any other Person under Title IV of ERISA.
"Unrefunded Swingline Loan" has the meaning set forth in Section
2.18(b).
"Voting Stock" means 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.
1.1. SECTION Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted,
all accounting determinations hereunder shall be made, and all financial
statements required to be delivered hereunder shall be prepared in
accordance with generally accepted accounting principles as in effect from
time to time, applied on a basis consistent in all material respects
(except for changes concurred in by the Company's independent public
accountants) with the most recent audited consolidated financial statements
of the Company and its Consolidated Subsidiaries delivered to the Banks;
provided that, if the Company notifies the Administrative Agent that the
Company wishes to amend any covenant in Article 5 to eliminate the effect
of any change in generally accepted accounting principles on the operation
of such covenant (or if the Administrative Agent notifies the Company that
the Required Banks wish to amend Article 5 for such purpose), then the
Company's compliance with such covenant shall be determined on the basis of
generally accepted accounting principles in effect immediately before the
relevant change in generally accepted accounting principles became
effective, until either such notice is withdrawn or such covenant is
amended in a manner satisfactory to the Company and the Required Banks, and
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 the financial condition and performance of the Company and its
Consolidated Subsidiaries shall be the same after such changes as if such
changes had not been made.
1.2.
1.3. SECTION Types of Borrowings . The term "Borrowing" denotes the
aggregation of Loans of one or more Banks to be made to a single Borrower
pursuant to Article 2 on a single date and for a single Interest Period.
Borrowings are classified for purposes of this Agreement either by
reference to the pricing of Loans comprising such Borrowing (e.g., a "Fixed
Rate Borrowing" is a Euro-Dollar Borrowing, a Swingline Borrowing or a Bid
Rate Borrowing (excluding any such Borrowing consisting of Swingline Loans
or Bid Rate (Indexed) Loans bearing interest at the Base Rate), and a "Euro-
Dollar Borrowing" is a Borrowing comprised of Euro-Dollar Loans) or by
reference to the provisions of Article 2 under which participation therein
is determined (i.e., a "Syndicated Borrowing" is a Borrowing under Section
2.01 in which all Banks participate in proportion to their Commitments,
while a "Bid Rate Borrowing" is a Borrowing under Section 2.03 in which the
Bank participants are determined on the basis of their bids in accordance
therewith).
1.4.
ARTICLE THE CREDITS
1.1. SECTION Commitments to Lend. (a) Syndicated Loans. During the
Revolving Credit Period, each Bank severally agrees, on the terms and
conditions set forth in this Agreement, to make loans to any Borrower
pursuant to this subsection (a) from time to time in amounts such that the
aggregate principal amount of Committed Loans by such Bank, together with
its Letter of Credit Liabilities and its participating interests in any
Unrefunded Swingline Loans, at any one time outstanding to all Borrowers
shall not exceed the amount of its Commitment. Each Borrowing under this
subsection (a) (other than a Swingline Takeout Borrowing) shall be in an
aggregate principal amount of $10,000,000 or any larger multiple of
$1,000,000 (except that any such Borrowing may be in the aggregate amount
available in accordance with Section 3.02(b) and except that any such
Borrowing to refund a Swingline Loan or to fund the reimbursement
obligation in respect of a Letter of Credit may be in the exact amount
required for such purpose) and shall be made from the several Banks ratably
in proportion to their respective Commitments. Within the foregoing
limits, any Borrower may borrow under this subsection (a), repay or, to the
extent permitted by Section 2.12, prepay Loans and reborrow at any time
during the Revolving Credit Period under this subsection (a).
(b) Swingline Loans. From time to time prior to the Termination Date,
each Swingline Bank agrees, on the terms and conditions set forth in this
Agreement, to make loans to any Borrower pursuant to this subsection (b)
from time to time in amounts such that (i) the aggregate principal amount
of its Committed Loans together with its Letter of Credit Liabilities at
any one time outstanding to all Borrowers shall not exceed the amount of
its Commitment and (ii) the aggregate principal amount of Swingline Loans
at any time outstanding shall not exceed $25,000,000. Within the foregoing
limits, any Borrower may borrow under this subsection (b), repay or, to the
extent permitted by Section 2.12, prepay Loans and reborrow at any time
during the Revolving Credit Period under this subsection (b); provided that
the proceeds of a Swingline Borrowing may not be used, in whole or in part,
to refund any prior Swingline Borrowing. Each Borrowing under this
subsection (b) shall be in an aggregate principal amount of $500,000 or any
larger multiple of $250,000 (except that any such Borrowing may be in the
aggregate amount available in accordance with Section 2.01(a)).
1.1. SECTION Notice of Committed Borrowings. The Borrower shall give
the Administrative Agent notice (a "Notice of Committed Borrowing") not
later than 11:00 A.M. (New York City time) on (x) the date of each Base
Rate Borrowing or Swingline Borrowing and (y) the third Euro-Dollar
Business Day before each Euro-Dollar Borrowing, specifying:
1.2.
(a) the date of such Borrowing, which shall be a Domestic
Business Day in the case of a Base Rate Borrowing or a Swingline
Borrowing or a Euro-Dollar Business Day in the case of a Euro-Dollar
Borrowing;
(b) the aggregate amount of such Borrowing;
(c) whether the Loans comprising such Borrowing are to be
Swingline Loans or Syndicated Loans, and, in the case of Swingline
Loans, the applicable Swingline Banks;
(d) in the case of a Syndicated Borrowing, whether the Loans
comprising such Borrowing are to bear interest initially at the Base
Rate or a Euro-Dollar Rate; and
(e) in the case of a Euro-Dollar Borrowing or a Swingline
Borrowing, the duration of the initial Interest Period applicable
thereto, subject to the provisions of the definition of Interest
Period.
1.1. SECTION Bid Rate Borrowings . The Bid Rate Option. In addition
to Committed Borrowings pursuant to Section 2.01, any Borrower may, as set
forth in this Section, request the Banks to make offers to make Bid Rate
Loans to the Borrower. The Banks may, but shall have no obligation to,
make such offers and the Borrower may, but shall have no obligation to,
accept any such offers in the manner set forth in this Section.
1.2.
1.3. (b) Bid Rate Quote Request. When a Borrower wishes to request
offers to make Bid Rate Loans under this Section, it shall transmit to the
Administrative Agent by telex or facsimile transmission a Bid Rate Quote
Request substantially in the form of Exhibit B hereto so as to be received
no later than 11:00 A.M. (New York City time) on (x) the fifth Euro-Dollar
Business Day prior to the date of Borrowing proposed therein, in the case
of a Bid Rate (Indexed) Auction or (y) the Domestic Business Day next
preceding the date of Borrowing proposed therein, in the case of a Bid Rate
(General) Auction (or, in either case, such other time or date as the
Borrower and the Administrative Agent shall have mutually agreed and shall
have notified to the Banks not later than the date of the Bid Rate Quote
Request for the first Bid Rate (Indexed) Auction or Bid Rate (General)
Auction for which such change is to be effective) specifying:
1.4.
1.5. (i) the proposed date of Borrowing, which shall be a
Euro-Dollar Business Day,
1.6.
1.7. (ii) the aggregate amount of such Borrowing, which shall be
$10,000,000 or a larger multiple of $1,000,000,
1.8.
1.9. (iii) the duration of the Interest Period applicable
thereto, subject to the provisions of the definition of Interest Period,
and
1.10.
1.11. (iv) whether the Bid Rate Quotes requested are to set
forth a Bid Rate (Indexed) Margin or a Bid Rate (General).
1.12. The Borrower may request offers to make Bid Rate Loans for more
than one Interest Period in a single Bid Rate Quote Request.
(c) Invitation for Bid Rate Quotes. Promptly upon receipt of a Bid
Rate Quote Request, the Administrative Agent shall send to the Banks by
telex or facsimile transmission an Invitation for Bid Rate Quotes
substantially in the form of Exhibit C hereto, which shall constitute an
invitation by the Borrower to each Bank to submit Bid Rate Quotes offering
to make the Bid Rate Loans to which such Bid Rate Quote Request relates in
accordance with this Section.
(d) Submission and Contents of Bid Rate Quotes. (i) Each Bank may
submit a Bid Rate Quote containing an offer or offers to make Bid Rate
Loans in response to any Invitation for Bid Rate Quotes. Each Bid Rate
Quote must comply with the requirements of this subsection (d) and must be
submitted to the Administrative Agent by telex or facsimile transmission at
its offices specified in or pursuant to Section 11.01 not later than (x)
2:00 P.M. (New York City time) on the fourth Euro-Dollar Business Day prior
to the proposed date of Borrowing, in the case of a Bid Rate (Indexed)
Auction or (y) 10:00 A.M. (New York City time) on the proposed date of
Borrowing, in the case of a Bid Rate (General) Auction (or, in either case,
such other time or date as the Borrower and the Administrative Agent shall
have mutually agreed and shall have notified to the Banks not later than
the date of the Bid Rate Quote Request for the first Bid Rate (Indexed)
Auction or Bid Rate (General) Auction for which such change is to be
effective); provided that Bid Rate Quotes submitted by the Administrative
Agent (or any affiliate of the Administrative Agent) in the capacity of a
Bank may be submitted, and may only be submitted, if the Administrative
Agent or such affiliate notifies the Borrower of the terms of the offer or
offers contained therein not later than (x) 1:00 P.M. (New York City time)
on the fourth Euro-Dollar Business Day prior to the proposed date of
Borrowing, in the case of a Bid Rate (Indexed) Auction or (y) 9:45 A.M.
(New York City time) on the proposed date of Borrowing, in the case of a
Bid Rate (General) Auctions. Subject to Articles 3 and 6, any Bid Rate
Quote so made shall be irrevocable except with the written consent of the
Administrative Agent given on the instructions of the Borrower.
(ii) Each Bid Rate Quote shall be in substantially the form of Exhibit
D hereto and shall in any case specify:
(A) the proposed date of Borrowing,
(B) the principal amount of the Bid Rate Loan for which
each such offer is being made, which principal amount (w) may be
greater than or less than the Commitment of the quoting Bank, (x)
must be $5,000,000 or a larger multiple of $1,000,000, (y) may
not exceed the principal amount of Bid Rate Loans for each
Interest Period for which offers were requested and (z) may be
subject to an aggregate limitation as to the principal amount of
Bid Rate Loans for which offers being made by such quoting Bank
may be accepted,
(C) in the case of a Bid Rate (Indexed) Auction, the margin
above or below the applicable London Interbank Offered Rate (the
"Bid Rate (Indexed) Margin") offered for each such Bid Rate Loan,
expressed as a percentage (specified to the nearest 1/10,000th of
1%) to be added to or subtracted from such base rate,
(D) in the case of a Bid Rate (General) Auction, the rate
of interest per annum (specified to the nearest 1/10,000th of 1%)
(the "Bid Rate (General)") offered for each such Bid Rate Loan,
and
(E) the identity of the quoting Bank.
A Bid Rate Quote may set forth up to five separate offers by the quoting
Bank with respect to each Interest Period specified in the related
Invitation for Bid Rate Quotes.
(iii) Any Bid Rate Quote shall be disregarded if:
(A) it is not substantially in conformity with Exhibit D
hereto or does not specify all of the information required by
subsection 2.03(d)(ii);
(B) it contains qualifying, conditional or similar language
beyond that contemplated by Exhibit D (other than a qualification
or condition as to minimum amount);
(C) it proposes terms other than or in addition to those
set forth in the applicable Invitation for Bid Rate Quotes; or
(D) it arrives after the time set forth in subsection
2.03(d)(i).
(e) Notice to Borrower. The Administrative Agent shall promptly but
in no event later than (i) 5:00 P.M. (New York City time) on the fourth
Euro-Dollar Business Day prior to the proposed date of Borrowing, in the
case of a Bid Rate (Indexed) Auction or (ii) 10:30 A.M. (New York City
time) on the proposed date of Borrowing, in the case of a Bid Rate
(General) Auction (or, in either case such other time or date as the
Borrower and the Administrative Agent shall have mutually agreed and shall
have notified to the Banks not later than the date of the Bid Rate Quote
Request for the first Bid Rate (Indexed) Auction or Bid Rate (General)
Auction for which such change is to be effective) notify the Borrower of
the terms (x) of any Bid Rate Quote submitted by a Bank that is in
accordance with subsection (d) and (y) of any Bid Rate Quote that amends,
modifies or is otherwise inconsistent with a previous Bid Rate Quote
submitted by such Bank with respect to the same Bid Rate Quote Request.
Any such subsequent Quote shall be disregarded by the Administrative Agent
unless such subsequent Quote is submitted solely to correct a manifest
error in such former Quote. The Administrative Agent's notice to the
Borrower shall specify (A) the aggregate principal amount of Loans for
which offers have been received for each Interest Period specified in the
related Bid Rate Quote Request, (B) the respective principal amounts and
Bid Rate (Indexed) Margins or Bid Rates (General), as the case may be, so
offered and (C) if applicable, limitations on the aggregate principal
amount of Bid Rate Loans for which offers in any single Bid Rate Quote may
be accepted.
(f) Acceptance and Notice by Borrower. Not later than 11:00 A.M.
(New York City time) on (x) the third Euro-Dollar Business Day prior to the
proposed date of Borrowing, in the case of a Bid Rate (Indexed) Auction or
(y) the proposed date of Borrowing, in the case of a Bid Rate (General)
Auction (or, in either case, such other time or date as the Borrower and
the Administrative Agent shall have mutually agreed and shall have notified
to the Banks not later than the date of the Bid Rate Quote Request for the
first Bid Rate (Indexed) Auction or Bid Rate (General) Auction for which
such change is to be effective), the Borrower shall notify the
Administrative Agent of its acceptance or non-acceptance of the offers so
notified to it pursuant to subsection (e). In the case of acceptance, such
notice (a "Notice of Bid Rate Borrowing") shall specify the aggregate
principal amount of offers for each Interest Period that are accepted. The
Borrower may accept any Bid Rate Quote in whole or in part; provided that:
(i) the aggregate principal amount of each Bid Rate Borrowing
may not exceed the applicable amount set forth in the related Bid Rate
Quote Request,
(ii) the principal amount of each Bid Rate Borrowing must be
$10,000,000 or a larger multiple of $1,000,000, and
(iii) acceptance of offers may only be made on the basis of
ascending Bid Rate (Indexed) Margins or Bid Rates (General), as the
case may be.
(g) Allocation by Administrative Agent. If offers are made by two or
more Banks with the same Bid Rate (Indexed) Margins or Bid Rates (General),
as the case may be, for a greater aggregate principal amount than the
amount in respect of which such offers are accepted for the related
Interest Period, the principal amount of Bid Rate Loans in respect of which
such offers are accepted shall be allocated by the Administrative Agent
among such Banks as nearly as possible (in multiples of $1,000,000, as the
Administrative Agent may deem appropriate) in proportion to the aggregate
principal amounts of such offers. Determinations by the Administrative
Agent of the amounts of Bid Rate Loans shall be conclusive in the absence
of manifest error.
1.1. SECTION Notice to Banks; Funding of Loans . (a) Upon receipt
of a Notice of Borrowing, the Administrative Agent shall promptly notify
each Bank of the contents thereof and of such Bank's share (if any) of such
Borrowing and such Notice of Borrowing shall not thereafter be revocable by
the Borrower.
1.2.
1.3. (b) Not later than 1:00 P.M. (New York City time) on the date of
each Borrowing, each Bank participating therein shall (except as provided
in subsection (c) of this Section) make available its share of such
Borrowing, in Federal or other funds immediately available in New York
City, to the Administrative Agent at its address specified in or pursuant
to Section 11.01. Unless the Administrative Agent determines that any
applicable condition specified in Article 3 has not been satisfied, the
Administrative Agent will make the funds so received from the Banks
available to the Borrower at the Administrative Agent's aforesaid address
not later than 2:30 P.M. (New York City time) on the date of such
Borrowing.
1.4. (c) Unless the Administrative Agent shall have received notice
from a Bank prior to the time of any Borrowing that such Bank will not make
available to the Administrative Agent such Bank's share of such Borrowing,
the Administrative Agent may assume that such Bank has made such share
available to the Administrative Agent on the date of such Borrowing in
accordance with subsection (b) of this Section 2.04 and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrower
on such date a corresponding amount. If and to the extent that such Bank
shall not have so made such share available to the Administrative Agent,
such Bank and, if such Bank shall not have made such payment within two
Domestic Business Days of demand therefor, the Borrower severally agree to
repay to the Administrative Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the date such
amount is made available to the Borrower until the date such amount is
repaid to the Administrative Agent, at (i) in the case of the Borrower, a
rate per annum equal to the higher of the Federal Funds Rate and the
interest rate applicable thereto pursuant to Section 2.07 and (ii) in the
case of such Bank, the Federal Funds Rate. If such Bank shall repay to the
Administrative Agent such corresponding amount, such amount so repaid shall
constitute such Bank's Loan included in such Borrowing for purposes of this
Agreement.
1.5.
1.6. (d) The failure of any Bank to make the Loan to be made by it as
part of any Borrowing shall not relieve any other Bank of its obligation,
if any, hereunder to make a Loan on the date of such Borrowing, but no Bank
shall be responsible for the failure of any other Bank to make a Loan to be
made by such other Bank.
1.7.
1.8. SECTION Registry; Notes . (a) The Administrative Agent shall
maintain a register (the "Register") on which it will record the Commitment
of each Bank, each Loan made by such Bank and each repayment of any Loan
made by such Bank. Any such recordation by the Administrative Agent on the
Register shall be presumptively correct, absent manifest error. Failure to
make any such recordation, or any error in such recordation, shall not
affect the Borrowers' obligations hereunder.
1.9.
1.10. (b) Each Borrower hereby agrees that, promptly upon the
request of any Bank at any time, such Borrower shall deliver to such Bank a
duly executed Note, in substantially the form of Exhibit A hereto, payable
to the order of such Bank and representing the obligation of such Borrower
to pay the unpaid principal amount of the Loans made to such Borrower by
such Bank, with interest as provided herein on the unpaid principal amount
from time to time outstanding.
1.11.
1.12. (c) Each Bank shall record the date, amount and maturity of
each Loan made by it and the date and amount of each payment of principal
made by the Borrower with respect thereto, and each Bank receiving a Note
pursuant to this Section, if such Bank so elects in connection with any
transfer or enforcement of any Note, may endorse on the schedule forming a
part thereof appropriate notations to evidence the foregoing information
with respect to each such Loan then outstanding; provided that the failure
of such Bank to make any such recordation or endorsement shall not affect
the obligations of the Borrowers hereunder or under the Notes. Such Bank
is hereby irrevocably authorized by the Borrowers so to endorse any Note
and to attach to and make a part of any Note a continuation of any such
schedule as and when required.
1.13.
1.14. SECTION Maturity of Loans . (a) Each Syndicated Loan
shall mature, and the principal amount thereof shall be due and payable
(together with accrued and unpaid interest thereon), on the Termination
Date.
1.15.
1.16. (b) Each Swingline Loan included in any Swingline Borrowing
and each Bid Rate Loan included in any Bid Rate Borrowing shall mature, and
the principal amount thereof shall be due and payable (together with
accrued and unpaid interest thereon), on the last day of the Interest
Period applicable to such Borrowing.
1.17.
1.18. SECTION Interest Rates . (a) Each Base Rate Loan shall
bear interest on the outstanding principal amount thereof, for each day
from the date such Loan is made until it becomes due, at a rate per annum
equal to the Base Rate for such day. Such interest shall be payable
quarterly in arrears on each Quarterly Payment Date, at maturity and, with
respect to the principal amount of any Base Rate Loan converted to a Euro-
Dollar Loan, on the date such Base Rate Loan is so converted. Any overdue
principal of or overdue interest on any Base Rate Loan shall bear interest,
payable on demand, for each day until paid at a rate per annum equal to the
sum of 2% plus the Base Rate for such day.
1.19.
1.20. (b) Each Euro-Dollar Loan shall bear interest on the
outstanding principal amount thereof, for each day during each Interest
Period applicable thereto, at a rate per annum equal to the sum of the
Euro-Dollar Margin for such day plus the London Interbank Offered Rate
applicable to such Interest Period. Such interest shall be payable for
each Interest Period on the last day thereof and, if such Interest Period
is longer than three months, at intervals of three months after the first
day thereof.
1.21.
1.22. The "London Interbank Offered Rate" applicable to any
Interest Period means the average (rounded upward, if necessary, to the
next higher 1/16 of 1%) of the respective rates per annum at which deposits
in dollars are offered to each of the Euro-Dollar Reference Banks in the
London interbank market at approximately 11:00 A.M. (London time) two Euro-
Dollar Business Days before the first day of such Interest Period in an
amount approximately equal to the principal amount of the Loan of such Euro-
Dollar Reference Bank to which such Interest Period is to apply and for a
period of time comparable to such Interest Period. If any Euro-Dollar
Reference Bank does not furnish a timely quotation, the Administrative
Agent shall determine the relevant interest rate on the basis of the
quotation furnished by the remaining Euro-Dollar Reference Banks or, if
none of such quotations is available on a timely basis, the provisions of
Section 8.01 shall apply.
1.23.
1.24. (c) Any overdue principal of or overdue interest on any
Euro-Dollar Loan shall bear interest, payable on demand, for each day from
and including the date payment thereof was due to but excluding the date of
actual payment, at a rate per annum equal to the sum of 2% plus the higher
of (i) the sum of the Euro-Dollar Margin for such day plus the London
Interbank Offered Rate applicable to such Loan at the date such payment was
due and (ii) the Base Rate for such day.
1.25.
1.26. (d) Each Swingline Loan shall bear interest on the
outstanding principal amount thereof, for each day during the Interest
Period applicable thereto, at a rate per annum equal to the Base Rate for
such day or such other rate as may be from time to time determined by
mutual agreement between the Swingline Bank making such Loan and the
Borrower. Interest on each Swingline Loan shall be payable at the maturity
of such Loan. Any overdue principal of or overdue interest on any
Swingline Loan shall bear interest, payable on demand, for each day until
paid at a rate per annum equal to the sum of 2% plus the Base Rate for such
day; provided that if and to the extent the failure to pay such principal
or interest when due was attributable to default by a Bank in making a Loan
which such Bank was obligated to make hereunder, such interest shall accrue
at a rate per annum equal to the Base Rate from and including the date such
payment was due to but not including the first Domestic Business Day
thereafter and shall accrue at a rate per annum equal to the sum of 2% plus
the Base Rate from and including such first succeeding Domestic Business
Day until paid.
1.27.
1.28. (e) Subject to Section 8.01(a), each Bid Rate (Indexed)
Loan shall bear interest on the outstanding principal amount thereof, for
the Interest Period applicable thereto, at a rate per annum equal to the
sum of the London Interbank Offered Rate for such Interest Period
(determined in accordance with Section 2.07(b) as if each Euro-Dollar
Reference Bank were to participate in the related Bid Rate (Indexed)
Borrowing ratably in proportion to its Commitment) plus (or minus) the Bid
Rate (Indexed) Margin quoted by the Bank making such Loan in accordance
with Section 2.03. Each Bid Rate (General) Loan shall bear interest on the
outstanding principal amount thereof, for the Interest Period applicable
thereto, at a rate per annum equal to the Bid Rate (General) quoted by the
Bank making such Loan in accordance with Section 2.03. Such interest shall
be payable for each Interest Period on the last day thereof and, if such
Interest Period is longer than three months, at intervals of three months
after the first day thereof. Any overdue principal of or overdue interest
on any Bid Rate Loan shall bear interest, payable on demand, for each day
until paid at a rate per annum equal to the sum of 2% plus the Base Rate
for such day.
1.29.
1.30. (f) The Administrative Agent shall determine each interest
rate applicable to the Loans hereunder. The Administrative Agent shall
give prompt notice to the Borrower and the participating Banks of each rate
of interest so determined, and its determination thereof shall be
conclusive in the absence of manifest error.
1.31.
1.32. SECTION Fees . (a) Facility Fee. The Company shall pay
to the Administrative Agent for the account of each Bank a facility fee at
the Facility Fee Rate (determined daily in accordance with the Pricing
Schedule). Such facility fee shall accrue (i) from and including the
earlier of the date hereof and the Effective Date to but excluding the date
of termination of the Commitments in their entirety, on the daily aggregate
amount of the Commitments (whether used or unused) and (ii) from and
including such date of termination to but excluding the date the Loans and
Letter of Credit Liabilities shall be repaid in their entirety, on the
daily average aggregate outstanding principal amount of the Loans and
Letter of Credit Liabilities.
1.33.
1.34. (b) Letter of Credit Fees. Each Borrower shall pay (i) to
the Administrative Agent for the account of the Banks ratably a letter of
credit fee accruing daily on the aggregate amount then available for
drawing under all outstanding Letters of Credit issued at its request at a
rate per annum equal to the Euro-Dollar Margin and (ii) to each Issuing
Bank a letter of credit fronting fee accruing daily on the aggregate amount
then available for drawing under all Letters of Credit issued by such
Issuing Bank issued at its request at a rate per annum mutually agreed from
time to time by the Borrowers and such Issuing Bank.
1.35.
1.36. (c) Utilization Fees. For any day on which the aggregate
outstanding principal amount of the Loans is equal to or greater than 25%
of the aggregate amount of the Commitments, the Company shall pay to the
Administrative Agent for the account of each Bank a utilization fee for
such day computed at a rate per annum equal to the Utilization Fee Rate
(determined daily in accordance with the Pricing Schedule) on the principal
amount of such Bank's Loans. Such utilization fee shall accrue (for any
day on which applicable) from and including the Effective Date to the date
on which the Commitments are terminated, and thereafter until all Loans are
paid in full.
1.37.
1.38. (d) Payments. Accrued fees under this Section shall be
payable quarterly in arrears on each Quarterly Payment Date and upon the
date of termination of the Commitments in their entirety (and, thereafter,
on demand until the Loans and Letter of Credit Liabilities shall be repaid
in their entirety).
1.39.
1.40. SECTION Optional Termination or Reduction of Commitments .
The Company may, upon notice to the Administrative Agent not later than
11:00 A.M. (New York City time) on any Domestic Business Day, (i) terminate
the Commitments at any time, if no Loans or Letter of Credit Liabilities
are outstanding at such time (after giving effect to any contemporaneous
prepayment of the Loans in accordance with Section 2.12) or (ii) ratably
reduce from time to time by an aggregate amount of $25,000,000 or any
larger multiple of $1,000,000 the aggregate amount of the Commitments in
excess of the aggregate outstanding principal amount of the Loans and
Letter of Credit Liabilities.
1.41.
1.42. SECTION Method of Electing Interest Rates . (a) The Loans
included in each Syndicated Borrowing shall bear interest initially at the
type of rate specified by the Borrower in the applicable Notice of
Committed Borrowing. Thereafter, the Borrower may from time to time elect
to change or continue the type of interest rate borne by each Group of
Loans (subject in each case to the provisions of Article 8 and the last
sentence of this subsection (a)), as follows:
1.43.
1.44. (i) if such Loans are Base Rate Loans, the Borrower
may elect to convert such Loans to Euro-Dollar Loans as of any Euro-Dollar
Business Day; and
1.45.
1.46. (ii) if such Loans are Euro-Dollar Loans, the Borrower
may elect to convert such Loans to Base Rate Loans or elect to continue
such Loans as Euro-Dollar Loans for an additional Interest Period, subject
to Section 2.14 in the case of any such conversion or continuation
effective on any day other than the last day of the then current Interest
Period applicable to such Loans.
1.47.
1.48. Each such election shall be made by delivering a notice in
substantially the form of Exhibit L (a "Notice of Interest Rate Election")
to the Administrative Agent not later than 11:00 A.M. (New York City time)
on the third Euro-Dollar Business Day before the conversion or continuation
selected in such notice is to be effective. A Notice of Interest Rate
Election may, if it so specifies, apply to only a portion of the aggregate
principal amount of the relevant Group of Loans, provided that (i) such
portion is allocated ratably among the Loans comprising such Group and (ii)
the portion to which such notice applies, and the remaining portion to
which it does not apply, are each $10,000,000 or any larger multiple of
$1,000,000.
1.49.
1.50. (b) Each Notice of Interest Rate Election shall specify:
1.51.
(i) the Group of Loans (or portion thereof) to which such notice
applies;
(ii) the date on which the conversion or continuation selected in
such notice is to be effective, which shall comply with the applicable
clause of subsection 2.10(a) above;
(iii) if the Loans comprising such Group are to be converted,
the new type of Loans and, if the Loans being converted are to be
Fixed Rate Loans, the duration of the next succeeding Interest Period
applicable thereto; and
(iv) if such Loans are to be continued as Euro-Dollar Loans for
an additional Interest Period, the duration of such additional
Interest Period.
Each Interest Period specified in a Notice of Interest Rate Election
shall comply with the provisions of the definition of the term "Interest
Period".
(c) Promptly after receiving a Notice of Interest Rate Election from
the Borrower pursuant to subsection 2.10(a) above, the Administrative Agent
shall notify each Bank of the contents thereof and such notice shall not
thereafter be revocable by the Borrower. If no Notice of Interest Rate
Election is timely received prior to the end of an Interest Period for any
Group of Loans, the Borrower shall be deemed to have elected that such
Group of Loans be converted to Base Rate Loans as of the last day of such
Interest Period.
(d) An election by the Borrower to change or continue the rate of
interest applicable to any Group of Loans pursuant to this Section shall
not constitute a "Borrowing" subject to the provisions of Section 3.02.
1.1. SECTION Scheduled Termination of Commitments . The
Commitments shall terminate on the Termination Date, and any Loans then
outstanding (together with accrued and unpaid interest thereon) shall be
due and payable on such date.
1.2.
1.3. SECTION Optional Prepayments . (a) Subject in the case of any
Fixed Rate Borrowing to Section 2.14, the Borrower may upon notice to the
Administrative Agent not later than 11:00 A.M. (New York City time) on any
Domestic Business Day prepay on such Domestic Business Day any Group of
Base Rate Loans, any Swingline Borrowing or any Bid Rate Borrowing bearing
interest at the Base Rate pursuant to Section 8.01(a) and upon at least
three Euro-Dollar Business Days' notice to the Administrative Agent not
later than 11:00 A.M. (New York City time) prepay any Group of Euro-Dollar
Loans, in each case in whole at any time, or from time to time in part in
amounts aggregating $10,000,000 or any larger multiple of $1,000,000, by
paying the principal amount to be prepaid together with accrued interest
thereon to the date of prepayment. Each such optional prepayment shall be
applied to prepay ratably the Loans of the several Banks included in such
Group or Borrowing.
1.4.
1.5. (b) Except as provided in subsection 2.12(a), the Borrower may
not prepay all or any portion of the principal amount of any Bid Rate Loan
prior to the maturity thereof.
1.6.
1.7. (c) Upon receipt of a notice of prepayment pursuant to this
Section, the Administrative Agent shall promptly notify each Bank of the
contents thereof and of such Bank's share (if any) of such prepayment and
such notice shall not thereafter be revocable by the Borrower.
1.8.
1.9. SECTION General Provisions as to Payments . (a) Each payment
of principal of, and interest on, the Loans and of fees hereunder shall be
made not later than 2:30 P.M. (New York City time) on the date when due, in
Federal or other funds immediately available in New York City, to the
Administrative Agent at its address referred to in Section 11.01. The
Administrative Agent will promptly distribute to each Bank its ratable
share of each such payment received by the Administrative Agent for the
account of the Banks. Whenever any payment of principal of, or interest
on, the Base Rate Loans, Swingline Loans or Letter of Credit Liabilities or
of fees shall be due on a day which is not a Domestic Business Day, the
date for payment thereof shall be extended to the next succeeding Domestic
Business Day. Whenever any payment of principal of, or interest on, the
Euro-Dollar Loans shall be due on a day which is not a Euro-Dollar Business
Day, the date for payment thereof shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case the date for payment thereof shall be
the next preceding Euro-Dollar Business Day. Whenever any payment of
principal of, or interest on, the Bid Rate Loans shall be due on a day
which is not a Euro-Dollar Business Day, the date for payment thereof shall
be extended to the next succeeding Euro-Dollar Business Day. If the date
for any payment of principal is extended by operation of law or otherwise,
interest thereon shall be payable for such extended time.
1.10.
1.11. (b) Unless the Administrative Agent shall have received
notice from a Borrower prior to the date on which any payment is due from
such Borrower to the Banks hereunder that such Borrower will not make such
payment in full, the Administrative Agent may assume that such Borrower has
made such payment in full to the Administrative Agent on such date and the
Administrative Agent may, in reliance upon such assumption, cause to be
distributed to each Bank on such due date an amount equal to the amount
then due such Bank. If and to the extent that such Borrower shall not have
so made such payment, each Bank shall repay to the Administrative Agent
forthwith on demand such amount distributed to such Bank together with
interest thereon, for each day from the date such amount is distributed to
such Bank until the date such Bank repays such amount to the Administrative
Agent, at the Federal Funds Rate.
1.12.
1.13. SECTION Funding Losses . If a Borrower makes any payment
of principal with respect to any Fixed Rate Loan or any Euro-Dollar Loan is
converted to a Base Rate Loan or continued as a Euro-Dollar Loan for a new
Interest Period (pursuant to Article 2, 6 or 8 or otherwise) on any day
other than the last day of an Interest Period applicable thereto, or if a
Borrower fails to borrow, prepay, convert or continue any Fixed Rate Loans
after notice has been given to any Bank in accordance with Section 2.04(a),
2.10(c) or 2.12(c) (other than by reason of a default by the Bank demanding
payment hereunder), such Borrower shall reimburse each Bank within 15 days
after written demand from such Bank for any resulting loss or reasonable
expense incurred by it (or by an existing or prospective Participant in the
related Loan, but not to exceed the loss and expense which would have been
incurred by such Bank had no participations been granted by it), including
(without limitation) any loss incurred in obtaining, liquidating or
employing deposits from third parties, but excluding loss of profit or
margin for the period after any such payment or conversion or failure to
borrow, prepay, convert or continue, provided that such Bank shall have
delivered to such Borrower a certificate setting forth in reasonable detail
the calculation of the amount of such loss or expense, which certificate
shall be presumptively correct in the absence of manifest error.
1.14.
1.15. SECTION Computation of Interest and Fees . Interest based
on the Prime Rate hereunder shall be computed on the basis of a year of 365
days (or 366 days in a leap year) and paid for the actual number of days
elapsed (including the first day but excluding the last day). All other
interest and all fees shall be computed on the basis of a year of 360 days
and paid for the actual number of days elapsed (including the first day but
excluding the last day).
1.16.
1.17. SECTION Letters of Credit . (a) Subject to the terms and
conditions hereof, each Issuing Bank agrees to issue Letters of Credit
hereunder from time to time before the sixth Domestic Business Day
preceding the Termination Date upon the request of any Borrower; provided
that, immediately after each Letter of Credit is issued (i) the aggregate
amount of the Letter of Credit Liabilities plus the aggregate outstanding
amount of all Loans shall not exceed the aggregate amount of the
Commitments and (ii) the aggregate Letter of Credit Liabilities shall not
exceed $100,000,000. On the Effective Date, each of the Existing Letters
of Credit shall be deemed to be a Letter of Credit issued at the request of
the Company hereunder, and shall from and after such date be governed by
the provisions of this Agreement as fully as if the same had been issued
pursuant hereto on the Effective Date. Upon the date of issuance by an
Issuing Bank of a Letter of Credit (or on the Effective Date, in the case
of the Existing Letters of Credit), the Issuing Bank shall be deemed,
without further action by any party hereto, to have sold to each Bank, and
each Bank shall be deemed, without further action by any party hereto, to
have purchased from the Issuing Bank, a participation in such Letter of
Credit and the related Letter of Credit Liabilities in the proportion its
Commitment bears to the aggregate Commitments.
1.18.
1.19. (b) The Borrower shall give an Issuing Bank notice at least
three Domestic Business Days prior to the requested issuance of a Letter of
Credit specifying the date such Letter of Credit is to be issued, and
describing the terms of such Letter of Credit and the nature of the
transactions to be supported thereby (such notice, including any such
notice given in connection with the extension of a Letter of Credit, a
"Notice of Issuance"). Upon receipt of a Notice of Issuance, the Issuing
Bank shall promptly notify the Administrative Agent, and the Administrative
Agent shall promptly notify each Bank of the contents thereof and of the
amount of such Bank's participation in such Letter of Credit. The issuance
by the Issuing Bank of each Letter of Credit shall, in addition to the
conditions precedent set forth in Article 3, be subject to the conditions
precedent that such Letter of Credit shall be in such form and contain such
terms as shall be reasonably satisfactory to the Issuing Bank and that the
Borrower shall have executed and delivered such other instruments and
agreements relating to such Letter of Credit as the Issuing Bank shall have
reasonably requested. The Borrower shall also pay to the Issuing Bank for
its own account issuance, drawing, amendment and extension charges in the
amounts and at the times as agreed between the Borrower and the Issuing
Bank. The extension or renewal of any Letter of Credit shall be deemed to
be an issuance of such Letter of Credit, and if any Letter of Credit
contains a provision pursuant to which it is deemed to be extended unless
notice of termination is given by the Issuing Bank, the Issuing Bank shall
timely give such notice of termination unless it has theretofore timely
received a Notice of Issuance and the other conditions to issuance of a
Letter of Credit have also theretofore been met with respect to such
extension.
1.20.
1.21. (c) No Letter of Credit shall have a term extending or
extendible beyond the fifth Domestic Business Day preceding the Termination
Date.
1.22.
1.23. (d) Upon receipt from the beneficiary of any Letter of
Credit of any notice of a drawing under such Letter of Credit, the Issuing
Bank shall notify the Administrative Agent and the Administrative Agent
shall promptly notify the Borrower and each other Bank as to the amount to
be paid as a result of such demand or drawing and the payment date. The
Borrower shall be irrevocably and unconditionally obligated forthwith to
reimburse the Issuing Bank for any amounts paid by the Issuing Bank upon
any drawing under any Letter of Credit, without presentment, demand,
protest or other formalities of any kind. In the event of a drawing under
a Letter of Credit, the Borrower shall, unless it gives not less than one
Domestic Business Day's notice to the Administrative Agent to the contrary,
be deemed to have timely given a Notice of Borrowing for a Base Rate
Borrowing on the date of such drawing in the exact amount due the Issuing
Bank hereunder on such date, and the Administrative Agent shall apply the
proceeds of such Borrowing to make payment thereof.
1.24.
1.25. (e) All such amounts paid by the Issuing Bank and remaining
unpaid by the Borrower shall bear interest, payable on demand, for each day
until paid at a rate per annum equal to the Base Rate for such day plus, if
such amount remains unpaid for more than one Domestic Business Day, 2%;
provided that if and to the extent the failure to pay such principal or
interest when due is attributable to default by a Bank in making a Loan
which such Bank was obligated to make hereunder, such interest shall accrue
at a rate per annum equal to the Base Rate from and including the date such
payment was due to but not including the first Domestic Business Day
thereafter and shall accrue at a rate per annum equal to the sum of 2% plus
the Base Rate from and including such first succeeding Domestic Business
Day until paid. In addition, each Bank will pay to the Administrative
Agent, for the account of the Issuing Bank, immediately upon the Issuing
Bank's demand at any time during the period commencing after such drawing
until reimbursement therefor in full by the Borrower, an amount equal to
such Bank's ratable share of such drawing (in proportion to its
participation therein), together with interest on such amount for each day
from the date of the Issuing Bank's demand for such payment (or, if such
demand is made after 12:00 Noon (New York City time) on such date, from the
next succeeding Domestic Business Day) to the date of payment by such Bank
of such amount at a rate of interest per annum equal to the Federal Funds
Rate. The Issuing Bank will pay to each Bank ratably all amounts received
from the Borrower for application in payment of its reimbursement
obligations in respect of any Letter of Credit, but only to the extent such
Bank has made payment to the Issuing Bank in respect of such Letter of
Credit pursuant hereto.
1.26.
1.27. (f) The obligations of each Borrower and Bank under
subsections 2.16(d) and 2.16(e) above shall be absolute, unconditional and
irrevocable, and shall be performed strictly in accordance with the terms
of this Agreement, under all circumstances whatsoever, including without
limitation the following circumstances:
1.28.
1.29. (i) the use which may be made of the Letter of Credit
by, or any acts or omission of, a beneficiary of a Letter of Credit (or any
Person for whom the beneficiary may be acting);
1.30.
1.31. (ii) the existence of any claim, set-off, defense or
other rights that such Borrower may have at any time against a beneficiary
of a Letter of Credit (or any Person for whom the beneficiary may be
acting), the Banks (including the Issuing Bank), any other Borrower or any
other Person, whether in connection with this Agreement or the Letter of
Credit or any document related hereto or thereto or any unrelated
transaction;
1.32.
1.33. (iii) any statement or any other document presented
under a Letter of Credit proving to be forged, fraudulent or invalid in any
respect or any statement therein being untrue or inaccurate in any respect
whatsoever;
1.34.
1.35. (iv) payment under a Letter of Credit to the
beneficiary of such Letter of Credit against presentation to the Issuing
Bank of a draft or certificate that does not comply with the terms of the
Letter of Credit; and
1.36.
1.37. (v) any other act or omission to act or delay of any
kind by any Bank (including the Issuing Bank), the Administrative Agent or
any other Person or any other event or circumstance whatsoever that might,
but for the provisions of this subsection (v), constitute a legal or
equitable discharge of such Borrower's or Bank's obligations hereunder;
provided however that nothing in this subsection 2.16(f) shall relieve the
Issuing Bank, the Administrative Agent or any other Bank of legal
responsibility it would otherwise have for the consequences of its own
gross negligence or willful misconduct.
(g) Each Borrower hereby indemnifies and holds harmless each Bank
(including each Issuing Bank) and the Administrative Agent from and against
any and all liabilities, losses, damages, costs or out-of-pocket expenses
which such Bank or the Administrative Agent may incur (including, without
limitation, any liabilities, losses, damages, costs or out-of-pocket
expenses which an Issuing Bank may incur by reason of or in connection with
the failure of any other Bank to fulfill or comply with its obligations to
such Issuing Bank hereunder (but nothing herein contained shall affect any
rights the Borrower may have against such defaulting Bank)), and none of
the Banks (including the Issuing Banks) nor the Administrative Agent nor
any of their officers or directors or employees or agents shall be liable
or responsible, by reason of or in connection with the execution and
delivery or transfer of or payment or failure to pay under any Letter of
Credit issued at the request of such Borrower, including without limitation
any of the circumstances enumerated in subsection 2.16(f) above, as well as
(i) any error, omission, interruption or delay in transmission or delivery
of any messages, by mail, cable, telegraph, telex or otherwise, (ii) any
loss or delay in the transmission of any document required in order to make
a drawing under a Letter of Credit, and (iii) any consequences arising from
causes beyond the control of the Issuing Bank, including without limitation
any government acts, or any other circumstances whatsoever in making or
failing to make payment under such Letter of Credit; provided that such
Borrower shall not be required to indemnify the Issuing Bank for any
claims, damages, losses, liabilities, costs or expenses, and the Borrower
shall have a claim for direct damage suffered by it, to the extent found by
a court of competent jurisdiction to have been caused by (x) the willful
misconduct or gross negligence of the Issuing Bank in determining whether a
request presented under any such Letter of Credit complied with the terms
of such Letter of Credit or (y) the Issuing Bank's failure to pay under any
such Letter of Credit after the presentation to it of a request strictly
complying with the terms and conditions of such Letter of Credit. Nothing
in this subsection 2.16(g) is intended to limit the obligations of any
Borrower under any other provision of this Agreement. To the extent any
Borrower does not indemnify an Issuing Bank as required by this subsection,
the Banks agree to do so ratably in accordance with their Commitments.
1.1. SECTION Regulation D Compensation . In the event that a Bank
is required to maintain reserves of the type contemplated by the definition
of "Euro-Dollar Reserve Percentage", such Bank may require the Borrower to
pay, contemporaneously with each payment of interest on the Euro-Dollar
Loans, additional interest on the related Euro-Dollar Loan of such Bank at
a rate per annum determined by such Bank up to but not exceeding the excess
of (i) (A) the applicable London Interbank Offered Rate divided by (B) one
minus the Euro-Dollar Reserve Percentage over (ii) the applicable London
Interbank Offered Rate. Any Bank wishing to require payment of such
additional interest (x) shall so notify the Borrower and the Administrative
Agent, in which case such additional interest on the Euro-Dollar Loans of
such Bank shall be payable to such Bank at the place indicated in such
notice with respect to each Interest Period commencing at least three
Euro-Dollar Business Days after the giving of such notice and (y) shall
furnish to the Borrower at least three Euro-Dollar Business Days prior to
each date on which interest is payable on the Euro-Dollar Loans of such
Borrower an officer's certificate setting forth the amount to which such
Bank is then entitled under this Section 2.17 (which shall be consistent
with such Bank's good faith estimate of the level at which the related
reserves are maintained by it). Each such notification shall be
accompanied by such information as the Borrower may reasonably request.
1.2.
1.3. "Euro-Dollar Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement for a member
bank of the Federal Reserve System in New York City with deposits exceeding
five billion dollars in respect of "Eurocurrency liabilities" (or in
respect of any other category of liabilities which includes deposits by
reference to which the interest rate on Euro-Dollar Loans is determined or
any category of extensions of credit or other assets which includes loans
by a non-United States office of any Bank to United States residents).
1.4.
1.5. SECTION Takeout of Swingline Loans . (a) In the event that any
Swingline Loan shall not be repaid in full at or prior to the maturity
thereof the Administrative Agent shall, on behalf of the Borrower (each
Borrower hereby irrevocably directing and authorizing the Administrative
Agent so to act on its behalf), give a Notice of Borrowing requesting the
Banks, including the Swingline Bank, to make a Base Rate Borrowing on the
maturity date of such Swingline Loan in an amount equal to the unpaid
principal amount of such Swingline Loan. Each Bank will make the proceeds
of its Base Rate Loan included in such Borrowing available to the
Administrative Agent for the account of the Swingline Bank which made such
Swingline Loan on such date in accordance with Section 2.04. The proceeds
of such Base Rate Borrowing shall be immediately applied to repay such
Swingline Loan.
1.6.
1.7. (b) If, for any reason, a Base Rate Borrowing may not be (as
determined by the Administrative Agent in its sole discretion), or is not,
made pursuant to subsection (a) above to refund a Swingline Loan as
required by said subsection, then, effective on the date such Borrowing
would otherwise have been made, each Bank severally, unconditionally and
irrevocably agrees that it shall purchase an undivided participating
interest in such Swingline Loan (an "Unrefunded Swingline Loan") in an
amount equal to the amount of the Loan which otherwise would have been made
by such Bank pursuant to subsection (a), which purchase shall be funded by
the time such Loan would have been required to be funded pursuant to
Section 2.04 by transfer to the Administrative Agent, for the account of
the Swingline Bank, in immediately available funds, of the amount of its
participation.
1.8.
1.9. (c) Whenever, at any time after the Swingline Bank has received
from any Bank payment in full for such Bank's participating interest in a
Swingline Loan, the Swingline Bank (or the Administrative Agent on its
behalf) receives any payment on account thereof, the Swingline Bank (or the
Administrative Agent, as the case may be) will promptly distribute to such
Bank its participating interest in such payment (appropriately adjusted, in
the case of interest payments, to reflect the period of time during which
such Bank's participating interest was outstanding and funded); provided,
however, that in the event that such payment is subsequently required to be
returned, such Bank will return to the Swingline Bank (or the
Administrative Agent, as the case may be) any portion thereof previously
distributed by the Swingline Bank (or the Administrative Agent, as the case
may be) to it.
1.10.
1.11. (d) Each Bank's obligation to purchase and fund
participating interests pursuant to this Section shall be absolute and
unconditional and shall not be affected by any circumstance, including,
without limitation: any setoff, counterclaim, recoupment, defense or other
right which such Bank or the Borrower may have against any Swingline Bank,
or any other Person for any reason whatsoever; the occurrence or
continuance of a Default or the failure to satisfy any of the conditions
specified in Article 3; any adverse change in the condition (financial or
otherwise) of any Borrower; any breach of this Agreement by any Borrower or
any Bank; or (v) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing.
1.12.
1.13. SECTION Foreign Costs . (a) If the cost to any Bank of
making or maintaining any Loan or of issuing or participating in any Letter
of Credit is increased, or the amount of any sum received or receivable by
any Bank (or its Applicable Lending Office) is reduced by an amount deemed
by such Bank to be material, by reason of the fact that the Borrower of
such Loan or Letter of Credit is incorporated in, or conducts business in,
a jurisdiction outside the United States of America, such Borrower shall
indemnify such Bank for such increased cost or reduction within 15 days
after demand by such Bank (with a copy to the Administrative Agent). A
certificate of such Bank claiming compensation under this subsection (a)
and setting forth the additional amount or amounts to be paid to it
hereunder shall be conclusive in the absence of manifest error.
1.14.
1.15. (b) Each Bank will promptly notify the Company and the
Administrative Agent of any event of which it has knowledge that will
entitle such Bank to additional compensation pursuant to subsection (a) and
will designate a different Applicable Lending Office if, in the judgment of
such Bank, such designation will avoid the need for, or reduce the amount
of, such compensation and will not be otherwise disadvantageous to such
Bank.
1.16.
ARTICLE CONDITIONS
1.1. SECTION Effectiveness . This Agreement shall become effective,
and all loans outstanding under the Existing Credit Agreement shall be
deemed to be Loans hereunder, on the date that each of the following
conditions shall have been satisfied (or waived in accordance with Section
11.05):
(a) receipt by the Administrative Agent of evidence that counterparts
hereof have been signed by each Borrower, the Resigning Agent and the
Required Banks (it being understood that the Administrative Agent may rely
on telegraphic, telecopy, telex or other written confirmation from any
party of execution of a counterpart hereof by such party);
(a) receipt by the Administrative Agent of an opinion of (i) Kirkland
& Ellis, special counsel for the Company, substantially in the form of
Exhibit E-1 hereto and (ii) Mary Ann Hynes, General Counsel of the Company,
substantially in the form of Exhibit E-2 hereto, and in each case covering
such additional matters relating to the transactions contemplated hereby as
the Required Banks may reasonably request;
(a) receipt by the Administrative Agent of an opinion of Mayer, Brown
& Platt, special counsel for the Administrative Agent, substantially in the
form of Exhibit F hereto and covering such additional matters relating to
the transactions contemplated hereby as the Required Banks may reasonably
request; and
(a) receipt by the Administrative Agent of all documents it may have
reasonably requested prior to the date hereof relating to the existence of
the Company, the corporate authority for and the validity of this Agreement
and the Notes, and any other matters relevant hereto, all in form and
substance satisfactory to the Administrative Agent;
provided that this Agreement shall not become effective or be binding on
any party hereto unless all of the foregoing conditions are satisfied not
later than December 24, 1999; and provided further that the provisions of
Sections 2.08, 2.09, 2.14 and 11.03 shall become effective upon
satisfaction of the condition specified in clause 3.01(a). The
Administrative Agent shall promptly notify the Company and the Banks of the
Effective Date, and such notice shall be conclusive and binding on all
parties hereto.
1.1. SECTION Borrowings and Issuance of Letters of Credits . The
obligation of any Bank to make a Loan on the occasion of any Borrowing and
the obligation of the Issuing Bank to issue (or renew or extend the term
of) any Letter of Credit is subject to the satisfaction of the following
conditions; provided that if such Borrowing is a Swingline Takeout
Borrowing, only the conditions set forth in clauses 3.02(a) and 3.02(b)
must be satisfied:
1.2.
(a) receipt by the Administrative Agent of a Notice of Borrowing as
required by Section 2.02 or 2.03 or receipt by the Issuing Bank of a Notice
of Issuance as required by Section 2.16, as the case may be;
(a) the fact that, immediately after such Borrowing or issuance of
such Letter of Credit, the sum of the aggregate outstanding principal
amount of the Loans and the aggregate amount of Letter of Credit
Liabilities will not exceed the aggregate amount of the Commitments, the
aggregate outstanding principal amount of Swingline Loans will not exceed
$25,000,000 and the aggregate amount of Letter of Credit Liabilities will
not exceed $100,000,000;
(a) the fact that, immediately after such Borrowing or issuance of
such Letter of Credit, no Default shall have occurred and be continuing;
and
(a) the fact that the representations and warranties (other than (i)
the representation and warranty set forth in Section 4.04(b) in the case of
a Borrowing which does not result in an increase in the sum of the
aggregate outstanding principal amount of the Loans and the aggregate
Letter of Credit Liabilities, (ii) the representation and warranty set
forth in Section 4.04(a) and (iii) the representations and warranties set
forth in Section 4.12 in the case of a Borrowing after December 31, 2000)
of the Borrower and, if the Borrower is not the Company, of the Company
contained in this Agreement shall be true on and as of the date of such
Borrowing or issuance of such Letter of Credit.
Each Borrowing and each issuance of a Letter of Credit hereunder shall
be deemed to be a representation and warranty by the Borrower (and, if the
Company is not the Borrower, by the Company) on the date of such Borrowing
or issuance as to the facts specified in clauses (b), (c) and (d) of this
Section (unless such Borrowing is a Swingline Takeout Borrowing, in which
case the Borrower (and the Company) shall be deemed to represent and
warrant as to the facts specified in clause (b) of this Section).
1.1. SECTION First Borrowing by or Issuance of Letter of Credit for
Each Eligible Subsidiary . The obligation of each Bank to make a Loan and
the obligation of each Issuing Bank to issue (or renew or extend the term
of) any Letter of Credit on the occasion of the first Borrowing by or
issuance for each Eligible Subsidiary is subject to the satisfaction of the
following further conditions:
1.2.
(a) receipt by the Administrative Agent of an opinion or opinions of
counsel for such Eligible Subsidiary reasonably acceptable to the
Administrative Agent (which, in the case of an Eligible Subsidiary
organized under the laws of the United States or a State thereof may be an
employee of the Company) and addressed to the Administrative Agent and the
Banks, substantially to the effect of Exhibit J hereto and covering such
additional matters relating to the transactions contemplated hereby as the
Required Banks may reasonably request; and
(a) receipt by the Administrative Agent of all documents which it may
reasonably request relating to the existence of such Eligible Subsidiary,
the authority for and the validity of the Election to Participate of such
Eligible Subsidiary, this Agreement and the Notes of such Eligible
Subsidiary, and any other matters relevant thereto, all in form and
substance reasonably satisfactory to the Administrative Agent.
ARTICLE REPRESENTATIONS AND WARRANTIES
2 The Company represents and warrants that:
3
3.1. SECTION Corporate Existence and Power . The Company is a
corporation duly incorporated, validly existing and in good standing under
the laws of Delaware, has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to
carry on its business as now conducted and is duly qualified to do business
as a foreign corporation in each jurisdiction where such qualification is
required, except where the failure so to qualify could not reasonably be
expected to have a Material Adverse Effect.
1.1. SECTION Corporate and Governmental Authorization; No
Contravention . The execution, delivery and performance by the Company of
this Agreement and its Notes are within the Company's corporate powers,
have been duly authorized by all necessary corporate action, require no
action by or in respect of, or filing with, any governmental body, agency
or official and do not contravene, or constitute a default under, any
provision of applicable law or regulation or of the certificate of
incorporation or by-laws of the Company or of any agreement, judgment,
injunction, order, decree or other instrument binding upon the Company or
any of its Subsidiaries or result in the creation or imposition of any Lien
on any asset of the Company or any of its Subsidiaries.
1.2.
1.3. SECTION Binding Effect . This Agreement constitutes a valid
and binding agreement of the Company and each of its Notes, if and when
executed and delivered in accordance with this Agreement, will constitute a
valid and binding obligation of the Company, in each case enforceable in
accordance with its terms, except as the same may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and by
general principles of equity.
1.4.
1.5. SECTION Financial Information . (a) The consolidated balance
sheet of the Company and its Consolidated Subsidiaries as of December 31,
1998 and the related consolidated statements of earnings, cash flows and
changes in stockholders' equity for the fiscal year then ended, reported on
by Ernst & Young LLP, copies of which are included in the Company's Form 10-
K for the period ended December 31, 1998 and have been delivered to each of
the Banks, fairly present in all material respects, in conformity with
generally accepted accounting principles, the consolidated financial
position of the Company and its Consolidated Subsidiaries as of such date
and their consolidated results of operations and cash flows for such fiscal
year.
1.6.
1.7. (b) The financial statements presented in the Company's Form 10-
Q for the period ended September 30, 1999, which the Company has filed with
the Securities and Exchange Commission, copies of which have been delivered
to each of the Banks, fairly present in all material respects, on a basis
consistent with the financial statements referred to in Section 4.04(a),
the consolidated financial position of the Company and its Consolidated
Subsidiaries as of such date and their consolidated results of operations
and cash flows for such nine-month period (subject to normal year-end audit
adjustments and the absence of full footnotes).
1.8.
1.9. (c) Since September 30, 1999, there has been no material adverse
change in the business, financial position or operations of the Company and
its Consolidated Subsidiaries, considered as a whole.
1.10.
1.11. SECTION Litigation . Except as disclosed in the Company's
annual report on Form 10-K for the year ended December 31, 1998, each
registration statement (other than a registration statement on Form S-8 (or
its equivalent)) and each report on Form 10-K, 10-Q and 8-K (or their
equivalents) which the Company shall have filed with the Securities and
Exchange Commission at any time thereafter, there is no action, suit or
proceeding pending against, or to the knowledge of the Company, threatened
against or affecting, the Company or any of its Subsidiaries before any
court or arbitrator or any governmental body, agency or official which
could reasonably be expected to have a Material Adverse Effect or which in
any manner draws into question the validity of this Agreement or any Note.
1.1. SECTION Compliance with Laws . (a) The Company and each
Subsidiary is in compliance in all material respects with all applicable
laws, ordinances, rules, regulations and requirements of governmental
authorities except where (i) non-compliance could not reasonably be
expected to have a Material Adverse Effect or (ii) the necessity of
compliance therewith is contested in good faith by appropriate proceedings.
(b) Each member of the ERISA Group has fulfilled its obligations
under the minimum funding standards of ERISA and the Internal Revenue Code
with respect to each Plan and is in compliance in all material respects
with the presently applicable provisions of ERISA and the Internal Revenue
Code with respect to each Plan. No member of the ERISA Group has (i)
sought a waiver of the minimum funding standard under Section 412 of the
Internal Revenue Code in respect of any Plan, (ii) failed to make any
contribution or payment to any Plan or Multiemployer Plan or in respect of
any Benefit Arrangement, or made any amendment to any Plan or Benefit
Arrangement, which has resulted or could result in the imposition of a Lien
or the posting of a bond or other security under ERISA or the Internal
Revenue Code or (iii) incurred any liability under Title IV of ERISA other
than a liability to the PBGC for premiums under Section 4007 of ERISA.
1.1. SECTION Environmental Matters . In the ordinary course of its
business, the Company conducts a systematic review of the effects and
reasonably ascertainable associated liabilities and costs of Environmental
Laws on the business, operations and properties of the Company and its
Subsidiaries. The associated liabilities and costs include, without
limitation: any capital or operating expenditures required for clean-up or
closure of properties presently or previously owned; any capital or
operating expenditures required to achieve or maintain compliance with
Environmental Laws; any constraints on operating activities related to
achieving or maintaining compliance with Environmental Laws, including any
periodic or permanent shutdown of any facility or reduction in the level or
change in the nature of operations conducted thereat; any costs or
liabilities in connection with off-site disposal of wastes or hazardous
substances; and any actual or potential liabilities to third parties,
including employees, arising under Environmental Laws, and any related
costs and expenses. On the basis of this review, the Company has
reasonably concluded that such associated liabilities and costs, including
the costs of compliance with Environmental Laws, could not reasonably be
expected to have a Material Adverse Effect.
1.2.
1.3. SECTION Taxes . The Company and its Subsidiaries have filed
all United States Federal income tax returns and all other material tax
returns which are required to be filed by them and have paid all taxes due
pursuant to such returns or pursuant to any assessment received by the
Company or any Subsidiary except (i) where nonpayment could not reasonably
be expected to have a Material Adverse Effect or (ii) where the same are
contested in good faith by appropriate proceedings. The charges, accruals
and reserves on the books of the Company and its Subsidiaries in respect of
taxes or other governmental charges are, in the opinion of the Company,
adequate.
1.4.
1.5. SECTION Subsidiaries . Each of the Company's corporate
Subsidiaries is a corporation validly existing and in good standing under
the laws of its jurisdiction of incorporation, and has all corporate powers
and all material governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted and is duly
qualified to do business as a foreign corporation in each jurisdiction
where such qualification is required, except where the failure so to
qualify could not reasonably be expected to have Material Adverse Effect.
1.6.
1.7. SECTION Regulatory Restrictions on Borrowing . The Company is
not an "investment company" within the meaning of the Investment Company
Act of 1940, as amended, a "holding company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended, or otherwise
subject to any regulatory scheme which restricts its ability to incur debt.
1.8.
1.9. SECTION Full Disclosure . Neither the Company's Form 10-K for
the year ended December 31, 1998, as of the date of filing of such Form 10-
K, nor any registration statement (other than a registration statement on
Form S-8 (or its equivalent)) or report on Form 10-K, 10-Q and 8-K (or
their equivalents) which the Company shall have filed with the Securities
and Exchange Commission as at the time of filing of such registration
statement or report, as applicable, contained any untrue statement of a
material fact or omitted to state a material fact necessary in order to
make any statements contained therein, in the light of the circumstances
under which they were made, not misleading; provided that to the extent any
such document contains forecasts and/or projections, it is understood and
agreed that uncertainty is inherent in any forecasts or projections and
that no assurances can be given by the Company of the future achievement of
such performance.
1.10.
1.11. SECTION Year 2000 . Any reprogramming required to permit
the proper functioning, in and following year 2000, of the Company's
computer systems and equipment containing embedded microchips (including
systems and equipment supplied by others or with which the Company's
systems interface) and the testing of all such systems and equipment, as so
reprogrammed, will be completed in a timely fashion. The cost to the
Company of such reprogramming and testing and of the reasonably foreseeable
consequences of year 2000 to the Company (including, without limitation,
reprogramming errors and the failure of others' systems or equipment) will
not result in a Default or a Material Adverse Effect. Except for such of
the reprogramming referred to in the preceding sentence as may be
necessary, the computer and management information systems of the Company
and its Subsidiaries are and, with ordinary course upgrading and
maintenance, will continue for the term of this Agreement, to be sufficient
to permit the Company to conduct its business without Material Adverse
Effect.
1.12.
ARTICLE COVENANTS
The Company and, where stated, each other Borrower agree that, so long
as any Bank has any Commitment hereunder or any amount payable hereunder
remains unpaid or any Letter of Credit Liabilities remain outstanding:
1.1. SECTION Information . The Company will deliver to each of the
Banks:
1.2.
(a) as soon as available and in any event within 95 days after the
end of each fiscal year of the Company, a consolidated balance sheet of the
Company and its Consolidated Subsidiaries as of the end of such fiscal year
and the related consolidated statements of earnings, cash flows, and
changes in stockholders' equity for such fiscal year, setting forth in each
case in comparative form the figures for the previous fiscal year, all
reported on in a manner consistent with the requirements of the Securities
and Exchange Commission and audited by Ernst & Young LLP or other
independent public accountants of nationally recognized standing;
(a) as soon as available and in any event within 50 days after the
end of each of the first three quarters of each fiscal year of the Company,
an unaudited consolidated balance sheet of the Company and its Consolidated
Subsidiaries as of the end of such quarter and the related unaudited
consolidated statements of earnings and cash flows for such quarter and for
the portion of the Company'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 Company's
previous fiscal year, all certified (subject to normal year-end
adjustments) as to fairness of presentation and preparation based on
financial accounting principles consistent with generally accepted
accounting principles by an Approved Officer of the Company;
(a) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of an
Approved Officer of the Company (i) setting forth in reasonable detail the
calculations required to establish whether the Company was in compliance
with the requirements of Sections 5.10 and 5.12 on the date of such
financial statements and (ii) stating whether any Default exists on the
date of such certificate and, if any Default then exists, setting forth the
details thereof and the action which the Company is taking or proposes to
take with respect thereto;
(a) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements (i) that
nothing has come to their attention to cause them to believe that any
Default arising from the Company's failure to comply with its obligations
under Sections 5.10 and 5.12 existed on the date of such statements (it
being understood that such accountants shall not thereby be required to
perform any procedures not otherwise required under generally accepted
auditing standards) and (ii) confirming the calculations set forth in the
officer's certificate delivered simultaneously therewith pursuant to clause
(c) above;
(a) within five days after any officer of the Company obtains
knowledge of any Default, if such Default is then continuing, a certificate
of an Approved Officer of the Company setting forth the details thereof and
the action which the Company is taking or proposes to take with respect
thereto;
(a) promptly upon the mailing thereof to the shareholders of the
Company generally, copies of all financial statements, reports and proxy
statements so mailed;
(a) promptly after the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements
on Form S-8 or its equivalent) and reports (other than the exhibits
thereto) on Forms 10-K, 10-Q and 8-K (or their equivalents) which the
Company shall have filed with the Securities and Exchange Commission;
(a) if and when any member of the ERISA Group (i) gives or is
required to give notice to the PBGC of any "reportable event" (as defined
in Section 4043 of ERISA) with respect to any Plan which might constitute
grounds for a termination of such Plan under Title IV of ERISA, or knows
that the plan administrator of any Plan has given or is required to give
notice of any such reportable event, a copy of the notice of such
reportable event given or required to be given to the PBGC; (ii) receives
notice of complete or partial withdrawal liability under Title IV of ERISA
or notice that any Multiemployer Plan is in reorganization, is insolvent or
has been terminated, a copy of such notice; (iii) receives notice from the
PBGC under Title IV of ERISA of an intent to terminate, impose liability
(other than for premiums under Section 4007 of ERISA) in respect of, or
appoint a trustee to administer any Plan, a copy of such notice; (iv)
applies for a waiver of the minimum funding standard under Section 412 of
the Internal Revenue Code, a copy of such application; (v) gives notice of
intent to terminate any Plan under Section 4041(c) of ERISA, a copy of such
notice and other information filed with the PBGC; (vi) gives notice of
withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such
notice; or (vii) fails to make any payment or contribution to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement or makes any
amendment to any Plan or Benefit Arrangement which has resulted or could
result in the imposition of a Lien or the posting of a bond or other
security, a certificate of the chief financial officer or the chief
accounting officer of the Company setting forth details as to such
occurrence and action, if any, which the Company or applicable member of
the ERISA Group is required or proposes to take; and
(a) from time to time such additional information regarding the
financial position or business of the Company and its Subsidiaries as the
Administrative Agent, at the request of any Bank, may reasonably request.
1.1. SECTION Payment of Obligations . Each Borrower will pay and
discharge, and will cause each of its Subsidiaries to pay and discharge, at
or before maturity, all their respective material obligations and
liabilities (including, without limitation, tax liabilities and claims of
materialmen, warehousemen and the like which if unpaid might by law give
rise to a Lien), except where the same may be contested in good faith by
appropriate proceedings, and will maintain, and will cause each of its
Subsidiaries to maintain, in accordance with generally accepted accounting
principles, appropriate reserves for the accrual of any of the same.
1.1. SECTION Maintenance of Property; Insurance . (a) Each Borrower
will keep, and will cause each of its Subsidiaries to keep, all material
property useful and necessary in its business in good working order and
condition, ordinary wear and tear excepted.
(b) Each Borrower will, and will cause each of its Subsidiaries to,
maintain (either in the name of the Company or in such Borrower's or
Subsidiary's own name) with financially sound and responsible insurance
companies, insurance on all its respective properties in at least such
amounts, against at least such risks and with such risk retention as are
usually maintained, insured against or retained, as the case may be, in the
same general area by companies of established repute engaged in the same or
a similar business; provided that the Borrowers and their Subsidiaries may
self-insure to the same extent as other companies of established repute
engaged in the same or a similar business in the same general area in which
such Borrower or such Subsidiary operates and to the extent consistent with
prudent business practice. Each Borrower will furnish to the Banks, upon
request from the Administrative Agent, information presented in reasonable
detail as to the insurance so carried.
1.1. SECTION Conduct of Business and Maintenance of Existence .
Each Borrower and its Subsidiaries taken as a whole will continue to engage
in business of the same general type as now conducted by such Borrower and
its Subsidiaries and any ancillary or related lines of business, and each
Borrower will preserve, renew and keep in full force and effect, and will
cause each of its Subsidiaries to preserve, renew and keep in full force
and effect, its respective legal existence and its respective rights,
privileges and franchises necessary or desirable in the normal conduct of
business; provided that nothing in this Section shall prohibit (i) the
consolidation or merger of a Subsidiary (other than an Eligible Subsidiary
with obligations with respect to Loans or Letters of Credit outstanding
hereunder) with or into another Person, (ii) the consolidation or merger of
an Eligible Subsidiary with or into the Company or another Eligible
Subsidiary or (iii) the termination of the corporate existence of any
Subsidiary (other than an Eligible Subsidiary with obligations with respect
to Loans or Letters of Credit outstanding hereunder) if, in the case of
clauses (i), (ii) and (iii), such consolidation, merger or termination is
not materially disadvantageous to the Banks; and provided further that
nothing in this Section shall prohibit any sale or other disposition of
assets permitted under Section 5.07.
1.2.
1.3. SECTION Compliance with Laws . Each Borrower will comply, and
cause each of its Subsidiaries to comply, in all material respects with all
applicable laws, ordinances, rules, regulations, and requirements of
governmental authorities (including, without limitation, Environmental Laws
and ERISA and the rules and regulations thereunder) except where (i) the
necessity of compliance therewith is contested in good faith by appropriate
proceedings or (ii) the failure to comply could not reasonably be expected
to have a Material Adverse Effect.
1.4.
1.5. SECTION Inspection of Property, Books and Records . Each
Borrower will keep, and will cause each of its Subsidiaries to keep, proper
books of record and account in which full, true and correct entries shall
be made of all dealings and transactions in relation to its business and
activities; and will permit, and will cause each of its Subsidiaries to
permit, representatives of any Bank at such Bank's expense to visit and
inspect any of its respective properties, to examine and make abstracts
from any of its respective books and records and to discuss its respective
affairs, finances and accounts with its respective officers, employees and
independent public accountants, all at such reasonable times as may be
desired.
1.6.
1.7. SECTION Mergers and Sales of Assets . (a) The Company will not
consolidate or merge with or into any other Person; provided that the
Company may merge with another Person if (x) the Company is the corporation
surviving such merger and (y) after giving effect to such merger, no
Default shall have occurred and be continuing.
1.8.
1.9. (b) The Company will not sell, lease or otherwise transfer,
directly or indirectly, assets (exclusive of assets transferred in the
ordinary course of business) if after giving effect to such transfer the
aggregate book value of assets so transferred subsequent to the date of
this Agreement would constitute Substantial Assets as of the day preceding
the date of such transfer other than (i) sales of accounts receivable to
IMC-Agrico Receivables Company L.L.C. or any other similar bankruptcy-
remote Subsidiary of the Company or any of its Subsidiaries established for
the purpose of engaging in transactions related to accounts receivable,
(ii) the sale of assets acquired pursuant to an Acquisition that are
unrelated to the business of the same general type as now conducted by the
Company and its Subsidiaries, and (iii) the sale of assets acquired in or
as a direct result of the Harris Chemical Acquisition.
1.10.
1.11. SECTION Use of Proceeds . The proceeds of the Loans made
under this Agreement and of the Letters of Credit under this Agreement will
be used by the Borrowers for general corporate purposes, including without
limitation Acquisitions. None of such proceeds will be used in violation
of Regulation T, U or X of the Board of Governors of the Federal Reserve
System.
1.12.
1.13. SECTION Negative Pledge . Neither any Borrower nor any
Subsidiary of any Borrower will create, assume or suffer to exist any Lien
on any asset now owned or hereafter acquired by it, except:
1.14.
(a) Liens existing on the date of this Agreement securing Debt
outstanding on the date of this Agreement in an aggregate principal or face
amount not exceeding $135,000,000;
(a) any Lien existing on any asset of any Person at the time such
Person becomes a Subsidiary of a Borrower and not created in contemplation
of such event;
(a) any Lien on any asset securing Debt incurred or assumed for the
purpose of financing all or any part of the cost of acquiring or
constructing such asset, provided that such Lien attaches to such asset
concurrently with or within 90 days after the acquisition or completion of
construction thereof;
(a) any Lien on any asset of any Person existing at the time such
Person is merged or consolidated with or into a Borrower or a Subsidiary of
a Borrower and not created in contemplation of such event;
(a) any Lien existing on any asset prior to the acquisition thereof
by a Borrower or a Subsidiary of a Borrower and not created in
contemplation of such acquisition;
(a) any Lien arising out of the refinancing, extension, renewal or
refunding of any Debt secured by any Lien permitted by any of the foregoing
clauses of this Section, provided that the proceeds of such Debt are used
solely for the foregoing purpose and to pay financing costs and such Debt
is not secured by any additional assets;
(a) Liens arising in the ordinary course of its business which (i) do
not secure Debt or Derivatives Obligations, (ii) do not secure any
obligation in an amount exceeding $100,000,000 and (iii) do not in the
aggregate materially detract from the value of its assets or materially
impair the use thereof in the operation of its business;
(a) Liens on cash and cash equivalents securing Derivatives
Obligations, provided that the aggregate amount of cash and cash
equivalents subject to such Liens may at no time exceed $10,000,000; and
(a) Liens not otherwise permitted by the foregoing clauses of this
Section securing Debt in an aggregate principal or face amount, together
with all other Debt secured by Liens permitted under this Section 5.09(i),
not to exceed an amount equal to 10% of Consolidated Net Worth (calculated
as of the last day of the fiscal quarter most recently ended on or prior to
the date of the most recent incurrence of such Debt).
1.1. SECTION Debt of Subsidiaries . Total Debt of all Subsidiaries
(excluding Debt (i) of a Subsidiary owing to the Company, (ii) of a
Subsidiary owing to a Substantially-Owned Consolidated Subsidiary, (iii) of
an Eligible Subsidiary under this Agreement, (iv) of PLP in an aggregate
principal amount not exceeding $300,000,000 outstanding on December 15,
1997 (but not any refinancing thereof), (v) of Harris Chemical North
America, Inc. and its Subsidiaries arising out of the Argus Utilities sale-
leaseback transaction in an aggregate principal amount not exceeding
$71,000,000, or (vi) of IMC Inorganic Chemicals Inc., formerly known as
Harris Chemical Group Inc., and its Subsidiaries in an aggregate principal
amount not exceeding UKf 50,000,000) will not at any date exceed 25% of
Consolidated Net Worth (calculated as of the last day of the fiscal quarter
most recently ended on or prior to such date). For purposes of this
Section any preferred stock of a Consolidated Subsidiary (other than the
Series E Preferred Stock) held by a Person other than the Company or a
Substantially-Owned Consolidated Subsidiary shall be included, at the
higher of its voluntary or involuntary liquidation value, in the "Debt" of
such Consolidated Subsidiary.
1.2.
1.3. SECTION Transactions with Affiliates . No Borrower will, nor
will it permit any of its Subsidiaries to, directly or indirectly, pay any
funds to or for the account of, make any investment (whether by acquisition
of stock or indebtedness, by loan, advance, transfer of property, guarantee
or other agreement to pay, purchase or service, directly or indirectly, any
Debt, or otherwise) in, lease, sell, transfer or otherwise dispose of any
assets, tangible or intangible, to, or participate in, or effect, any
transaction with, any Affiliate except: (i) transactions on an arm's-length
basis on terms at least as favorable to such Borrower or such Subsidiary as
could have been obtained from a third party who was not an Affiliate, (ii)
marketing services provided by IMC Global Operations Inc. to Agrico, (iii)
employee leasing services agreements between IMC Global Operations Inc. and
Agrico, (iv) transactions between Agrico and the IMC Kalium business unit
of the Company, (v) loans from the Company or a Subsidiary to the Company
or a Subsidiary, (vi) the declaration and payment of any lawful dividend
and (vii) transactions between Vigoro Partnership, a Delaware general
partnership, and the IMC AgriBusiness business unit of the Company.
1.4.
1.5. SECTION Leverage Ratio . The Leverage Ratio will not exceed
4.00 to 1.00 as of the last day of any fiscal quarter ending on or prior to
December 31, 2000 or 3.75 to 1.00 as of the last day of any fiscal quarter
ending thereafter. For this purpose:
1.6.
1.7. "Consolidated Adjusted Debt" means at any date the sum of (i) the
Debt of the Company and its Consolidated Subsidiaries plus (ii) the excess
(if any) of (A) the aggregate unrecovered principal investment of
transferees of accounts receivable from the Company or a Consolidated
Subsidiary in transactions accounted for as sales under generally accepted
accounting principles over (B) $100,000,000, in each case determined on a
consolidated basis as of such date.
1.8.
1.9. "Consolidated EBITDA" means, for any period, the consolidated
operating earnings from (i) continuing operations of the Company, (ii)
continuing operations of the Company's Consolidated Subsidiaries and (iii)
discontinued operations of the Company and its Consolidated Subsidiaries,
in each case for such period before interest, taxes, depreciation,
depletion, amortization, other income and expense, minority interests, the
cumulative non-cash effect of changes in accounting standards and other non-
cash adjustments to operating earnings (other than any such non-cash charge
to the extent that it represents an accrual of or reserve for cash
expenditures in any future period), minus any non-recurring or other
charges not included in consolidated operating earnings which are cash or
represent an accrual of or reserve for cash expenditures in future periods
(with the exception of $100,000,000 of cash charges in the fourth quarter
of 1999). Consolidated EBITDA for each four-quarter period will be
adjusted on a pro-forma basis to reflect any Acquisition closed during such
period as if such Acquisition had been closed on the first day of such
period.
1.10.
1.11. "Leverage Ratio" means, as of the last day of any fiscal
quarter, the ratio of Consolidated Adjusted Debt calculated as of such day
to Consolidated EBITDA calculated for the period of four consecutive fiscal
quarters ending on such day.
1.12.
ARTICLEDEFAULTS
1.1. SECTION Events of Default . If one or more of the following
events ("Events of Default") shall have occurred and be continuing:
(a) any Borrower shall fail to pay when due any principal of any
Loan or of any Letter of Credit Liabilities or shall fail to pay,
within five Domestic Business Days of the due date thereof, any
interest, fees or any other amount payable hereunder;
(b) any Borrower shall fail to observe or perform any covenant
contained in Sections 5.07 to 5.12, inclusive;
(c) any Borrower shall fail to observe or perform any covenant
or agreement contained in this Agreement (other than those covered by
clause (a) or (b) above) for 30 days after notice thereof has been
given to the Company by the Administrative Agent at the request of any
Bank;
(d) any representation, warranty, certification or statement
made by any Borrower in this Agreement or in any certificate,
financial statement or other document delivered pursuant to this
Agreement shall prove to have been incorrect in any material respect
when made (or deemed made);
(e) the Company or any Subsidiary shall fail to make any payment
in respect of Material Financial Obligations (other than the Loans and
Letter of Credit Liabilities) when due or within any applicable grace
period;
(f) any event or condition shall occur and shall continue beyond the
applicable grace or cure period, if any, provided with respect thereto and
the maturity of Material Financial Obligations shall be accelerated as a
result thereof;
(g)
(g) the Company or any Material Subsidiary or any other Borrower
shall commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or
its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief
or to the appointment of or taking possession by any such official in
an involuntary case or other proceeding commenced against it, or shall
make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any
corporate action to authorize any of the foregoing;
(h) an involuntary case or other proceeding shall be commenced
against the Company or any Material Subsidiary or any other Borrower
seeking liquidation, reorganization or other relief with respect to it
or its debts under any bankruptcy, insolvency or other similar law now
or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 60
days; or an order for relief shall be entered against the Company or
any Material Subsidiary or any other Borrower under the federal
bankruptcy laws as now or hereafter in effect;
(i) any member of the ERISA Group shall fail to pay when due an
amount or amounts aggregating in excess of $25,000,000 which it shall
have become liable to pay under Title IV of ERISA; or notice of intent
to terminate a Material Plan shall be filed under Title IV of ERISA by
any member of the ERISA Group, any plan administrator or any
combination of the foregoing; or the PBGC shall institute proceedings
under Title IV of ERISA to terminate, to impose liability (other than
for premiums under Section 4007 of ERISA) in respect of, or to cause a
trustee to be appointed to administer any Material Plan; or a
condition shall exist by reason of which the PBGC would be entitled to
obtain a decree adjudicating that any Material Plan must be
terminated; or there shall occur a complete or partial withdrawal
from, or a default, within the meaning of Section 4219(c)(5) of ERISA,
with respect to, one or more Multiemployer Plans which causes one or
more members of the ERISA Group to incur a current payment obligation
in excess of $100,000,000 in the aggregate;
(j) judgments or orders for the payment of money in excess of
$100,000,000 in the aggregate shall be rendered against the Company or
any Subsidiary and such judgments or orders shall continue unsatisfied
and unstayed for a period of 30 days;
(k) any Person or two or more Persons acting in concert shall
have acquired beneficial ownership (within the meaning of Rule 13d-3
of the Securities and Exchange Commission under the Securities
Exchange Act of 1934), directly or indirectly, of Voting Stock of the
Company (or other securities convertible into such Voting Stock)
representing 35% or more of the combined voting power of all Voting
Stock of the Company; or (ii) during any period of up to 24
consecutive months, commencing after the date of this Agreement,
individuals who at the beginning of such 24-month period were
directors of the Company shall cease for any reason (other than due to
death or disability) to constitute a majority of the board of
directors of the Company, except to the extent that individuals who at
the beginning of such 24-month period were replaced by individuals (x)
elected by 66-2/3% of the remaining members of the board of directors
of the Company or (y) nominated for election by a majority of the
remaining members of the board of directors of the Company and
thereafter elected as directors by the shareholders of the Company; or
(iii) any Person or two or more Persons acting in concert shall have
acquired by contract or otherwise, or shall have entered into a
contract or arrangement that has resulted in its or their acquisition
of, 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; or
(l) any of the obligations of the Company under Article 10 of
this Agreement shall for any reason not be enforceable against the
Company in accordance with their terms, or the Company shall so assert
in writing; then, and in every such event, the Administrative Agent
shall (i) if requested by Banks having more than 50% in aggregate
amount of the Commitments, by notice to the Company terminate the
Commitments and they shall thereupon terminate and (ii) if requested
by Banks holding more than 50% in aggregate principal amount of the
Loans, by notice to the Company declare the Loans (together with
accrued interest thereon) to be, and the Loans shall thereupon become,
immediately due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the
Borrowers; provided that in the case of any of the Events of Default
specified in clause (g) or (h) above with respect to any Borrower,
without any notice to any Borrower or any other act by the
Administrative Agent or the Banks, the Commitments shall thereupon
terminate and the Loans (together with accrued interest thereon) shall
become immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by
the Borrowers.
1.1. SECTION Notice of Default . The Administrative Agent shall
give notice to the Company under Section 6.01(c) promptly upon being
requested to do so by any Bank and shall thereupon notify all the Banks
thereof.
1.2.
1.3. SECTION Cash Cover . The Company agrees, in addition to the
provisions of Section 6.01 hereof, that upon the occurrence and during the
continuance of any Event of Default, it shall, if requested by the
Administrative Agent upon the instruction of the Banks having more than 50%
in the aggregate amount of the Commitments (or, if the Commitments shall
have been terminated, holding more than 50% of the Letter of Credit
Liabilities), pay to the Administrative Agent an amount in immediately
available funds (which funds shall be held as collateral pursuant to
arrangements satisfactory to the Administrative Agent) equal to the
aggregate amount available for drawing under all Letters of Credit then
outstanding at such time, provided that, upon the occurrence of any Event
of Default specified in Section 6.01(g) or 6.01(h) with respect to any
Borrower, the Company shall pay such amount forthwith without any notice or
demand or any other act by the Administrative Agent or the Banks.
1.4.
1.5.
ARTICLE THE ADMINISTRATIVE AGENT
1.1. SECTION Appointment and Authorization . Each Bank irrevocably
appoints and authorizes the Administrative Agent to take such action as
agent on its behalf and to exercise such powers under this Agreement and
the Notes as are delegated to the Administrative Agent by the terms hereof
or thereof, together with all such powers as are reasonably incidental
thereto.
1.2.
1.3. SECTION Administrative Agent and Affiliates . Bank of America,
N.A. shall have the same rights and powers under this Agreement as any
other Bank and may exercise or refrain from exercising the same as though
it were not the Administrative Agent, and Bank of America, N.A. and its
affiliates may accept deposits from, lend money to, and generally engage in
any kind of business with the Company or any Subsidiary or affiliate of the
Company as if it were not the Administrative Agent hereunder.
1.4.
1.5. SECTION Action by Administrative Agent . The obligations of
the Administrative Agent hereunder are only those expressly set forth
herein. Without limiting the generality of the foregoing, the
Administrative Agent shall not be required to take any action with respect
to any Default, except as expressly provided in Article 6.
1.6.
1.7. SECTION Consultation with Experts . The Administrative Agent
may consult with legal counsel (who may be counsel for any Borrower),
independent public accountants and other experts selected by it and shall
not be liable for any action taken or omitted to be taken by it in good
faith in accordance with the advice of such counsel, accountants or
experts.
1.8.
1.9. SECTION Liability of Administrative Agent . Neither the
Administrative Agent nor any of its affiliates nor any of their respective
directors, officers, agents or employees shall be liable to any Bank for
any action taken or not taken by it in connection herewith (i) with the
consent or at the request of the Required Banks (or, when expressly
required hereby, all the Banks) or (ii) in the absence of its own gross
negligence or willful misconduct. Neither the Administrative Agent nor any
of its affiliates nor any of their respective directors, officers, agents
or employees shall be responsible for or have any duty to ascertain,
inquire into or verify (i) any statement, warranty or representation made
in connection with this Agreement or any extension of credit hereunder;
(ii) the performance or observance of any of the covenants or agreements of
any Borrower; (iii) the satisfaction of any condition specified in Article
3, except receipt of items required to be delivered to the Administrative
Agent; or (iv) the validity, effectiveness or genuineness of this
Agreement, the Notes or any other instrument or writing furnished in
connection herewith. The Administrative Agent shall not incur any
liability by acting in reliance upon any notice, consent, certificate,
statement, or other writing (which may be a bank wire, telex or similar
writing) believed by it in good faith to be genuine or to be signed by the
proper party or parties. Without limiting the generality of the foregoing,
the use of the term "agent" in this Agreement with reference to the
Administrative Agent is not intended to connote any fiduciary or other
implied (or express) obligations arising under agency doctrine of any
applicable law. Instead, such term is used merely as a matter of market
custom and is intended to create or reflect only an administrative
relationship between independent contracting parties.
1.10.
1.11. SECTION Indemnification . Each Bank shall, ratably in
accordance with its Commitment, indemnify the Administrative Agent, its
affiliates and their respective directors, officers, agents and employees
(to the extent not reimbursed by the Borrowers) against any cost, expense
(including reasonable counsel fees and disbursements), claim, demand,
action, loss or liability (except such as result from such indemnitees'
gross negligence or willful misconduct) that such indemnitees may suffer or
incur in connection with this Agreement or any action taken or omitted by
such indemnitees thereunder.
1.12.
1.13. SECTION Credit Decision . Each Bank acknowledges that it
has, independently and without reliance upon any Agent or any other Bank,
and based on such documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this Agreement.
Each Bank also acknowledges that it will, independently and without
reliance upon any Agent or any other Bank, and based on such documents and
information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking any action under this
Agreement.
1.14.
1.15. SECTION Successor Administrative Agent . The
Administrative Agent may resign at any time by giving notice thereof to the
Banks and the Company. Upon any such resignation, the Company, with the
consent of the Required Banks (such consent not to be unreasonably withheld
or delayed), shall have the right to appoint a successor Administrative
Agent. If no successor Administrative Agent shall have been so appointed,
and shall have accepted such appointment, within 30 days after the retiring
Administrative Agent gives notice of resignation, then the retiring
Administrative Agent may, on behalf of the Banks, appoint a successor
Administrative Agent, which shall be a commercial bank organized or
licensed under the laws of the United States of America or of any State
thereof and having a combined capital and surplus of at least $500,000,000.
Upon the acceptance of its appointment as Administrative Agent hereunder by
a successor Administrative Agent, such successor Administrative Agent shall
thereupon succeed to and become vested with all the rights and duties of
the retiring Administrative Agent, and the retiring Administrative Agent
shall be discharged from its duties and obligations hereunder. After any
retiring Administrative Agent's resignation hereunder as Administrative
Agent, the provisions of this Article shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Administrative
Agent.
1.16.
1.17. SECTION Agents' Fees . The Company shall pay to each of
the Agents for its own account fees in the amounts and at the times
previously agreed upon between the Company and such Agent.
1.18.
1.19. SECTION Other Agents . Nothing in this Agreement shall
impose upon the Documentation Agent, the Co-Documentation Agent, the
Syndication Agent or the Co-Syndication Agent, in such capacity, any duties
or obligations whatsoever.
1.20.
ARTICLE CHANGE IN CIRCUMSTANCES
1.1. SECTION Basis for Determining Interest Rate Inadequate or
Unfair . If on or prior to the first day of any Interest Period for any
Euro-Dollar Borrowing or Bid Rate (Indexed) Borrowing:
(a) the Administrative Agent is advised by the Euro-Dollar Reference
Banks that deposits in dollars (in the applicable amounts) are not being
offered to the Euro-Dollar Reference Banks in the relevant market for such
Interest Period, or
(a) in the case of a Euro-Dollar Borrowing, Banks having more than
50% of the aggregate amount of the affected Loans advise the Administrative
Agent that the London Interbank Offered Rate as determined by the
Administrative Agent will not adequately and fairly reflect the cost to
such Banks of funding their Euro-Dollar Loans for such Interest Period, the
Administrative Agent shall forthwith give notice thereof to the Borrower
and the Banks, whereupon until the Administrative Agent notifies the
Borrower that the circumstances giving rise to such suspension no longer
exist, (i) the obligations of the Banks to make Euro-Dollar Loans or to
continue or convert outstanding Loans as or into Euro-Dollar Loans shall be
suspended and (ii) each outstanding Euro-Dollar Loan shall be converted
into a Base Rate Loan on the last day of the then current Interest Period
applicable thereto. Unless the Borrower notifies the Administrative Agent
at least one Domestic Business Day before the date of any Fixed Rate
Borrowing for which a Notice of Borrowing has previously been given that it
elects not to borrow on such date, (i) if such Fixed Rate Borrowing is a
Syndicated Borrowing, such Borrowing shall instead be made as a Base Rate
Borrowing and (ii) if such Borrowing is a Bid Rate (Indexed) Borrowing, the
Loans comprising such Borrowing shall bear interest for each day from and
including the first day to but excluding the last day of the Interest
Period applicable thereto at the Base Rate for such day.
1.1. SECTION Illegality . If, on or after the date of this
Agreement, 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,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its Euro-Dollar
Lending Office) with any request or directive (whether or not having the
force of law) of any such authority, central bank or comparable agency
shall make it unlawful or impossible for any Bank (or its Euro-Dollar
Lending Office) to make, maintain or fund any of its Euro-Dollar Loans to
any Borrower and such Bank shall so notify the Administrative Agent, the
Administrative Agent shall forthwith give notice thereof to the other Banks
and such Borrower, whereupon until such Bank notifies such Borrower and the
Administrative Agent that the circumstances giving rise to such suspension
no longer exist, the obligation of such Bank to make Euro-Dollar Loans, or
to continue or convert outstanding Loans as or into Euro-Dollar Loans, to
such Borrower shall be suspended. Before giving any notice to the
Administrative Agent pursuant to this Section, such Bank shall designate a
different Euro-Dollar Lending Office if such designation will avoid the
need for giving such notice and will not be otherwise disadvantageous to
such Bank in the good faith exercise of its discretion. If such notice is
given, each Euro-Dollar Loan of such Bank to such Borrower then outstanding
shall be converted to a Base Rate Loan either (a) on the last day of the
then current Interest Period applicable to such Euro-Dollar Loan if such
Bank may lawfully continue to maintain and fund such Loan to such day or
(b) immediately if such Bank shall determine that it may not lawfully
continue to maintain and fund such Loan to such day.
1.2.
1.3. SECTION Increased Cost and Reduced Return . (a) If on or after
(x) the date of this Agreement, in the case of any Committed Loan or Letter
of Credit or any obligation to make Committed Loans or issue or participate
in any Letter of Credit or (y) the date of any related Bid Rate Quote, in
the case of any Bid Rate Loan, 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, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank (or its
Applicable Lending Office) with any request or directive (whether or not
having the force of law) issued on or after such date of any such
authority, central bank or comparable agency 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, but excluding with respect to any
Euro-Dollar Loan any such requirement for which such Bank is entitled to
compensation for the relevant Interest Period under Section 2.17) against
assets of, deposits with or for the account of, or credit extended by, any
Bank (or its Applicable Lending Office) or shall impose on any Bank (or its
Applicable Lending Office) or on the London interbank market any other
condition (other than in respect of Taxes or Other Taxes) affecting its
Fixed Rate Loans, its Notes or its obligation to make Fixed Rate Loans or
its obligations hereunder in respect of Letters of Credit and the result of
any of the foregoing is to increase the cost to such Bank (or its
Applicable Lending Office) of making or maintaining any Fixed Rate Loan or
of issuing or participating in any Letter of Credit, or to reduce the
amount of any sum received or receivable by such Bank (or its Applicable
Lending Office) under this Agreement or under its Notes with respect
thereto, by an amount deemed by such Bank to be material, then, within 15
days after receipt by the Company of written demand by such Bank (with a
copy to the Administrative Agent), the Company shall pay to such Bank an
amount which on an after-tax basis is necessary to maintain the same rate
of return on capital that existed immediately prior thereto which such Bank
reasonably determines is attributable to this Agreement, its Loans and
Letter of Credit Liabilities or its obligations to make Loans or to issue
or participate in Letters of Credit hereunder (after taking into account
such Bank's policies as to capital adequacy).
1.4.
1.5. (b) If any Bank shall have determined that, on or after the date
of this Agreement, the adoption of any applicable law, rule or regulation
regarding capital adequacy, or any change in any such law, rule or
regulation, or any change in the interpretation or administration thereof
by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or any request or
directive regarding capital adequacy (whether or not having the force of
law) of any such authority, central bank or comparable agency given or made
after the date of this Agreement, has or would have the effect of reducing
the rate of return on capital of such Bank (or its Parent) as a consequence
of such Bank's obligations hereunder to a level below that which such Bank
(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 Bank to be material, then
from time to time, within 15 days after receipt by the Company of written
demand by such Bank (with a copy to the Administrative Agent), the Company
shall pay to such Bank an amount which on an after-tax basis is necessary
to maintain the same rate of return on capital that existed immediately
prior thereto which such Bank reasonably determines is attributable to this
Agreement, its Loans and Letter of Credit Liabilities or its obligations to
make Loans or to issue or participate in Letters of Credit hereunder (after
taking into account such Bank's policies as to capital adequacy).
1.6.
1.7. (c) Each Bank will promptly notify the Company and the
Administrative Agent of any event of which it has knowledge, occurring
after the date hereof, which will entitle such Bank to compensation
pursuant to this Section and will designate a different Applicable Lending
Office if such designation will avoid the need for, or reduce the amount
of, such compensation and will not, in the judgment of such Bank, be
otherwise disadvantageous to such Bank. A certificate of any Bank claiming
compensation under this Section and setting forth the additional amount or
amounts to be paid to it hereunder shall be presumptively correct in the
absence of manifest error. In determining such amount, such Bank may use
any reasonable averaging and attribution methods. Notwithstanding the
foregoing subsections (a) and (b) of this Section 8.03, the Company shall
only be obligated to compensate any Bank for any amount arising or accruing
during any time or period commencing not more than 45 days prior to the
date on which such Bank notifies the Administrative Agent and the Company
that it proposes to demand such compensation and identifies to the
Administrative Agent and the Company the statute, regulation or other basis
upon which the claimed compensation is or will be based and any time or
period during which because of the retroactive application of such statute,
regulation or other such basis, such Bank did not know in good faith that
such amount would arise or accrue.
1.8.
1.9. SECTION Taxes . (a) For purposes of this Section 8.04, the
following terms have the following meanings:
1.10.
1.11. "Taxes" means any and all present or future taxes, duties,
levies, imposts, deductions, charges or withholdings with respect to any
payment by any Borrower pursuant to this Agreement or any Note, and all
liabilities with respect thereto, excluding (i) in the case of each Bank
and the Administrative Agent, taxes imposed on its net income and franchise
or similar taxes imposed on it by a jurisdiction under the laws of which
such Bank or the Administrative Agent (as the case may be) is organized or
in which its principal executive office is located or, in the case of each
Bank, in which its Applicable Lending Office is located (all such excluded
taxes of the Administrative Agent or any Bank being herein referred to as
its "Domestic Taxes") and (ii) in the case of each Bank, any United States
withholding tax imposed on such payments except to the extent that such
Bank is subject to United States withholding tax by reason of a U.S. Tax
Law Change.
1.12.
1.13. "Other Taxes" means any present or future stamp or
documentary taxes and any other excise or property taxes, or similar
charges or levies, which arise from any payment made pursuant to this
Agreement or under any Note or from the execution or delivery of, or
otherwise with respect to, this Agreement or any Note.
1.14.
1.15. "U.S. Tax Law Change" means with respect to any Bank or
Participant the occurrence (x) in the case of each Bank listed on the
signature pages hereof, after the date of its execution and delivery of
this Agreement and (y) in the case of any other Bank, after the date such
Bank shall have become a Bank hereunder, and (z) in the case of each
Participant, after the date such Participant became a Participant
hereunder, of the adoption of any applicable U.S. federal law, U.S. federal
rule or U.S. federal regulation relating to taxation, or any change
therein, or the entry into force, modification or revocation of any income
tax convention or treaty to which the United States is a party.
1.16.
1.17. (b) Any and all payments by any Borrower to or for the
account of any Bank or the Administrative Agent hereunder or under any Note
shall be made without deduction for any Taxes or Other Taxes; provided
that, if any Borrower shall be required by law to deduct any Taxes or Other
Taxes from any such payments, (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 8.04)
such Bank or the Administrative Agent (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been
made, (ii) such Borrower shall make such deductions, (iii) such Borrower
shall pay the full amount deducted to the relevant taxation authority or
other authority in accordance with applicable law and (iv) such Borrower
shall furnish to the Administrative Agent, at its address referred to in
Section 11.01, the original or a certified copy of a receipt evidencing
payment thereof.
1.18.
1.19. (c) Each Borrower agrees to indemnify each Bank and the
Administrative Agent for the full amount of Taxes or Other Taxes
(including, without limitation, any Taxes or Other Taxes imposed or
asserted by any jurisdiction on amounts payable under this Section 8.04)
paid by such Bank or the Administrative Agent (as the case may be) and any
liability (including penalties, interest and expenses) arising therefrom or
with respect thereto. In addition, each Borrower organized under the laws
of a jurisdiction outside the United States agrees to indemnify the
Administrative Agent and each Bank for all Domestic Taxes incurred by it
and any liability (including any penalties, interest and expenses arising
therefrom or with respect thereto), in each case to the extent that such
Domestic Taxes or liabilities result from any payment or indemnification
pursuant to this Section by or for the account of such Borrower. This
indemnification shall be paid within 15 days after such Bank or the
Administrative Agent (as the case may be) makes demand therefor.
1.20.
1.21. (d) Each Bank organized under the laws of a jurisdiction
outside the United States, on or prior to the date of its execution and
delivery of this Agreement in the case of each Bank listed on the signature
pages hereof and on or prior to the date on which it becomes a Bank in the
case of each other Bank, and from time to time thereafter as required by
law (but only so long as such Bank remains lawfully able to do so), shall
provide the Company two completed and duly executed copies of Internal
Revenue Service form 1001 or 4224, as appropriate, or any successor form
prescribed by the Internal Revenue Service, or other documentation
reasonably requested by the Company, certifying that such Bank is entitled
to benefits under an income tax treaty to which the United States is a
party which exempts the Bank from United States withholding tax or reduces
the rate of withholding tax on payments of interest for the account of such
Bank or certifying that the income receivable pursuant to this Agreement is
effectively connected with the conduct of a trade or business in the United
States.
1.22.
1.23. (e) For any period with respect to which a Bank has failed
to provide the Company with the appropriate form pursuant to Section
8.04(d) (unless such failure is due to a U.S. Tax Law Change), such Bank
shall not be entitled to indemnification under Section 8.04(b) or 8.04(c)
or with respect to any Taxes or Other Taxes which would not have been
payable had such form been so provided, provided that if a Bank, which is
otherwise exempt from or subject to a reduced rate of withholding tax,
becomes subject to Taxes because of its failure to deliver a form required
hereunder, the Company shall take such steps as such Bank shall reasonably
request to assist such Bank to recover such Taxes (it being understood,
however, that the Company shall have no liability to such Bank in respect
of such Taxes).
1.24.
1.25. (f) If any Borrower is required to pay additional amounts
to or for the account of any Bank pursuant to this Section 8.04, then such
Bank will take such action (including changing the jurisdiction of its
Applicable Lending Office) as in the good faith judgment of such Bank (i)
will eliminate or reduce any such additional payment which may thereafter
accrue and (ii) is not otherwise disadvantageous to such Bank.
1.26.
1.27. SECTION Base Rate Loans Substituted for Affected Fixed
Rate Loans . If (i) the obligation of any Bank to make or to continue or
convert outstanding Loans as or into Euro-Dollar Loans to any Borrower has
been suspended pursuant to Section 8.02 or (ii) any Bank has demanded
compensation under Section 8.03(a) or 8.04 with respect to its Euro-Dollar
Loans and the Borrower shall, by at least five Euro-Dollar Business Days'
prior notice to such Bank through the Administrative Agent, have elected
that the provisions of this Section shall apply to such Bank, then, unless
and until such Bank notifies the Borrower that the circumstances giving
rise to such suspension or demand for compensation no longer apply:
1.28.
(a) all Loans to such Borrower which would otherwise be made by such
Bank as (or continued as or converted to) Euro-Dollar Loans, as the case
may be, shall instead be Base Rate Loans (on which interest and principal
shall be payable contemporaneously with the related Euro-Dollar Loans of
the other Banks), and
(a) after each of its Euro-Dollar Loans to such Borrower has been
repaid, all payments of principal which would otherwise be applied to repay
such Loans shall be applied to repay its Base Rate Loans instead.
If such Bank notifies such Borrower that the circumstances giving rise
to such suspension or demand for compensation no longer exist, the
principal amount of each such Base Rate Loan shall be converted into a Euro-
Dollar Loan on the first day of the next succeeding Interest Period
applicable to the related Euro-Dollar Loans of the other Banks.
1.1. SECTION Substitution of Bank . If (i) the obligation of any
Bank to make or to convert or continue outstanding Loans as or into Euro-
Dollar Loans has been suspended pursuant to Section 8.02 or (ii) any Bank
has demanded compensation under Section 8.03 or 8.04, the Company shall
have the right, with the assistance of the Administrative Agent, to
designate a substitute bank or banks (which may be one or more of the
Banks) mutually satisfactory to the Company, the Administrative Agent, the
Issuing Banks and the Swingline Bank (whose consent shall not be
unreasonably withheld or delayed) to purchase for cash, pursuant to an
Assignment and Assumption Agreement in substantially the form of Exhibit G
hereto, the outstanding Loans of such Bank and assume the Commitment and
Letter of Credit Liabilities of such Bank, without recourse to or warranty
by, or expense to, such Bank, for a purchase price equal to the principal
amount of all of such Bank's outstanding Loans and funded Letter of Credit
Liabilities plus any accrued but unpaid interest thereon and the accrued
but unpaid fees in respect of such Bank's Commitment hereunder plus such
amount, if any, as would be payable pursuant to Section 2.14 if the
outstanding Loans of such Bank were prepaid in their entirety on the date
of consummation of such assignment.
1.2.
ARTICLE REPRESENTATIONS AND WARRANTIES OF ELIGIBLE SUBSIDIARIES
By the execution and delivery of its Election to Participate, each
Eligible Subsidiary shall be deemed to have represented and warranted as of
the date thereof that:
1.1. SECTION Corporate Existence and Power . It is a legal entity
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization and is a Substantially-Owned Consolidated
Subsidiary of the Company.
1.2.
1.3. SECTION Corporate and Governmental Authorization; Contravention
. The execution and delivery by it of its Election to Participate and its
Notes, and the performance by it of this Agreement and its Notes, are
within its legal powers, have been duly authorized by all necessary legal
action, require no action by or in respect of, or filing with, any
governmental body, agency or official and do not contravene, or constitute
a default under, any provision of applicable law or regulation or of its
organizational documents or of any agreement, judgment, injunction, order,
decree or other instrument binding upon the Company or such Eligible
Subsidiary or result in the creation or imposition of any Lien on any asset
of the Company or any of its Subsidiaries.
1.4.
1.5. SECTION Binding Effect . Its Election to Participate has been
duly executed by such Eligible Subsidiary and this Agreement constitutes a
valid and binding agreement of such Eligible Subsidiary and each of its
Notes, when executed and delivered in accordance with this Agreement, will
constitute a valid and binding obligation of such Eligible Subsidiary, in
each case enforceable in accordance with its terms, except as the same may
be limited by bankruptcy, insolvency or similar laws affecting creditors'
rights generally and by general principles of equity.
1.6.
1.7. SECTION Taxes . Except as disclosed in the opinion of counsel
delivered pursuant to Section 3.03 of this Agreement or in its Election to
Participate, there are no Taxes or Other Taxes of any country, or any
taxing authority thereof or therein, which are imposed on any payment to be
made by such Eligible Subsidiary pursuant hereto or on its Notes, or
imposed on or by virtue of the execution, delivery or enforcement of this
Agreement, its Election to Participate or of its Notes.
1.8.
ARTICLE GUARANTY
1.1. SECTION The Guaranty . The Company hereby unconditionally
guarantees the full and punctual payment (whether at stated maturity, upon
acceleration or otherwise) of the principal of and interest (including,
without limitation, interest accruing after the commencement of a
bankruptcy, insolvency or similar proceeding with respect to any Eligible
Subsidiary, regardless of whether such interest is an allowed claim in such
proceeding) on each Loan made to and all Letter of Credit Liabilities
incurred at the request of any Eligible Subsidiary pursuant to this
Agreement, and the full and punctual payment of all other amounts payable
by any Eligible Subsidiary under this Agreement or any Note. Upon failure
by any Eligible Subsidiary to pay punctually any such amount, the Company
shall forthwith on demand pay the amount not so paid at the place and in
the manner specified in this Agreement.
1.1. SECTION Guaranty Unconditional . The obligations of the
Company hereunder shall be unconditional and absolute and, without limiting
the generality of the foregoing, shall not be released, discharged or
otherwise affected by:
1.2.
(a) any extension, renewal, settlement, compromise, waiver or release
in respect of any obligation of any Eligible Subsidiary under this
Agreement or any Note, by operation of law or otherwise;
(a) any modification or amendment of or supplement to this Agreement
or any Note;
(a) any release, impairment, non-perfection or invalidity of any
direct or indirect security for any obligation of any Eligible Subsidiary
under this Agreement or any Note;
(a) any change in the existence, structure or ownership of any
Eligible Subsidiary, or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting any Eligible Subsidiary or its assets or any
resulting release or discharge of any obligation of any Eligible Subsidiary
contained in this Agreement or any Note;
(a) the existence of any claim, set-off or other rights which the
Company may have at any time against any Eligible Subsidiary, any Agent,
any Bank or any other Person, whether in connection herewith or any
unrelated transactions, provided that nothing herein shall prevent the
assertion of any such claim by separate suit or compulsory counterclaim;
(a) any invalidity or unenforceability relating to or against any
Eligible Subsidiary for any reason of this Agreement or any Note, or any
provision of applicable law or regulation purporting to prohibit the
payment by any Eligible Subsidiary of the principal of or interest on any
Loan, any Letter of Credit Liability or any other amount payable by it
under this Agreement or any Note; or
(a) any other act or omission to act or delay of any kind by any
Eligible Subsidiary, any Agent or Bank or any other Person or any other
circumstance whatsoever which might, but for the provisions of this
paragraph, constitute a legal or equitable discharge of or defense to the
Company's obligations hereunder.
1.1. SECTION Discharge Only Upon Payment In Full; Reinstatement In
Certain Circumstances . The Company's obligations hereunder shall remain
in full force and effect until the Commitments and any Letters of Credit
shall have terminated and the principal of and interest on the Loans, the
Letter of Credit Liabilities and all other amounts payable by the Company
and each Eligible Subsidiary under this Agreement or any Note shall have
been paid in full. If at any time any payment of principal of or interest
on any Loan, any Letter of Credit Liability or any other amount payable by
any Eligible Subsidiary under this Agreement or any Note is rescinded or
must be otherwise restored or returned upon the insolvency, bankruptcy or
reorganization of any Eligible Subsidiary or otherwise, the Company's
obligations hereunder with respect to such payment shall be reinstated at
such time as though such payment had been due but not made at such time.
1.2.
1.3. SECTION Waiver by the Company . The Company irrevocably waives
acceptance hereof, presentment, demand, protest and any notice not provided
for herein, as well as any requirement that at any time any action be taken
by any Person against any Eligible Subsidiary or any other Person.
1.4.
1.5. SECTION Subrogation . The Company irrevocably waives any and
all rights to which it may be entitled, by operation of law or otherwise,
upon making any payment hereunder in respect of any Eligible Subsidiary to
be subrogated to the rights of the payee against such Eligible Subsidiary
with respect to such payment or against any direct or indirect security
therefor, or otherwise to be reimbursed, indemnified or exonerated by or
for the account of such Eligible Subsidiary in respect thereof, in any
bankruptcy, insolvency or similar proceeding involving such Eligible
Subsidiary as debtor commenced within one year after the making of any
payment by such Eligible Subsidiary under this Agreement or its Notes.
1.6.
1.7. SECTION Stay of Acceleration . In the event that acceleration
of the time for payment of any amount payable by any Eligible Subsidiary
under this Agreement or any Note is stayed upon insolvency, bankruptcy or
reorganization of such Eligible Subsidiary, all such amounts otherwise
subject to acceleration under the terms of this Agreement shall nonetheless
be payable by the Company hereunder forthwith on demand by the
Administrative Agent made at the request of the Required Banks.
ARTICLE MISCELLANEOUS
1
.1 SECTION Notices . All notices, requests and other communications to
any party hereunder shall be in writing (including bank wire, telex,
facsimile transmission or similar writing) and shall be given to such
party: in the case of the Company or the Administrative Agent, at its
address, facsimile number or telex number set forth on the signature pages
hereof, in the case of any Bank, at its address, facsimile number or telex
number set forth in its Administrative Questionnaire or in the case of any
party, such other address, facsimile number or telex number as such party
may hereafter specify for the purpose by notice to the Administrative Agent
and the Company. Each such notice, request or other communication shall be
effective if given by telex, when such telex is transmitted to the telex
number specified in this Section and the appropriate answerback is
received, if given by facsimile transmission, when transmitted to the
facsimile number specified in this Section and confirmation of receipt is
received, if given by mail, 72 hours after such communication is deposited
in the mail with first class postage prepaid, addressed as aforesaid or if
given by any other means, when delivered at the address specified in this
Section; provided that notices to the Administrative Agent under Article 2
or Article 8 shall not be effective until received. Any notice required to
be given to or by any Eligible Subsidiary shall be duly given if given to
or by the Company, which is hereby appointed the agent of each Eligible
Subsidiary for such purpose.
1.1. SECTION No Waivers . No failure or delay by the Administrative
Agent or any Bank in exercising any right, power or privilege hereunder or
under any Note shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.
1.2.
1.3. SECTION Expenses; Indemnification . (a) The Company shall pay
(i) all reasonable out-of-pocket expenses of the Administrative Agent,
including reasonable fees and disbursements of special counsel for the
Administrative Agent, in connection with the preparation of this Agreement,
any waiver or consent hereunder or any amendment hereof or any Default or
alleged Default hereunder and (ii) if an Event of Default occurs, all
reasonable out-of-pocket expenses incurred by the Administrative Agent or
any Bank, including (without duplication) the reasonable fees and
disbursements of outside counsel and allocated cost of inside counsel, in
connection with such Event of Default and collection, bankruptcy,
insolvency and other enforcement proceedings resulting therefrom.
1.4.
1.5. (b) The Company agrees to indemnify the Administrative Agent and
each Bank, their respective affiliates and the respective directors,
officers, agents and employees of the foregoing (each an "Indemnitee") and
hold each Indemnitee harmless from and against any and all liabilities,
losses, damages, costs and out-of-pocket expenses of any kind, including,
without limitation, the reasonable fees and disbursements of counsel, which
may be incurred by such Indemnitee in connection with any litigation or
governmental or regulatory investigation or other similar proceeding
(whether or not such Indemnitee shall be designated a party thereto)
relating to or arising out of this Agreement or any actual or proposed use
of proceeds of Loans or Letters of Credit hereunder; provided that no
Indemnitee shall have the right to be indemnified hereunder for such
Indemnitee's own gross negligence or willful misconduct or for its breach
of its express obligations under this Agreement, in each case as determined
by a court of competent jurisdiction; provided further that in no event
shall the Company have any such indemnification obligation in respect of
any liabilities, losses, damages, costs or expenses resulting from disputes
between any Bank and any Agent or among the Banks.
1.6.
1.7. SECTION Sharing of Set-offs . Each Bank agrees that if it
shall, by exercising any right of set-off or counterclaim or otherwise,
receive payment of a proportion of the aggregate amount then due with
respect to the Loans and Letter of Credit Liabilities held by it which is
greater than the proportion received by any other Bank in respect of the
aggregate amount then due with respect to the Loans and Letter of Credit
Liabilities held by such other Bank, the Bank receiving such
proportionately greater payment shall purchase such participations in the
Loans and Letter of Credit Liabilities held by the other Banks, and such
other adjustments shall be made, as may be required so that all such
payments with respect to the Loans and Letter of Credit Liabilities held by
the Banks shall be shared by the Banks pro rata; provided that nothing in
this Section shall impair the right of any Bank to exercise any right of
set-off or counterclaim it may have and to apply the amount subject to such
exercise to the payment of indebtedness of the Borrowers other than their
indebtedness under this Agreement. Each Borrower agrees, to the fullest
extent it may effectively do so under applicable law, that any holder of a
participation in a Loan or Letter of Credit, whether or not acquired
pursuant to the foregoing arrangements, may exercise rights of set-off or
counterclaim and other rights with respect to such participation as fully
as if such holder of a participation were a direct creditor of such
Borrower in the amount of such participation.
1.8.
1.9. SECTION Amendments and Waivers . Any provision of this
Agreement or the Notes may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by the Borrower and the
Required Banks (and, if the rights or duties of the Administrative Agent,
any Swingline Bank or any Issuing Bank are affected thereby, by such
Person); provided that no such amendment or waiver shall, unless signed by
all the Banks, (i) increase or decrease the Commitment of any Bank (except
for a ratable decrease in the Commitments of all Banks) or subject any Bank
to any additional obligation, (ii) reduce the principal of or rate of
interest on any Loan or the amount to be reimbursed in respect of any
Letter of Credit or any interest thereon or any fees hereunder, (iii)
postpone the date fixed for any payment of principal of or interest on any
Loan or for reimbursement in respect of any Letter of Credit or interest
thereon or any fees hereunder or for termination of any Commitment, (iv)
make any changes to Article 10 or (v) change the percentage of the
Commitments or of the aggregate unpaid principal amount of the Loans and
Letter of Credit Liabilities, or the number of Banks, which shall be
required for the Banks or any of them to take any action under this Section
or any other provision of this Agreement; provided further that no such
amendment, waiver or modification shall, unless signed by each Eligible
Subsidiary, (w) subject such Eligible Subsidiary to any additional
obligation, (x) increase the principal of or rate of interest on any
outstanding Loan or Letter of Credit Liability of such Eligible Subsidiary,
(y) accelerate the stated maturity of any outstanding Loan or Letter or
Credit Liability of such Eligible Subsidiary or (z) change this proviso.
1.10.
1.11. SECTION Successors and Assigns . (a) The provisions of
this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except that no
Borrower may assign or otherwise transfer any of its rights under this
Agreement without the prior written consent of all Banks.
1.12.
1.13. (b) Any Bank may at any time grant to one or more banks or
other institutions (each a "Participant") participating interests in its
Commitment or any or all of its Loans and Letter of Credit Liabilities. In
the event of any such grant by a Bank of a participating interest to a
Participant, whether or not upon notice to the Administrative Agent, such
Bank shall remain responsible for the performance of its obligations
hereunder, and the Borrowers, the Issuing Banks, the Swingline Banks and
the Administrative Agent shall continue to deal solely and directly with
such Bank in connection with such Bank's rights and obligations under this
Agreement. Any agreement pursuant to which any Bank may grant such a
participating interest shall provide that such Bank shall retain the sole
right and responsibility to enforce the obligations of the Borrowers
hereunder including, without limitation, the right to approve any
amendment, modification or waiver of any provision of this Agreement;
provided that such participation agreement may provide that such Bank will
not agree to any modification, amendment or waiver of this Agreement
described in clause (i), (ii), (iii) or (iv) of Section 11.05 without the
consent of the Participant. The Borrowers agree that each Participant
shall, to the extent provided in its participation agreement, be entitled
to the benefits of Article 8 with respect to its participating interest,
subject to subsection (e) below. An assignment or other transfer which is
not permitted by subsection (c) or (d) below shall be given effect for
purposes of this Agreement only to the extent of a participating interest
granted in accordance with this subsection (b).
1.14.
1.15. (c) Any Bank may at any time assign to one or more banks or
other financial institutions (each an "Assignee") all, or a proportionate
part (equivalent to an initial Commitment of not less than $15,000,000) of
all, of its rights and obligations under this Agreement and its Notes (if
any), and such Assignee shall assume such rights and obligations, pursuant
to an Assignment and Assumption Agreement in substantially the form of
Exhibit G hereto executed by such Assignee and such transferor Bank, with
(and only with and subject to) the prior written consent of the Borrower,
the Issuing Banks, the Swingline Banks and the Administrative Agent (which
consents shall not be unreasonably withheld or delayed); provided that if
an Assignee is an affiliate of such transferor Bank or was a Bank
immediately prior to such assignment, no such consent shall be required;
provided further such assignment may, but need not, include rights of the
transferor Bank in respect of outstanding Bid Rate Loans. Upon execution
and delivery of such instrument of assumption and payment by such Assignee
to such transferor Bank of an amount equal to the purchase price agreed
between such transferor Bank and such Assignee, such Assignee shall be a
Bank party to this Agreement and shall have all the rights and obligations
of a Bank with a Commitment as set forth in such instrument of assumption,
and the transferor Bank shall be released from its obligations hereunder to
a corresponding extent, and no further consent or action by any party shall
be required. Upon the consummation of any assignment pursuant to this
subsection (c), the transferor Bank, the Administrative Agent and the
Borrowers shall make appropriate arrangements so that, if required by the
Assignee, Note(s) are issued to the Assignee. In connection with any such
assignment, the transferor Bank or the Assignee shall pay or cause to be
paid to the Administrative Agent an administrative fee for processing such
assignment in the amount of $3,000. If the Assignee is not organized under
the laws of the United States of America or a state thereof, it shall,
prior to the first date on which interest or fees are payable hereunder for
its account, deliver to the Company and the Administrative Agent
certification as to exemption from deduction or withholding of any United
States federal income taxes in accordance with Section 8.04.
1.16.
1.17. (d) Any Bank may at any time assign all or any portion of
its rights under this Agreement and its Notes (if any) to a Federal Reserve
Bank. No such assignment shall release the transferor Bank from its
obligations hereunder or modify any such obligations.
1.18.
1.19. (e) No Assignee, Participant or other transferee of any
Bank's rights shall be entitled to receive any greater payment under
Section 8.03 or 8.04 than such Bank would have been entitled to receive
with respect to the rights transferred, unless such transfer is made by
reason of the provisions of Section 8.02, 8.03 or 8.04 requiring such Bank
to designate a different Applicable Lending Office under certain
circumstances or at a time when the circumstances giving rise to such
greater payment did not exist.
1.20.
1.21. SECTION Collateral . Each of the Banks represents to the
Administrative Agent and each of the other Banks that it in good faith is
not relying upon any "margin stock" (as defined in Regulation U) as
collateral in the extension or maintenance of the credit provided for in
this Agreement.
1.22.
1.23. SECTION Confidentiality . The Administrative Agent and
each Bank agrees to keep any information delivered or made available by the
Borrower pursuant to this Agreement confidential from anyone other than
persons employed or retained by such Bank and its affiliates who are
engaged in evaluating, approving, structuring or administering the credit
facility contemplated hereby; provided that nothing herein shall prevent
any Bank from disclosing such information (a) to any other Bank or to the
Administrative Agent, (b) to any other Person if reasonably incidental to
the administration of the credit facility contemplated hereby, (c) upon the
order of any court or administrative agency, (d) upon the request or demand
of any regulatory agency or authority, (e) which had been publicly
disclosed other than as a result of a disclosure by the Administrative
Agent or any Bank prohibited by this Agreement, (f) in connection with any
litigation to which the Administrative Agent, any Bank or its subsidiaries
or Parent may be a party, (g) to the extent necessary in connection with
the exercise of any remedy hereunder, (h) to such Bank's or Administrative
Agent's legal counsel and independent auditors and (i) subject to
provisions substantially similar to those contained in this Section 11.08,
to any actual or proposed Participant or Assignee.
1.24.
1.25. SECTION Governing Law; Submission to Jurisdiction . This
Agreement and each Note shall be construed in accordance with and governed
by the law of the State of Illinois. Each Borrower hereby submits to the
nonexclusive jurisdiction of the United States District Court for the
Northern District of Illinois and of any Illinois State court sitting in
Chicago for purposes of all legal proceedings arising out of or relating to
this Agreement or the transactions contemplated hereby. Each 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.
1.26.
1.27. SECTION Counterparts; Integration . This Agreement may be
signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the
same instrument. This Agreement constitutes the entire agreement and
understanding among the parties hereto and supersedes any and all prior
agreements and understandings, oral or written, relating to the subject
matter hereof.
1.28.
1.29. SECTION Waiver of Jury Trial . EACH OF THE BORROWERS, THE
AGENTS, THE ISSUING BANKS, THE SWINGLINE BANKS AND THE BANKS, TO THE
FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
1.30.
1.31. SECTION Effect of Amendment and Restatement; Resignation
of Resigning Agent . This agreement amends and restates the Existing
Credit Agreement in its entirety. Upon the effectiveness hereof, (a) the
Existing Credit Agreement shall be superseded and shall be of no further
force or effect (except for those provisions thereof which by their terms
survive any termination thereof) and (b) Morgan Guaranty Trust Company of
New York resigns as "Administrative Agent" under the Existing Credit
Agreement (it being understood that the provisions of Article 7 and Section
11.03 of the Existing Credit Agreement shall inure to its benefit as to any
actions taken or omitted to be taken while it was "Administrative Agent"
thereunder).
1.32.
1.33.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and
year first above written.
IMC GLOBAL INC.
By:
Title:
2100 Sanders Road
Northbrook, IL 60062
Attention: E. Paul Dunn, Jr.
Assistant Vice President and Treasurer
Telecopy number: 847-205-4930
$74,750,000 BANK OF AMERICA, N.A.,
Individually and as Administrative
Agent
By:
Title: Managing Director
231 South LaSalle Street
Chicago, Illinois 60697
Attention: G. Burton Queen
Telecopy number: (312) 987-1276
$45,500,000 THE CHASE MANHATTAN BANK,
Individually and as Syndication
Agent
By:
Title:
$45,500,000 ROYAL BANK OF CANADA,
Individually and as Documentation
Agent
By:
Title:
$45,500,000 MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By:
Title:
$39,000,000 CREDIT AGRICOLE INDOSUEZ
By:
Title:
$32,500,000 HARRIS TRUST AND SAVINGS
BANK
By:
Title:
$6,500,000 THE BANK OF MONTREAL
By:
Title:
$34,125,000 BANK ONE, NA (Main Office
Chicago), Individually and as
Co-Syndication Agent
By:
Title:
$34,125,000 THE NORTHERN TRUST COMPANY
By:
Title:
$29,250,000 ABN-AMRO BANK N.V.
By:
Title:
By:
Title:
$29,250,000 BANQUE NATIONALE DE PARIS
By:
Title:
$29,250,000 THE BANK OF NEW YORK
By:
Title:
$22,750,000 THE BANK OF TOKYO-MITSUBISHI, LTD.
CHICAGO BRANCH
By:
Title:
$22,750,000 FIRST UNION NATIONAL BANK
By:
Title:
$22,750,000 COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK
B.A., "RABOBANK INTERNATIONAL",
NEW YORK BRANCH
By:
Title:
By:
Title:
$22,750,000 STANDARD CHARTERED BANK
By:
Title:
By:
Title:
$22,750,000 BANK HAPOALIM B.M.
By:
Title:
By:
Title:
$22,750,000 SUNTRUST BANK, ATLANTA,
Individually and as Co-Documentation Agent
By:
Title:
By:
Title:
$22,750,000 THE DAI-ICHI KANGYO BANK,
LTD., CHICAGO BRANCH
By:
Title:
$22,750,000 HSBC BANK USA
By:
Title:
$22,750,000 THE INDUSTRIAL BANK OF JAPAN, LIMITED,
CHICAGO BRANCH
By:
Title:
Total Commitments
$650,000,000
Pricing Schedule
The "Euro-Dollar Margin," the "Utilization Fee Rate" and the "Facility
Fee Rate" for any day are the respective percentages set forth below in the
applicable row under the column corresponding to the Status that exists on
such day:
<TABLE>
<CAPTION>
LEVEL LEVEL LEVEL LEVEL LEVEL
I II III IV V
<S> <C> <C> <C> <C> <C>
Facility Fee Rate .07% .085% .11% .15% .25%
Euro-Dollar Margin .155% .19% .215% .275% .425%
Utilization Fee Rate .125% .25% .25% .25% .325%
(outstanding principal amount of Loans
equal to or greater than 25% but less than
50% of the aggregate Commitments)
Utilization Fee Rate .125% .25% .55% .575% .825%
(outstanding principal amount of Loans
equal to or greater than 50% of the
aggregate Commitments)
</TABLE>
For purposes of this Schedule, the following terms have the following
meanings, subject to the last paragraph of this Schedule:
"Level I Status" exists at any date if, at such date, the Company is
rated A- or higher by S&P or A3 or higher by Moody's.
"Level II Status" exists at any date if, at such date, (i) the Company
is rated BBB+ or higher by S&P or Baa1 or higher by Moody's and (ii) Level
I Status does not exist.
"Level III Status" exists at any date if, at such date, (i) the
Company is rated BBB or higher by S&P or Baa2 or higher by Moody's and (ii)
neither Level I Status nor Level II Status exists.
"Level IV Status" exists at any date if, at such date, (i) the Company
is rated BBB- by S&P or Baa3 by Moody's and (ii) neither Level I Status,
Level II Status nor Level III Status exists.
"Level V Status" exists at any date if, at such date, no other Status
exists.
"Status" refers to the determination of which of Level I Status, Level
II Status, Level III Status, Level IV Status or Level V Status exists at
any date.
The credit ratings to be utilized for purposes of this Schedule are
those assigned to the senior unsecured long-term debt securities of the
Company without third-party credit enhancement, whether or not any such
debt securities are actually outstanding, and any rating assigned to any
other debt security of the Company shall be disregarded. The rating in
effect at any date is that in effect at the close of business on such date.
If the Company is split-rated and the ratings differential is one notch,
the higher of the two ratings will apply (e.g., A-/Baa1 results in Level I
Status and BBB+/Baa2 results in Level II Status). If the Company is split-
rated and the ratings differential is more than one notch, the average of
the two ratings (or the higher of two intermediate ratings) shall be used
(e.g., A-/Baa3 results in Level II Status and BBB+/Baa3 results in Level
III Status). If at any date, the Company's long-term debt is rated by
neither S&P nor Moody's, then Level V shall apply.
SCHEDULE I
EXISTING LETTERS OF CREDIT
ACCOUNT PARTIES:
ISSUER AMOUNT BENEFICIARY RENEWAL DATE
IMC-Agrico
Bank of America, N.A. $2,832,500 National Union 05/30/00
Bank of America, N.A. $570,000 National Union 05/30/00
Bank of America, N.A. $2,750,000 Brewster Phosphate 12/31/99
IMC Global Operations Inc.
Bank of America, N.A. $2,683,980 National Union 12/02/99
Bank of America, N.A. $625,000 National Union 12/02/99
Bank of America, N.A. $250,000 State of Vermont 12/02/99
Bank of America, N.A. $500,000 National Union 12/02/99
Bank of America, N.A. $1,800,000 Reliance Nat'l 05/31/00
Indemnity
Cooperatieve Centrale $3,182,809 Dai-Ichi-Bank 03/17/01
Raiffeisen-boerenleenbank
B.A., "Rabobank
International", New York
Branch
Cooperatieve Centrale $9,445,754 Dai-Ichi-Bank 03/17/00
Raiffeisen-boerenleenbank
B.A., "Rabobank
International", New York
Branck
Cooperatieve Centrale $2,751,485 Bank of New York 02/16/01
Raiffeisen-boerenleenbank
B.A., "Rabobank Nederland",
New York Branch Vigoro
Industries, Inc.
Harris Trust and Savings $800,000 National Union 10/31/00
Bank First Ins. Co.
Harris Trust and Savings $546,000 St. Paul Fire & 02/25/00
Bank Marine Ins. Co.
Kalium Chemicals Ltd.
Royal Bank of Canada $25,000 MI Dept. of Natural 10/01/00
Resources
Royal Bank of Canada $5,000 MI Dept. of Natural 10/01/00
Resources
Western-AG Minerals Co.
Carlsbad National Bank $500,000 New Mexico Self 09/03/00
Insurers
IMC Kalium Ogden Corp.
NationsBank $298,900 Utah Div. of Oil, 04/08/00
Gas & Mining
IMC Salt Inc.
Bank of America, N.A. $150,000 Louisiana Dept. of 03/24/00
Employ.
Bank of America, N.A. $800,000 ACSTAR Insurance 03/26/00
Co.
Bank of America, N.A. $2,352,274 Reliance Nat'l 04/30/00
Indemnity Co.
Royal Bank of Canada $40,000 O&L Real Estate 07/31/00
Ltd. Liab. Co.
IMC Chemicals Inc.
Bank of America, N.A. $2,118,000 AIG/Nat'l Union, 03/23/00
Amer. Home
Bank of America, N.A. $110,000 Kredietbank NV 04/30/00
Bank of America, N.A. $150,750 State of Colorado 03/30/00
Rec. Brd.
Bank of America, N.A. $696,620.31 Colorado Nat'l Bank 08/31/00
Bank of America, N.A. $492,579.15 White River Elec. 03/30/00
Assoc.
Bank of America, N.A. $119,600 ACSTAR Insurance Co. 03/26/00
Bank of America, N.A. $941,338 County of San Bern. 03/24/00
Bank of America, N.A. $300,000 San Diego Unified 04/30/00
Bank of America, N.A. $5,860,441 General Electric 07/14/00
Cap. Corp.
Bank of America, N.A. $7,511,927 General Foods Cred. 07/14/00
EXHIBIT A
NOTE
Chicago, Illinois
[Date]
For value received, [Name of Borrower], a [jurisdiction of
incorporation] corporation (the "Borrower"), promises to pay to the order
of (the "Bank"), for the account of its Applicable Lending Office, the
unpaid principal amount of each Loan made by the Bank to the Borrower
pursuant to the Credit Agreement referred to below on the date specified in
the Credit Agreement. The Borrower promises to pay interest on the unpaid
principal amount of each such Loan on the dates and at the rate or rates
provided for in the Credit Agreement. All such payments of principal and
interest shall be made in lawful money of the United States in Federal or
other immediately available funds at the office of Bank of America, N.A.,
231 South LaSalle Street, Chicago, Illinois.
All Loans made by the Bank, the respective types and maturities
thereof and all repayments of the principal thereof shall be recorded by
the Bank and, the Bank, if the Bank so elects in connection with any
transfer or enforcement of its Note, may endorse on the schedule attached
hereto appropriate notations to evidence the foregoing information with
respect to the Loans then outstanding; provided that the failure of the
Bank to make any such recordation or endorsement shall not affect the
obligations of the Borrower hereunder or under the Credit Agreement.
This note is one of the Notes referred to in the Amended and Restated
Five-Year Credit Agreement dated as of December 8, 1999 among the Borrower,
various financial institutions and Bank of America, N.A., as Administrative
Agent (as the same may be amended from time to time, the "Credit
Agreement"). Terms defined in the Credit Agreement are used herein with
the same meanings. Reference is made to the Credit Agreement for
provisions for the prepayment hereof and the acceleration of the maturity
hereof.
[The payment in full of the principal and interest on this note has,
pursuant to the provisions of the Credit Agreement, been unconditionally
guaranteed by IMC Global Inc.]1
[NAME OF BORROWER]
By:
Title:
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
Date Amount Type Amount of Maturity Notation
of Loan of Loan Principal Repaid Date Made By
EXHIBIT B
FORM OF BID RATE QUOTE REQUEST
[Date]
To: Bank of America, N.A.
(the "Administrative Agent")
From: [Name of Borrower]
Re: Amended and Restated Five-Year Credit Agreement (the "Credit
Agreement") dated as of December 8, 1999 among IMC Global Inc.,
various financial institutions and Bank of America, N.A., as
Administrative Agent.
We hereby give notice pursuant to Section 2.03 of the Credit Agreement
that we request Bid Rate Quotes for the following proposed Bid Rate
Borrowing(s):
Date of Borrowing: __________________
Principal Amount2 Interest Period3
$
Such Bid Rate Quotes should offer a Bid Rate [(General), (Indexed)
Margin or both]. [The applicable base rate is the London Interbank Offered
Rate.]
Terms used herein have the meanings assigned to them in the Credit
Agreement.
[NAME OF BORROWER]
By
Title:
EXHIBIT C
FORM OF INVITATION FOR BID RATE QUOTES
To: [Name of Bank]
Re: Invitation for Bid Rate Quotes to [Name of Borrower] (the
"Borrower")
Pursuant to Section 2.03 of the Amended and Restated Five-Year Credit
Agreement dated as of December 8, 1999 among IMC Global Inc., various
financial institutions and the undersigned, as Administrative Agent, we are
pleased on behalf of the Borrower to invite you to submit Bid Rate Quotes
to the Borrower for the following proposed Bid Rate Borrowing(s):
Date of Borrowing: __________________
Principal Amount Interest Period
$
Such Bid Rate Quotes should offer a Bid Rate [(Indexed) Margin,
(General) or both]. [The applicable base rate is the London Interbank
Offered Rate.]
Please respond to this invitation by no later than [2:00 P.M.] [10:00
A.M.] (New York City time) on [date].
BANK OF AMERICA, N.A.,
as Administrative Agent
By
Authorized Officer
EXHIBIT D
FORM OF BID RATE QUOTE
To: Bank of America, N.A.,
as Administrative Agent
231 South LaSalle Street
Chicago, Illinois 60697
Attention:
Re: Bid Rate Quote to [Name of Borrower] (the "Borrower")
In response to your invitation on behalf of the Borrower dated
_____________, _____, we hereby make the following Bid Rate Quote on the
following terms:
1. Quoting Bank: ________________________________
2. Person to contact at Quoting Bank:
_____________________________
3. Date of Borrowing: ____________________4
4. We hereby offer to make Bid Rate Loan(s) in the following principal
amounts, for the following Interest Periods and at the following
rates:
Principal Interest
Bid Rate
Amount5 Period6 [(Indexed)7 Margin] [(General)8]
$
$
provided, that the aggregate principal amount of Bid Rate Loans for
which the above offers may be accepted shall not exceed $____________.]2
We understand and agree that the offer(s) set forth above, subject to
the satisfaction of the applicable conditions set forth in the Amended and
Restated Five-Year Credit Agreement dated as of December 8, 1999 among IMC
Global Inc., various financial institutions and yourselves, as
Administrative Agent, irrevocably obligates us to make the Bid Rate Loan(s)
for which any offer(s) are accepted, in whole or in part.
Very truly yours,
[NAME OF BANK]
Dated: By:
Authorized Officer
EXHIBIT E-1
December ___, 1999
To the Banks parties to the
"Credit Agreement" (as defined
below) and to Bank of America, N.A.,
as Administrative Agent:
We are issuing this opinion letter in our capacity as special legal
counsel to IMC Global Inc., a Delaware corporation (the "Company") in
response to the requirement in Section 3.01 of the Amended and Restated
Five Year Credit Agreement, dated as of December 8, 1999 (the "Credit
Agreement"), between the Company, as borrower, various financial
institutions (excluding the Company, the "Banks"), and Bank of America,
N.A., as administrative agent (together with the Banks, collectively called
"you"). The term "Transaction Agreements" whenever it is used in this
letter means the Credit Agreement and the Notes (as defined in the Credit
Agreement) dated the date hereof. Unless otherwise indicated, capitalized
terms used herein but not otherwise defined herein have the respective
meanings set forth in the Credit Agreement.
Subject to the assumptions, qualifications, exclusions and other
limitations which are identified in this letter and in the schedules
attached to this letter, we advise you that:
1. The Company is a corporation existing and in good standing under the
General Corporation Law of the State of Delaware.
2. The Company has the corporate power to own and lease its properties
and to enter into and perform its obligations under the Transaction
Agreements.
3. The Company's Board of Directors has adopted by requisite vote the
resolutions necessary to authorize the Company's execution, delivery
and performance of the Transaction Agreements. No approval by the
Company's stockholders is required.
4. The Company has duly authorized, executed and delivered the
Transaction Agreements.
5. Each of the Transaction Agreements is a valid and binding obligation
of the Company and is enforceable against the Company in accordance
with its terms.
6. The Company is not currently required to obtain any consent, approval,
authorization or order of any court or governmental agency in order to
obtain the right to enter into the Transaction Agreements or to take
any action in connection with the consummation of the transactions
contemplated by the Transaction Agreements, except for actions or
filings required in connection with ordinary course conduct by the
Company of its respective businesses and ownership or operation by the
Company of its respective assets.
7. The Company is not an "investment company" registered or required to
be registered under the Investment Company Act of 1940, as amended.
8. The execution and delivery of the Transaction Agreements by the
Company and performance of its obligations under the Transaction
Agreements will not (a) violate any existing provisions of the
Company's Certificate of Incorporation or Bylaws, (b) constitute a
violation by the Company of any applicable provision of existing
statutory law or governmental regulation covered by this letter, (c)
result in the creation or imposition of any lien, charge or
encumbrance upon any of the property of the Company, (d) violate any
existing order, writ, injunction or decree applicable to the Company
of which we are aware of any court or governmental instrumentality or
(e) whether with or without the giving of notice or lapse of time or
both, breach, or result in a default under, any existing obligation of
the Company or any of its Subsidiaries under any of the agreements
listed on Schedule E to this opinion (provided that we express no
opinion as to compliance with any financial test or cross-default
provision except insofar as any such cross-default provision relates
to a default under an agreement listed on Schedule E to this opinion)
except in each case as would not reasonably be expected to have a
Material Adverse Effect. Without limiting the foregoing, the
Borrowings and the application of the proceeds thereof as provided in
the Credit Agreement do not violate Regulation T, U or X of the Board
of Governors of the Federal Reserve System.
In preparing this letter, we have relied without any independent
verification upon the assumptions recited in Schedule B to this letter and
upon: (i) information contained in certificates obtained from governmental
authorities; (ii) factual information represented to be true in the Credit
Agreement and the other Transaction Agreements; (iii) factual information
provided to us by the Company; and (iv) factual information we have
obtained from such other sources as we have deemed reasonable. We have
assumed without investigation that there has been no relevant change or
development between the dates as of which the information cited in the
preceding sentence was given and the date of this letter and that the
information upon which we have relied is accurate and does not omit
disclosures necessary to prevent such information from being misleading.
For purposes of each opinion in paragraph 1, we have relied exclusively
upon a certificate issued by a governmental authority in Delaware, and such
opinion is not intended to provide any conclusion or assurance beyond that
conveyed by that certificate.
While we have not conducted any independent investigation to determine
facts upon which our opinions are based or to obtain information about
which this letter advises you, we confirm that we do not have any actual
knowledge which has caused us to conclude that our reliance and assumptions
cited in the preceding paragraph are unwarranted or that any information
supplied in this letter is wrong. The term "actual knowledge" whenever it
is used in this letter with respect to our firm means conscious awareness
at the time this letter is delivered on the date it bears by the following
Kirkland & Ellis lawyers who have had significant involvement with
negotiation or preparation of the Credit Agreement (herein called "our
Designated Transaction Lawyers"): Michael G. Timmers and Gavin J. Domm.
Our advice on every legal issue addressed in this letter is based
exclusively on the internal law of the State of Illinois, the federal law
of the United States and the General Corporation Law of the State of
Delaware. Issues addressed by this letter may be governed in whole or in
part by other laws, but we express no opinion as to whether any relevant
difference exists between the laws upon which our opinions are based and
any other laws which may actually govern. Our opinions are subject to all
qualifications in Schedule A and do not cover or otherwise address any law
or legal issue which is identified in the attached Schedule C or any
provision in the Credit Agreement or any of the other Transaction
Agreements of any type identified in Schedule D. Provisions in the
Transaction Agreements which are not excluded by Schedule D or any other
part of this letter or its attachments are called the "Relevant Agreement
Terms."
Our advice on each legal issue addressed in this letter represents our
opinion as to how that issue would be resolved were it to be considered by
the highest court of the jurisdiction upon whose law our opinion on that
issue is based. The manner in which any particular issue would be treated
in any actual court case would depend in part on facts and circumstances
particular to the case, and this letter is not intended to guarantee the
outcome of any legal dispute which may arise in the future. It is possible
that some Relevant Agreement Terms may not prove enforceable for reasons
other than those cited in this letter should an actual enforcement action
be brought, but (subject to all the exceptions, qualifications, exclusions
and other limitations contained in this letter) such unenforceability would
not in our opinion prevent you from realizing the principal benefits
purported to be provided by the Relevant Agreement Terms.
This letter speaks as of the time of its delivery on the date it
bears. We do not assume any obligation to provide you with any subsequent
opinion or advice by reason of any fact about which our Designated
Transaction Lawyers did not have actual knowledge at that time, by reason
of any change subsequent to that time in any law covered by any of our
opinions, or for any other reason. The attached schedules are an integral
part of this letter, and any term defined in this letter or any schedule
has that defined meaning wherever it is used in this letter or in any
schedule to this letter.
You may rely upon this letter only for the purpose served by the
provision in the Credit Agreement cited in the initial paragraph of this
letter in response to which it has been delivered. Without our written
consent: (i) no Person other than you may rely on this letter for any
purpose; (ii) this letter may not be cited or quoted in any financial
statement, prospectus, private placement memorandum or other similar
document; (iii) this letter may not be cited or quoted in any other
document or communication which might encourage reliance upon this letter
by any Person or for any purpose excluded by the restrictions in this
paragraph; and (iv) copies of this letter may not be furnished to anyone
for purposes of encouraging such reliance. Notwithstanding the foregoing,
Persons who subsequently become Banks (or participants in accordance with
the terms of the Credit Agreement) may rely on this letter as of the time
of its delivery on the date hereof as if this letter were addressed to
them.
Sincerely,
Kirkland & Ellis
Schedule A
General Qualifications
All of our opinions ("our opinions") in the letter to which this
Schedule is attached ("our letter") are subject to each of the
qualifications set forth in this Schedule.
1. Bankruptcy and Insolvency Exception. Each of our opinions is subject
to the effect of bankruptcy, insolvency, reorganization, receivership,
moratorium and other similar laws. This exception includes:
a. the federal Bankruptcy Code and thus comprehends, among
others, matters of turn-over, automatic stay, avoiding powers,
fraudulent transfer, preference, discharge, conversion of a non-
recourse obligation into a recourse claim, limitations on ipso
facto and anti-assignment clauses and the coverage of pre-
petition security agreements applicable to property acquired
after a petition is filed;
b. all other federal and state bankruptcy, insolvency,
reorganization, receivership, moratorium, arrangement and
assignment for the benefit of creditors laws that affect the
rights of creditors generally or that have reference to or affect
only creditors of specific types of debtors;
c. state fraudulent transfer and conveyance laws; and
d. judicially developed doctrines in this area, such as
substantive consolidation of entities and equitable
subordination.
2. Equitable Principles Limitation. Each of our opinions is subject to
the effect of general principles of equity, whether applied by a court
of law or equity. This limitation includes principles:
a. governing the availability of specific performance,
injunctive relief or other equitable remedies, which generally place the
award of such remedies, subject to certain guidelines, in the discretion of
the court to which application for such relief is made;
a. affording equitable defenses (e.g., waiver, laches and
estoppel) against a party seeking enforcement;
a. requiring good faith and fair dealing in the
performance and enforcement of a contract by the party seeking its
enforcement;
a. requiring reasonableness in the performance and
enforcement of an agreement by the party seeking enforcement of the
contract;
b. requiring consideration of the materiality of (i) a breach and
(ii) the consequences of the breach to the party seeking enforcement;
a. requiring consideration of the impracticability or
impossibility of performance at the time of attempted enforcement; and
a. affording defenses based upon the unconscionability of
the enforcing party's conduct after the parties have entered into the
contract.
3. Other Common Qualifications. Each of our opinions is subject to the
effect of rules of law that:
a. limit or affect the enforcement of provisions of a contract that
purport to waive, or to require waiver of, the obligations of good faith,
fair dealing, diligence and reasonableness;
a. provide that forum selection clauses in contracts are
not necessarily binding on the court(s) in the forum selected;
a. limit the availability of a remedy under certain
circumstances where another remedy has been elected;
a. provide a time limitation after which a remedy may not
be enforced;
a. limit the right of a creditor to use force or cause a breach of
the peace in enforcing rights;
a. relate to the sale or disposition of collateral or the
requirements of a commercially reasonable sale;
a. limit the enforceability of provisions releasing, exculpating or
exempting a party from, or requiring indemnification of a party for,
liability for its own action or inaction, to the extent the action or
inaction involves negligence, recklessness, willful misconduct, unlawful
conduct, violation of public policy or litigation against another party
determined adversely to such party;
a. may, where less than all of a contract may be unenforceable,
limit the enforceability of the balance of the contract to circumstances in
which the unenforceable portion is not an essential part of the agreed
exchange;
a. govern and afford judicial discretion regarding the determination
of damages and entitlement to attorneys' fees and other costs;
a. may permit a party that has materially failed to render or offer
performance required by the contract to cure that failure unless (i)
permitting a cure would unreasonably hinder the aggrieved party from making
substitute arrangements for performance, or (ii) it was important in the
circumstances to the aggrieved party that performance occur by the date
stated in the contract.
4. Referenced Provision Qualification. In addition, our opinions,
insofar as they relate to the validity, binding effect or enforceability of
a provision in any of the Transaction Agreements requiring the Company to
perform its obligations under, or to cause any other Person to perform its
obligations under, any provision (a "Referenced Provision") of such
Transaction Agreement or of any of the other Transaction Agreements or
stating that any action will be taken as provided in or in accordance with
any provision (also a "Referenced Provision") of any other Transaction
Agreement, are subject to the same qualifications as the corresponding
opinion in this letter relating to the validity, binding effect and
enforceability of such Referenced Provision. Requirements in the
Transaction Agreements that provisions therein may only be waived or
amended in writing may not be enforceable to the extent that an oral
agreement or an implied agreement by trade practice or course of conduct
has been created modifying any such provision.
Schedule B
Assumptions
For purposes of our letter, we have relied, without investigation,
upon each of the following assumptions:
1. The Company has the requisite title and rights to any property
involved in the transactions effected under the Transaction Agreements
(herein called the "Transactions").
1. Each of you is existing and in good standing in your jurisdiction of
organization.
1. The Credit Agreement constitutes valid and binding obligations of
yours and is enforceable against you in accordance with its terms (subject
to qualifications, exclusions and other limitations similar to those
applicable to our letter).
1. You have satisfied those legal requirements that are applicable to you
to the extent necessary to entitle you to enforce the Transaction
Agreements against the Company.
1. Each document submitted to us for review is accurate and complete,
each such document that is an original is authentic, each such document
that is a copy conforms to an authentic original, and all signatures (other
than those of or on behalf of the Company) on each such document are
genuine.
1. There has not been any mutual mistake of fact or misunderstanding,
fraud, duress or undue influence.
1. The conduct of the parties to the Transaction Agreements has complied
with any requirement of good faith, fair dealing and conscionability.
1. You have acted in good faith and without notice of any defense against
the enforcement of any rights created by, or adverse claim to any property
or security interest transferred or created as part of, the Transactions.
1. There are no agreements or understandings among the parties, written
or oral, and there is no usage of trade or course of prior dealing among
the parties that would, in either case, define, supplement or qualify the
terms of the Credit Agreement or any of the other Transaction Agreements.
1. The constitutionality or validity of a relevant statute, rule,
regulation or agency action is not in issue.
1. All parties to the Transactions will act in accordance with, and will
refrain from taking any action that is forbidden by, the terms and
conditions of the Transaction Agreements.
2. All agreements other than the Transaction Agreements (if any) with
respect to which we have provided advice in our letter or reviewed in
connection with our letter would be enforced as written.
1. The Company will not in the future take any discretionary action
(including a decision not to act) permitted under the Transaction
Agreements that would result in a violation of law or constitute a breach
or default under any other agreements or court orders to which the Company
may be subject.
1. The Company will in the future obtain all permits and governmental
approvals required, and will in the future obtain all actions required,
relevant to the consummation of the Transactions or performance of the
Transaction Agreements.
15. All information required to be disclosed in connection with any
consent or approval by the Company's Board of Directors or
stockholders (or equivalent governing group) and all other information
required to be disclosed in connection with any issue relevant to our
opinions has in fact been fully and fairly disclosed to all persons to
whom it is required to be disclosed.
16. The Company's certificate of incorporation (or equivalent governing
instrument), all amendments to that certificate, all resolutions
adopted establishing classes or series of stock under that
certificate, the Company's bylaws and all amendments to its bylaws
have been adopted in accordance with all applicable legal
requirements.
17. Each person who has taken any action relevant to any of our opinions
in the capacity of director or officer was duly elected to that
director or officer position and held that position when such action
was taken.
Schedule C
Excluded Law and Legal Issues
None of the opinions or advice contained in our letter covers or
otherwise addresses any of the following laws, regulations or other
governmental requirements or legal issues:
1. federal securities laws and regulations (excluding the Investment
Company Act of 1940 to the extent of our opinion contained in paragraph 7)
and all other laws and regulations administered by the United States
Securities and Exchange Commission), state "Blue Sky" laws and regulations,
and laws and regulations relating to commodity (and other) futures and
indices and other similar instruments;
1. pension and employee benefit laws and regulations (e.g., ERISA);
1. federal and state antitrust and unfair competition laws and
regulations;
1. compliance with fiduciary duty requirements;
1. the statues and ordinances, the administrative decisions and the rules
and regulations of counties, towns, municipalities and special political
subdivisions (whether created or enabled through legislative action at the
federal, state or regional level -- e.g., water agencies, joint power
districts, turnpike and tollroad authorities, rapid transit districts or
authorities, and port authorities) and judicial decisions to the extent
that they deal with any of the foregoing;
1. fraudulent transfer and fraudulent conveyance laws;
1. federal and state environmental laws and regulations;
1. federal and state land use and subdivision laws and regulations;
1. federal and state tax laws and regulations;
1. federal patent, trademark and copyright, state trademark, and other
federal and state intellectual property laws and regulations;
1. federal and state racketeering laws and regulations (e.g., RICO);
1. federal and state health and safety laws and regulations (e.g., OSHA);
1. federal and state labor laws and regulations;
1. federal and state laws, regulations and policies concerning (i)
national and local emergency, (ii) possible judicial deference to acts of
sovereign states, and (iii) criminal and civil forfeiture laws;
1. other federal and state statutes of general application to the extent
they provide for criminal prosecution (e.g., mail fraud and wire fraud
statutes);
1. any laws, regulations, directives and executive orders that prohibit
or limit the enforceability of obligations based on attributes of the party
seeking enforcement (e.g., the Trading with the Enemy Act and the
International Emergency Economic Powers Act); and
1. the effect of any law, regulation or order which hereafter becomes
effective.
We have not undertaken any research for purposes of determining
whether the Company or any of the Transactions which may occur in
connection with the Credit Agreement or any of the other Transaction
Agreements is subject to any law or other governmental requirement other
than to those laws and requirements which in our experience would generally
be recognized as applicable in the absence of research by lawyers in
Illinois, and none of our opinions covers any such law or other requirement
unless (i) one of our Designated Transaction Lawyers had actual knowledge
of its applicability at the time our letter was delivered on the date it
bears and (ii) it is not excluded from coverage by other provisions in our
letter or in any Schedule to our letter.
Schedule D
Excluded Provisions
None of the opinions in the letter to which this Schedule is attached
covers or otherwise addresses any of the following types of provisions
which may be contained in the Transaction Agreements:
1. Covenants not to compete, including without limitation covenants not
to interfere with business or employee relations, covenants not to solicit
customers, and covenants not to solicit or hire employees.
1. Indemnification for negligence, willful misconduct or other wrongdoing
or strict product liability or any indemnification for liabilities arising
under securities laws.
1. Provisions mandating contribution towards judgments or settlements
among various parties.
1. Waivers of (i) legal or equitable defenses, (ii) rights to damages,
(iii) rights to counter claim or set off, (iv) statutes of limitations, (v)
rights to notice, (vi) the benefits of statutory, regulatory, or
constitutional rights, unless and to the extent the statute, regulation, or
constitution explicitly allows waiver, (vii) broadly or vaguely stated
rights, and (viii) other benefits to the extent they cannot be waived under
applicable law.
1. Provisions providing for forfeitures or the recovery of amounts deemed
to constitute penalties, or for liquidated damages, acceleration of future
amounts due (other than principal) without appropriate discount to present
value, late charges, prepayment charges, and increased interest rates upon
default.
1. Time-is-of-the-essence clauses.
1. Provisions which provide a time limitation after which a remedy may
not be enforced.
1. Confession of judgment clauses.
1. Agreements to submit to the jurisdiction of any particular court or
other governmental authority (either as to personal jurisdiction and
subject matter jurisdiction); provisions restricting access to courts;
waiver of service of process requirements which would otherwise be
applicable; and provisions otherwise purporting to affect the jurisdiction
and venue of courts.
1. Provisions that attempt to change or waive rules of evidence or fix
the method or quantum of proof to be applied in litigation or similar
proceedings.
1. Provisions appointing one party as an attorney-in-fact for an adverse
party or providing that the decision of any particular person will be
conclusive or binding on others.
1. Provisions purporting to limit rights of third parties who have not
consented thereto or purporting to grant rights to third parties.
1. Provisions which purport to award attorneys' fees solely to one party.
1. Arbitration agreements.
1. Provisions purporting to create a trust or constructive trust without
compliance with applicable trust law.
1. Provisions relating to (i) insurance coverage requirements and (ii)
the application of insurance proceeds and condemnation awards.
1. Provisions that provide for the appointment of a receiver.
1. Provisions or agreements regarding proxies, shareholders agreements,
shareholder voting rights, voting trusts, and the like.
1. Confidentiality agreements.
1. Provisions in any of the Transaction Agreements requiring the Company
to perform its obligations under, or to cause any other Person to perform
its obligations under, or stating that any action will be taken as provided
in or in accordance with, any agreement or other document that is not a
Transaction Agreement.
Schedule E
Agreements
[TO COME]
EXHIBIT E-2
OPINION OF GENERAL COUNSEL OF THE COMPANY
December __, 1999
To each of the Banks parties to the "Credit
Agreement" (as defined below) and to Bank
of America, N.A., as Administrative Agent
IMC Global Inc.
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 3.01(b) of that
certain Amended and Restated Five Year Credit Agreement, dated as of
December 8, 1999 (the "Credit Agreement"), among the Company, as borrower,
various financial institutions and Bank of America, N.A., as Administrative
Agent, and the transactions contemplated thereby. Capitalized terms used
herein and not otherwise defined are used as defined in the Credit
Agreements.
I am the General Counsel of the Company and have acted in such
capacity in connection with the preparation, execution and delivery of the
Credit Agreement and each of the Notes dated the date hereof.
In that connection, I have examined:
(a) counterparts of the Credit Agreement and each of the Notes
dated the date hereof, in each case executed by each of the
parties thereto; and
(b) the certificate of incorporation and bylaws of the Company
as amended through the date hereof.
I have also examined the originals, or copies certified to my
satisfaction, of all of the indentures, loan or credit agreements,
guarantees, mortgages, security agreements, bonds, notes and other material
agreements or instruments (the "Relevant Contracts"), and all of the
orders, writs, judgments, injunctions, decrees, determinations and awards
of which I am aware, after diligent inquiry, that affect or purport to
affect the obligations of the Company under the Credit Agreement or any of
the Notes dated the date hereof, or the right of the Company to borrow
money, to guaranty the obligations of other Borrowers from time to time
parties to the Credit Agreement or to consummate the transactions
contemplated by the Credit Agreement.
In addition, I have examined the originals, or copies certified to my
satisfaction, of such other corporate records of the Company, certificates
of public officials and of officers of the Company, and agreements,
instruments and other documents, as I have deemed necessary as a basis for
the opinions expressed below.
In my examination of the documents referred to above, I have assumed
(i) the due execution and delivery, pursuant to due authorization, of each
of the documents referred to above by all parties thereto other than the
Company, (ii) the authenticity of all such documents submitted to me as
originals and (iii) the conformity to originals of all such documents
submitted to me as copies.
I am qualified to practice law in the State of Illinois. This opinion
is limited to the laws of the State of Illinois, the General Corporation
Law of the State of Delaware and the Federal laws of the United States.
Based upon the foregoing and upon such investigation as I have deemed
necessary, I am of the following opinion as of the date hereof:
1. The Company (a) is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware, (b)
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 (c) is
duly qualified to do business and is in good standing in every state where
it owns or leases real 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 expected to have a Material
Adverse Effect.
2. The execution, delivery and performance by the Company of the
Credit Agreement and each of the Notes dated the date hereof, and the
consummation of the transactions contemplated by the Credit Agreement, are
within the Company's corporate powers, have been duly authorized by all
necessary corporate action, and do not (a) contravene the Company's charter
or by-laws or (b) violate any law, rule, or regulation of the State of
Illinois or Federal law of the United States, or any order, writ, judgment,
injunction, decree, determination or award binding on or affecting or any
of its properties or (c) conflict with or result in the breach of, or
constitute a default under, any Relevant Contracts binding on or affecting
the Company or any of its properties or (d) result in or require the
creation or imposition of any Lien upon or with respect to any of the
properties of the Company or any of its Subsidiaries.
3. No authorization, approval, or other action by, and no notice to
or filing with, any governmental authority or regulatory body or any third
party is required for the due execution, delivery and performance by the
Company of the Credit Agreement and each of the Notes dated the date
hereof, or for the consummation of the transactions contemplated thereby.
4. The Credit Agreement and each of the Notes dated the date hereof
have been duly executed and delivered by the Company.
5. To the best of my knowledge, except as disclosed in the Company's
annual report on for the year ended December 31, 1998, each registration
statement (other than a registration statement on Form S-8 (or its
equivalent)) and each report on Form 10-K, 10-Q and 8-K (or their
equivalents) which the Company has filed with the Securities and Exchange
Commission since such date, there is no action, suit or proceeding pending
against or affecting, the Company or any of its Subsidiaries before any
court, governmental agency or arbitrator that (a) purports to affect the
legality, validity binding effect or enforceability of the Credit
Agreement or the Notes dated the date hereof or the consummation of the
transactions contemplated by the Credit Agreement or (b) could reasonably
be expected to have a Material Adverse Effect any Note.
6. The provisions of the Credit Agreement (without regard for any
provision thereof limiting the payment of interest or any other sums
thereunder to the highest rate permitted by applicable law) and the Notes
dated the date hereof do not violate any applicable law of the State of
Illinois relating to usury.
7. Neither the Company nor any Subsidiary of the Company is an
"investment company" as such term is defined in the Investment Company Act
of 1940, as amended.
The opinions expressed herein are being delivered to you as of the
date hereof and are solely for your benefit in connection with the
transactions contemplated in the Credit Agreement and may not be relied on
in any manner or for any purpose by any other Person, nor any copies
published, communicated or otherwise made available in whole or in part to
any other Person or entity without my express prior written consent, except
that you may furnish copies thereof to any party that becomes a Bank after
the date hereof pursuant to the Credit Agreement. I do not express any
opinion, either implicitly or otherwise, on any issue not expressly
addressed in this opinion. The opinions expressed above are based solely
on facts, laws and regulations in effect on the date hereof, and I assume
no obligation to revise or supplement this opinion should such facts change
or should such laws or regulations be changed by legislative or regulatory
action, judicial decision or otherwise, notwithstanding that such changes
may affect the legal analysis or conclusions contained herein.
Very truly yours,
Mary Ann Hynes
EXHIBIT F
OPINION OF
MAYER, BROWN & PLATT, SPECIAL COUNSEL
FOR THE ADMINISTRATIVE AGENT
December __, 1999
To the Banks and the
Administrative Agent
Referred to Below
c/o Bank of America, N.A.,
as Administrative Agent
231 South LaSalle Street
Chicago, Illinois 60697
Dear Sirs:
We have participated in the preparation of the Amended and Restated
Five Year Credit Agreement (the "Credit Agreement") dated as of December 8,
1999 among IMC Global Inc., a Delaware corporation (the "Company"), various
financial institutions and Bank of America, N.A., as Administrative Agent
(the "Administrative Agent"), and have acted as special counsel for the
Administrative Agent for the purpose of rendering this opinion pursuant to
Section 3.01(c) of the Credit Agreement. Terms defined in the Credit
Agreement are used herein as therein defined.
In connection herewith, we have examined (i) the Credit Agreement,
including original or facsimile copies of signature pages thereto executed
by the Company, each of the Banks and the Administrative Agent; and (ii)
the Notes issued by the Company on the date hereof pursuant to the Credit
Agreement (the "Notes" and, together with the Credit Agreement, the
"Documents"). In connection with such examination, we have assumed,
without any independent investigation, that:
(a) all signatures of the parties on all items submitted to us are
genuine;
(b) all natural persons, including persons acting on behalf of a
business entity, are legally competent;
(c) all items submitted to us as originals are authentic, and all
documents submitted to us as copies conform to authentic original
documents;
(d) each of the parties has full power and authority to execute, deliver
and perform its obligations under the Documents to which it is a party, and
all such Documents have been duly authorized by all necessary corporate or
other action on the part of such parties and others and have been duly
executed and delivered by such parties;
(e) as to all parties (other than the Company), the Credit Agreement
constitutes the legal, valid and binding obligation of such parties,
enforceable against each such party in accordance with its terms;
(f) the Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware;
(g) the execution, delivery and performance of each of the Documents (i)
are within the Company's corporate powers, (ii) have been duly authorized
by all necessary corporate action on the party of the Company (including
all necessary stockholder approval), (iii) do not contravene or conflict
with (A) the charter or by-laws or any other organizational document of the
Company, (B) any law, rule or regulation of the State of Illinois or of the
Federal law of the United States, or (C) any writ, order, judgment, award,
determination or decree to which the Company is subject or to which any of
its property is bound and (iv) do not require any action, consent,
approval, authorization, declaration or filing by or with any governmental
or regulatory authority or any other third party; and
(h) there are no agreements between any of the parties that would alter
the agreements set forth in the Documents.
Based upon the foregoing, and subject to the qualifications and
exceptions set forth below, we are of the opinion that, under the laws of
the State of Illinois:
1. The Credit Agreement is the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms.
2. Each Note is the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
Our opinions are subject to the following qualifications:
(a) Our opinions are subject to the effect of any applicable
bankruptcy, insolvency, reorganization, receivership, fraudulent
conveyance, equitable subordination, moratorium or similar law affecting
creditors' rights generally and to the effect of general principles of
equity (regardless of whether considered in a proceeding in equity or at
law), including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing and limitations on the
availability of specific performance, injunctive relief or other equitable
remedies.
(b) We express no opinion as to obligations relating to
indemnification, contribution or exculpation of costs, expenses or
liabilities which contravene public policy.
(c) We express no opinion as to the enforceability, under
certain circumstances, of provisions imposing penalties or forfeitures,
late payment charges or an increase in interest rate upon delinquency in
payment or the occurrence of a default.
(d) We express no opinion as to any provision of any Document
that purports to establish an evidentiary standard for determinations by
the Banks or the Administrative Agent.
(e) We express no opinion as to Section 11.04 of the Credit
Agreement insofar as it authorizes any Person to exercise any right of
offset.
(f) We express no opinion as to any provision of the Credit Agreement
purporting to convey rights to Persons other than parties to the Credit
Agreement.
(g) We express no opinion as to any waiver of (i) the right to a jury
trial or (ii) any objection to venue.
(h) We express no opinion as to the effect of the law of any
jurisdiction other than the State of Illinois wherein enforcement of any
Document may be sought (including, without limitation, whether any court
outside the State of Illinois would honor the choice of Illinois law as the
governing law of the Credit Agreement and the Notes).
The opinions expressed herein shall be effective only as of the date
of this opinion letter. We do not assume responsibility for updating this
opinion letter as of any date subsequent to the date of this opinion
letter, and we assume no responsibility for advising you of any changes
with respect to any matters described in this opinion letter that may occur
subsequent to the date of this opinion letter or from the discovery
subsequent to the date of this opinion letter of information not previously
known to us pertaining to events occurring prior to the date of this
opinion letter.
This opinion letter is solely for the benefit of the addressees
hereof (and their respective successors and assigns) in connection with the
transactions contemplated by the Credit Agreement, and this opinion letter
may not be relied upon by any other Person or for any other purpose.
Very truly yours,
MAYER, BROWN & PLATT
RCB:AGS
EXHIBIT G
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of _________, ____ among [ASSIGNOR] (the
"Assignor"), [ASSIGNEE] (the "Assignee"), IMC GLOBAL INC. (the "Company"),
various financial institutions and BANK OF AMERICA, N.A., as Administrative
Agent (the "Administrative Agent").
W I T N E S S E T H
WHEREAS, this Assignment and Assumption Agreement (the "Agreement")
relates to the Amended and Restated Five-Year Credit Agreement dated as of
December 8, 1999, among the Company, various financial institutions and
Bank of America, N.A., as Administrative Agent (as amended from time to
time, the "Credit Agreement");
WHEREAS, as provided under the Credit Agreement, the Assignor has a
Commitment to make Loans to the Borrowers and participate in Swingline
Loans and Letters of Credit in an aggregate principal amount at any time
outstanding not to exceed $__________;
WHEREAS, Syndicated Loans made to the Borrowers by the Assignor under
the Credit Agreement in the aggregate principal amount of $__________ are
outstanding at the date hereof;
WHEREAS, Swingline Loans in the aggregate principal amount of
$__________ are outstanding at the date hereof;
WHEREAS, Letters of Credit with a total amount available for drawing
thereunder of $___________ are outstanding at the date hereof; and
WHEREAS, the Assignor proposes to assign to the Assignee all of the
rights of the Assignor under the Credit Agreement in respect of a portion
of its Commitment thereunder in an amount equal to $__________ (the
"Assigned Amount"), together with a corresponding portion of its
outstanding Syndicated Loans and Letter of Credit Liabilities, and the
Assignee proposes to accept assignment of such rights and assume the
corresponding obligations from the Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing and the mutual
1agreements contained herein, the parties hereto agree as follows:
Section 1. Definitions. All capitalized terms not otherwise
defined herein shall have the respective meanings set forth in the Credit
Agreement.
Section 2. Assignment. The Assignor hereby assigns and sells to
the Assignee all of the rights of the Assignor under the Credit Agreement
to the extent of the Assigned Amount, and the Assignee hereby accepts such
assignment from the Assignor and assumes all of the obligations of the
Assignor under the Credit Agreement to the extent of the Assigned Amount,
including the purchase from the Assignor of the corresponding portion of
the principal amount of the Syndicated Loans made by, and participations in
Swingline Loans and Letter of Credit Liabilities of, the Assignor
outstanding at the date hereof. Upon the execution and delivery hereof by
the Assignor, the Assignee, the Company, the Issuing Bank(s), the Swingline
Bank(s) and the Administrative Agent, and the payment of the amounts
specified in Section 3 required to be paid on the date hereof (i) the
Assignee shall, as of the date hereof, succeed to the rights and be
obligated to perform the obligations of a Bank under the Credit Agreement
with a Commitment in an amount equal to the Assigned Amount (in addition to
any Commitment theretofore held by the Assignee), and (ii) the Commitment
of the Assignor shall, as of the date hereof, be reduced by a like amount
and the Assignor released from its obligations under the Credit Agreement
to the extent such obligations have been assumed by the Assignee. The
assignment provided for herein shall be without recourse to the Assignor.
Section 3. Payments. As consideration for the assignment and sale
contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on
the date hereof in Federal funds the amount heretofore agreed between them.9
It is understood that facility, utilization and Letter of Credit fees
accrued to the date hereof in respect of the Assigned Amount are for the
account of the Assignor and such fees accruing from and including the date
hereof are for the account of the Assignee. Each of the Assignor and the
Assignee hereby agrees that if it receives any amount under the Credit
Agreement which is for the account of the other party hereto, it shall
receive the same for the account of such other party to the extent of such
other party's interest therein and shall promptly pay the same to such
other party.
Section 4. Consent to Assignment. This Agreement is conditioned
upon the consent of the Company, the Issuing Bank(s), the Swingline Bank(s)
and the Administrative Agent pursuant to Section 11.06(c) of the Credit
Agreement. The execution of this Agreement by the Company, the Issuing
Bank(s), Swingline Bank(s) and the Administrative Agent is evidence of this
consent. Pursuant to Section 11.06(c), each Borrower shall execute and
deliver a Note, if required by the Assignee, payable to the order of the
Assignee to evidence the assignment and assumption provided for herein.
Section 5. Non-reliance on Assignor. The Assignor makes no
representation or warranty in connection with, and shall have no
responsibility with respect to, the solvency, financial condition, or
statements of any Borrower, or the validity and enforceability of the
obligations of any Borrower in respect of the Credit Agreement or any Note.
The Assignee acknowledges that it has, independently and without reliance
on the Assignor, and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into
this Agreement and will continue to be responsible for making its own
independent appraisal of the business, affairs and financial condition of
the Borrowers.
Section 6. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois.
Section 7. Counterparts. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same
instrument.
Section 8. Administrative Questionnaire. Attached is an
Administrative Questionnaire duly completed by the Assignee.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date
first above written.
[ASSIGNOR]
By
Title:
[ASSIGNEE]
By
Title:
IMC GLOBAL INC.
By
Title:
BANK OF AMERICA, N.A., as Issuing Bank, Swingline
Bank and Administrative Agent
By
Title:
[ISSUING BANK]
By
Title:
EXHIBIT H
FORM OF ELECTION TO PARTICIPATE
[Date]
Bank of America, N.A.,
as Administrative Agent for the Banks
which are parties to the Amended and
Restated Five-Year Credit Agreement dated
as of December 8, 1999 among IMC Global Inc.,
various financial institutions and Bank of America, N.A.,
as Administrative Agent (the "Credit Agreement").
Dear Sirs:
Reference is made to the Credit Agreement described above. Terms not
defined herein which are defined in the Credit Agreement shall have for the
purposes hereof the meaning provided therein.
The undersigned, [name of Eligible Subsidiary], a [jurisdiction of
incorporation] corporation, hereby elects to be an Eligible Subsidiary for
purposes of the Credit Agreement, effective from the date hereof until an
Election to Terminate shall have been delivered on behalf of the
undersigned in accordance with the Credit Agreement. The undersigned
confirms that the representations and warranties set forth in Article 9 of
the Credit Agreement are true and correct as to the undersigned as of the
date hereof, and the undersigned hereby agrees to perform all the
obligations of a Borrower under, and to be bound in all respects by the
terms of, the Credit Agreement, including without limitation Sections 8.03
and 11.03 thereof, as if the undersigned were a signatory party thereto.
[Tax disclosure pursuant to Section 9.04]
This instrument shall be construed in accordance with and governed by
the laws of the State of Illinois.
Very truly yours,
[NAME OF ELIGIBLE SUBSIDIARY]
By
Title:
The undersigned hereby confirms that [name of Eligible Subsidiary] is
an Eligible Subsidiary for purposes of the Credit Agreement described
above.
IMC GLOBAL INC.
By
Title:
Receipt of the above Election to Participate is hereby acknowledged on
and as of the date set forth above.
BANK OF AMERICA, N.A.,
as Administrative Agent
By
Title:
EXHIBIT I
FORM OF ELECTION TO TERMINATE
[Date]
Bank of America, N.A.,
as Administrative Agent for the Banks
which are parties to the Amended and
Restated Five-Year Credit Agreement dated
as of December 8, 1999 among IMC Global Inc.,
various financial institutions, and Bank of America, N.A.,
as Administrative Agent (the "Credit Agreement").
Dear Sirs:
Reference is made to the Credit Agreement described above. Terms not
defined herein which are defined in the Credit Agreement shall have for the
purposes hereof the meaning provided therein.
The undersigned, [name of Eligible Subsidiary], a [jurisdiction of
incorporation] corporation, hereby elects to terminate its status as an
Eligible Subsidiary for purposes of the Credit Agreement, effective as of
the date hereof. The undersigned hereby represents and warrants that all
principal and interest on all Loans to the undersigned and all other
amounts payable by the undersigned pursuant to the Credit Agreement have
been paid in full on or prior to the date hereof. Notwithstanding the
foregoing, this Election to Terminate shall not affect any obligation of
the undersigned under the Credit Agreement or under any Note heretofore
incurred.
This instrument shall be construed in accordance with and governed by
the laws of the State of Illinois.
Very truly yours,
[NAME OF ELIGIBLE SUBSIDIARY]
By
Title:
The undersigned hereby confirms that the status of [name of Eligible
Subsidiary] as an Eligible Subsidiary for purposes of the Credit Agreement
described above is terminated as of the date hereof.
IMC GLOBAL INC.
By
Title:
Receipt of the above Election to Terminate is hereby acknowledged on
and as of the date set forth above.
BANK OF AMERICA, N.A.,
as Administrative Agent
By
Title:
EXHIBIT J
Matters to be covered in the Opinions of Counsel for the Eligible
Subsidiaries
1. The Borrower is a [legal entity] duly organized, validly existing
and in good standing under the laws of [jurisdiction of organization].
2. The execution and delivery by the Borrower of its Election to
Participate and its Notes and the performance by the Borrower of the Credit
Agreement and its Notes are within the Borrower's legal powers, have been
duly authorized by all necessary legal action, require no action by or in
respect of, or filing with, any governmental body, agency or official and
do not contravene, or constitute a default under, any provision of
applicable law or regulation or of the [organizational documents] of the
Borrower or of any agreement, judgment, injunction, order, decree or other
instrument known to such counsel to be binding upon the Borrower or the
Company or any of its Subsidiaries or result in the creation or imposition
of any Lien on any asset of the Company or any of its Subsidiaries pursuant
to any of the foregoing.
3. The Borrower's Election to Participate has been duly executed and
delivered and the Credit Agreement constitutes a valid and binding
agreement of the Borrower and each of its Notes has been duly executed and
delivered and constitutes a valid and binding obligation of the Borrower,
in each case enforceable in accordance with its terms except as the same
may be limited by bankruptcy, insolvency and other similar laws affecting
creditors' rights generally and by general principles of equity.
[4. Except as disclosed in the Borrower's Election to Participate,
there are no Taxes or Other Taxes of [jurisdiction of organization and, if
different, principal place of business], or any taxing authority thereof or
therein, which is imposed on any payment to be made by the Borrower
pursuant to the Credit Agreement or its Notes, or imposed on or by virtue
of the execution, delivery or enforcement of its Election to Participate,
the Credit Agreement or its Notes.]
EXHIBIT K
FORM OF NOTICE OF BORROWING
Date ___________
Bank of America, N.A.,
as Administrative Agent under the
Credit Agreement referred to below
Ladies and Gentlemen:
The undersigned (the "Borrower") refers to the Amended and Restated
Five-Year Credit Agreement dated as of December 8, 1999 (as the same may be
amended from time to time, the "Credit Agreement"), among IMC Global Inc.,
various financial institutions and Bank of America, N.A., as Administrative
Agent. Capitalized terms used but not defined herein have the meaning
assigned to such terms in the Credit Agreement. The Borrower hereby
notifies you, pursuant to Section [2.02] [2.03(f)] of the Credit Agreement,
of its election to make the following Borrowing:
1. Amount: _________________________________
2. Type of Borrowing: _________________________________
3. Date of Borrowing: _________________________________
4. Interest Period for
Fixed Rate Borrowing: _________________________________
5. Lender [for Swingline
Borrowing only]: _________________________________
The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the date of the Borrowing,
before and immediately after giving effect thereto and to the application
of the proceeds therefrom:
(a) immediately after such Borrowing, (i) the sum of the aggregate
outstanding principal amount of the Loans and the aggregate amount of
Letters of Credit Liabilities will not exceed the aggregate amount of the
Commitments, (ii) the aggregate outstanding principal amount of Swingline
Loans will not exceed $25,000,000 and (iii) the aggregate amount of Letter
of Credit Liabilities will not exceed $100,000,000;
(b) no Default shall have occurred and be continuing; and
(c) the representations and warranties (other than the representation
and warranty set forth in Section 4.04(b) in the case of a Borrowing which
does not result in an increase in the sum of the aggregate outstanding
principal amount of the Loans and the aggregate Letter of Credit
Liabilities) of the Borrower contained in the Credit Agreement shall be
true on and as of the date of such Borrowing.
[NAME OF BORROWER]
By
Name:
Title:
EXHIBIT L
FORM OF NOTICE OF INTEREST RATE ELECTION
Date
Bank of America, N.A.,
as Administrative Agent under the
Credit Agreement referred to below
Ladies and Gentlemen:
The undersigned (the "Borrower") refers to the Amended and Restated
Five-Year Credit Agreement dated as of December 8, 1999 (as the same may be
amended from time to time, the "Credit Agreement"), among IMC Global Inc.,
various financial institutions and Bank of America, N.A., as Administrative
Agent. Capitalized terms used but not defined herein have the meaning
assigned to such terms in the Credit Agreement. The Borrower hereby
notifies you, pursuant to Section 2.10(a) of the Credit Agreement, of the
following interest rate election:
1. Group of Loans (or portion
thereof) to which election
applies
2. Effective date of election
3. New type of Loans [if
Loans are to be converted]
4. Duration of next succeeding
Interest Period [if Loans are
converted to Euro-Dollar Loans]
5. Additional Interest Period [if
Loans are continued as Euro-Dollar
Loans]
[NAME OF BORROWER]
By___________________________
Name:
Title:
Exhibit 10.iii.(m)
IMC GLOBAL INC.
1998 SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(Effective as of January 1, 1998)
Contents Page
Article 1. Introduction 1
Article 2. Definitions 1
Article 3. Eligibility 2
Article 4. Participant Accounts 2
Article 5. Additions to Participant Accounts 3
Article 6. Vesting in Participant Accounts 4
Article 7. Establishment of Trust 4
Article 8. Distributions 4
Article 9. Administration of the Plan 6
Article 10. Amendment and Termination 6
Article 11. General Provisions 7
IMC GLOBAL INC.
1998 SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Article 1. Introduction
1.1. Title. The title of this Plan shall be the "IMC Global Inc. 1998
Supplemental Executive Retirement Plan."
1.2. Purpose. This Plan shall constitute an unfunded nonqualified
deferred compensation arrangement established for the purpose of providing
deferred compensation to a select group of management or highly compensated
employees (as defined for purposes of Title I of ERISA) of the Company and
adopting Affiliates. The Plan is intended to be maintained and
administered in connection with the "IMC Global Inc. Profit Sharing and
Savings Plan" and the "IMC Global Inc. 1998 Restoration Plan" for the
benefit of employees of the Company and adopting Affiliates who are in
salary grade 27 or above or who are designated as participants in the Plan
by the Chief Executive Officer of the Company.
Article 2. Definitions
"Account" means the account maintained on behalf of each Participant which
will represent the amount of the Retirement Contributions made on behalf of
such Participant pursuant to Section 5.1 of the Plan, as adjusted by
Section 5.2 of the Plan.
"Affiliate" means an entity that, together with the Company, is considered
as a single employer under Section 414(b) or (c) of the Code.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the committee described in Section 10.1 of the Qualified
Plan which is a named fiduciary of and responsible for the administration
of the Qualified Plan.
"Company" means IMC Global Inc., a Delaware corporation.
"Effective Date" means January 1, 1998.
"Employer" means, both collectively and individually as determined by the
context of the applicable provision, the Company and any Affiliate which
adopts this Plan with the approval of the Company.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Participant" means any eligible employee of an Employer who is
participating under the Plan pursuant to Article 3.
"Plan" means this "IMC Global Inc. 1998 Supplemental Executive Retirement
Plan".
"Plan Year" means the calendar year.
"Retirement Contributions" means the contributions made on behalf of a
Participant pursuant to Section 5.1 of this Plan.
"Qualified Plan" means the "IMC Global Inc. Profit Sharing and Savings
Plan," as amended from time to time.
"Restoration Plan" means the "IMC Global Inc. 1998 Restoration Plan," as
amended from time to time.
Article 3. Eligibility
Each employee of an Employer (other than the Chief Executive Officer and
the Chairman of the Company) who as of the beginning of a Plan Year is in
salary grade 27 or above or who is designated as a Participant for the Plan
Year by the Chief Executive Officer of the Company shall be a Participant
in the Plan for the Plan Year; provided, that only those employees of an
Employer who are in a select group of management or are highly compensated
(within the meaning of Title I of ERISA) may be designated as participants
in this Plan.
Article 4. Participant Accounts
4.1. Account. The Committee shall establish and maintain an Account for
each Participant. The Participant's Account shall be a bookkeeping account
maintained by the Company and shall reflect the amount of the Retirement
Contributions and other amounts credited hereunder on behalf of the
Participant. Interest on the amounts reflected in a Participant's Account
shall be credited to his Account in accordance with Article 5.
4.2. Opening Account Balances. Each Participant as of the Effective Date
shall have an opening balance credited to such Participant's Account as of
the Effective Date equal to (i) the applicable percentage (as determined
from the table in Section 5.1 below based on the Participant's age on
December 31, 1997) of the Participant's 1997 base salary plus 1997 bonus
(the annual bonus payable to the Participant in 1997 under the Company's
Management Incentive Compensation Plan) multiplied by (ii) the
Participant's years (including fractional years) of service with the
Company or an Affiliate as of December 31, 1997 that were completed after
the Participant's 40th birthday, reduced by (iii) the lump sum actuarial
equivalent value of the Participant's accrued benefit as of December 31,
1997 (assuming payments begin at age 65 and calculated using a 5.25%
immediate annuity interest rate assumption and the deferred annuity
interest rate assumptions which would be used by the Pension Benefit
Guaranty Corporation to calculate benefits upon plan termination and the
other actuarial assumptions that were in effect under such plans on
December 31, 1997) earned for the period of service used in (ii) above
under all qualified and nonqualified (excluding the Company's Supplemental
Executive Retirement Plan) defined benefit plans and the profit sharing
component of defined contribution plans maintained by the Company and all
Affiliates and further reduced by (iv) FICA withholding on the vested
portion of the amount so determined after application of (iii) above.
Article 5. Additions to Participant Accounts
5.1. Retirement Contributions. As of the end of each Plan Year, a
Retirement Contribution shall be credited to the Account of each
Participant in an amount equal to (i) the applicable percentage (as
determined from the table set forth below) multiplied by (ii) the
Participant's base salary for the Plan Year plus bonus (the annual bonus
payable to the Participant in the Plan Year under the Company's Management
Incentive Compensation Plan), reduced by (iii) the profit sharing
contributions made for the Participant for the Plan Year (or that would
have been so made if the Participant had not elected to continuing accruing
benefits after the Effective Date under a qualified defined benefit plan
maintained by the Company or an Affiliate) to the Qualified Plan and the
Restoration Plan and further reduced by (iv) FICA withholding on the vested
portion of the amount so determined after application of (iii) above and on
any previously made Retirement Contribution amounts (and deemed investment
earnings thereon) that have become vested during the Plan Year.
The applicable percentage for a Participant for a Plan Year is based upon
the Participant's age as of the end of the Plan Year as follows:
Age Applicable Percentage
<40 0%
40-49 13%
50-59 15%
60+ 17%
5.2. Interest Additions. As of the end of each calendar quarter there
shall be added to each Participant's Account interest on the Account
balance as of the beginning of the calendar quarter at a rate equal to the
prime rate published in The Wall Street Journal on the first business day
of the calendar quarter plus 2 percent.
Article 6. Vesting in Participant Accounts
The balance in a Participant's Account shall be 100% vested at any time
after the Participant has both attained age 55 and completed at least five
years of Service (as defined in the Qualified Plan). Prior to a
Participant's attaining age 55 the vested percentage of the Participant's
Account shall be determined based on the Participant's years of Service (as
defined in the Qualified Plan) as follows:
Years of Service Vested Percentage
<5 0%
5 50%
6 60%
7 70%
8 80%
9 90%
10 or more 100%
Article 7. Establishment of Trust
7.1. Establishment of Trust. The Company may, in its sole discretion,
establish a grantor trust (as described in Section 671 of the Code) for the
purpose of accumulating assets to provide for the obligations hereunder.
The assets and income of such trust shall be subject to the claims of the
general creditors of an Employer hereunder, but only to the extent that
such assets and income are attributable to the contributions of that
individual Employer. The establishment of such a trust shall not affect
the Employers' liability to pay benefits hereunder except that any such
liability shall be offset by any payments actually made to a Participant
under such a trust. In the event such a trust is established, the amount
to be contributed thereto shall be determined by the Company and the
investment of such assets shall be made in accordance with the trust
document.
7.2. Status of Trust. Participants shall have no direct or secured claim
in any asset of the trust or in specific assets of their Employer and will
have the status of general unsecured creditors of their Employer for any
amounts due under this Plan. The assets and income of the trust will be
subject to the claims of any Employer's creditors, but only to the extent
that such assets and income are attributable to the contributions of that
individual Employer.
Article 8. Distributions
8.1. Distribution of Accounts. If a Participant's employment with his
Employer and all Affiliates is terminated by reason of his death, the
balance in the Participant's Account (determined as of the date on which
the distribution is processed) shall be distributed to Participant's
beneficiary as soon as administratively practicable after the end of the
calendar quarter in which the Participant's death occurs. Such payment
shall be made in the form of a lump sum payment. If such Participant is
entitled to a Retirement Contribution for the Plan Year in which his death
occurs that is not reflected in the Account balance so distributed to the
Participant's beneficiary, the amount of such Retirement Contribution shall
be distributed to the Participant's beneficiary as soon as administratively
practicable after the end of the Plan Year in which the Participant's death
occurs.
If a Participant's employment with his Employer and all Affiliates is
terminated for a reason other than his death, after he has completed five
years of Service (as defined in the Qualified Plan), the vested portion of
the balance in the Participant's Account (determined as of the date on
which the distribution is processed) shall be distributed to the
Participant (or, in the event of the Participant's death, to his
beneficiary) as soon as administratively practicable after the end of the
calendar quarter in which the Participant's termination of employment
occurs and the unvested portion shall be forfeited. Such payment shall be
made in the form of a lump sum payment. If such Participant is entitled to
a Retirement Contribution for the Plan Year in which his employment
terminates that is not reflected in the Account balance so distributed to
the Participant, the amount of the vested portion of such Retirement
Contribution shall be distributed to the Participant as soon as
administratively practicable after the end of the Plan Year in which the
Participant's termination of employment occurs. If a Participant's
employment with his Employer and all Affiliates is terminated before the
Participant has completed five years of Service (as defined in the
Qualified Plan) for a reason other than his death, the balance in the
Participant's Account shall be forfeited.
8.2. Involuntary Distributions. Notwithstanding the foregoing provisions
of this Article 8, the Committee may on its own initiative authorize the
Company to distribute to any Participant (or to a designated beneficiary in
the event of the Participant's death) all or any portion of the
Participant's Account. Such payment would be specifically authorized in
the event that there is a change in tax law, a published ruling or similar
announcement issued by the Internal Revenue Service, a regulation issued by
the Secretary of the Treasury, a decision by a court of competent
jurisdiction involving a Participant or a beneficiary, or a closing
agreement made under Section 7121 of the Code that is approved by the
Internal Revenue Service and involves a Participant, and the Committee
determines that a Participant has or will recognize income for federal
income tax purposes with respect to amounts deferred under this Plan prior
to the time such amounts are paid to the Participant.
8.3. Designation of Beneficiaries. Each Participant may name any person
(who may be named concurrently, contingently or successively) to whom the
Participant's Account under the Plan is to be paid if the Participant dies
before such Account is fully distributed. Each such beneficiary
designation will revoke all prior designations by the Participant, shall
not require the consent of any previously named beneficiary, shall be in a
form prescribed by the Committee and will be effective only when filed with
the Committee during the Participant's lifetime. If a Participant fails to
designate a beneficiary before his death, as provided above, or if the
beneficiary designated by a Participant dies before the date of the
Participant's death or before payment of the Participant's Account, the
Committee, in its discretion, may pay the Participant's Account (a) to the
surviving spouse of such deceased Participant, if any, or (b) if there
shall be no surviving spouse, the surviving children of such deceased
Participant, if any, in equal shares, or (c) if there shall be no surviving
spouse or children, to the executors or administrators of the estate of
such deceased Participant, or (d) if no executor or administrator shall
have been appointed for the estate of such deceased Participant within six
months from the date of the Participant's death, to the person or persons
who would be entitled under the intestate succession laws of the state of
the Participant's domicile to receive the Participant's personal estate.
Article 9. Administration of the Plan
The Plan shall be administered by the Committee. The duties and authority
of the Committee under the Plan shall include (a) the interpretation of the
provisions of the Plan, (b) the adoption of any rules and regulations which
may become necessary or advisable in the operation of the Plan, (c) the
making of such determinations as may be permitted or required pursuant to
the Plan, and (d) the taking of such other actions as may be required for
the proper administration of the Plan in accordance with its terms. Any
decision of the Committee with respect to any matter within the authority
of the Committee shall be final, binding and conclusive upon the Company
and each Participant, former Participant, designated beneficiary, and each
person claiming under or through any Participant or designated beneficiary;
and no additional authorization or ratification by the board of directors
of the Company shall be required. Any action taken by the Committee with
respect to any one or more Participants shall not be binding on the
Committee as to any action to be taken with respect to any other
Participant. A member of the Committee may be a Participant, but no member
of the Committee may participate in any decision directly affecting his
rights or the computation of his benefits under the Plan. Each
determination required or permitted under the Plan shall be made by the
Committee in the sole and absolute discretion of the Committee.
Article 10. Amendment and Termination
10.1. Amendment. The Company shall have the right to amend the Plan by
action of the board of directors of the Company (or a duly appointed
delegate thereof) from time to time, except that no such amendment shall,
without the consent of the Participant to whom deferred compensation has
been credited to his Account under this Plan, adversely affect the right of
the Participant (or his beneficiary) to receive payments of such deferred
compensation under the terms of this Plan.
10.2. Plan Termination. The Plan may be terminated with respect to the
Company or any Employer at any time by action of the board of directors of
the Company (or a duly appointed delegate thereof) in its sole discretion.
The Plan shall be automatically terminated with respect to any Employer
upon the termination of the Qualified Plan with respect to such Employer
pursuant to Section 15.3 of the Qualified Plan. Notwithstanding the
foregoing, no termination of this Plan shall alter the right of a
Participant (or his beneficiary) to payments of amounts previously credited
to such Participant's Account under the Plan.
Article 11. General Provisions
11.1. Non-Alienation of Benefits. A Participant's rights to the amounts
credited to his Accounts under the Plan shall not be salable, transferable,
pledgeable or otherwise assignable, in whole or in part, by the voluntary
or involuntary acts of any person, or by operation of law, and shall not be
liable or taken for any obligation of such person. Any such attempted
grant, transfer, pledge or assignment shall be null and void and without
any legal effect.
11.2. Withholding for Taxes. Notwithstanding anything contained in this
Plan to the contrary, each Employer shall withhold from any distribution
made under the Plan such amount or amounts as may be required for purposes
of complying with the tax withholding provisions of the Code or any
applicable State law for purposes of paying any tax attributable to any
amounts distributable or creditable under the Plan.
11.3. Immunity of Committee Members. The members of the Committee may
rely upon any information, report or opinion supplied to them by any
officer of an Employer or any legal counsel, independent public accountant
or actuary, and shall be fully protected in relying upon any such
information, report or opinion. No member of the Committee shall have any
liability to the Company or any Participant, former Participant, designated
beneficiary, person claiming under or through any Participant or designated
beneficiary or other person interested or concerned in connection with any
decision made by such member of the Committee pursuant to the Plan which
was based upon any such information, report or opinion if such member of
the Committee relied thereon in good faith.
11.4. Plan Not to Affect Employment Relationship. Neither the adoption of
the Plan nor its operation shall in any way affect the right and power of
an Employer to dismiss or otherwise terminate the employment or change the
terms of the employment or amount of compensation of any Participant at any
time for any reason or without cause. By accepting any payment under this
Plan, each Participant, former Participant, designated beneficiary and each
person claiming under or through such person, shall be conclusively bound
by any action or decision taken or made under the Plan by the Committee.
11.5. Notices. Any notice required to be given by the Company or the
Committee hereunder shall be in writing and shall be delivered in person or
by registered mail, return receipt requested. Any notice given by
registered mail shall be deemed to have been given upon the date of
delivery, correctly addressed to the last known address of the person to
whom such notice is to be given.
11.6. Gender and Number; Headings. Wherever any words are used herein in
the masculine gender they shall be construed as though they were also used
in the feminine gender in all cases where they would so apply; and wherever
any words are used herein in the singular form they shall be construed as
though they were also used in the plural form in all cases where they would
so apply. Headings of sections and subsections of the Plan are inserted
for convenience of reference and are not part of the Plan and are not to be
considered in the construction thereof.
11.7. Controlling Law. The Plan shall be construed in accordance with the
internal laws of the State of Illinois, to the extent not preempted by any
applicable federal law.
11.8. Successors. The Plan is binding on all persons entitled to benefits
hereunder and their respective heirs and legal representatives, on the
Committee and its successor and on any Employer and its successor, whether
by way of merger, consolidation, purchase or otherwise.
11.9. Severability. If any provision of the Plan shall be held illegal or
invalid for any reason, such illegality or invalidity shall not affect the
remaining provisions of the Plan, and the Plan shall be enforced as if the
invalid provisions had never been set forth therein.
IN WITNESS WHEREOF, IMC Global Inc. has caused its corporate seal to be
hereunto affixed by its officers thereunto duly authorized this ______ day
of ____________, 1999.
IMC GLOBAL INC.
By:
(Corporate Seal)
ATTEST:
Exhibit 10.iii.(n)
IMC GLOBAL INC.
1998 SUPPLEMENTAL EXECUTIVE
RETIREMENT PLAN, RESTORATION PLAN AND EXCESS BENEFIT PLAN TRUST
Contents Page
Article 2. Payments to Participants 5
Article 4. Payments to Company 7
Article 5. Management of the Trust Fund 7
Article 6. Investment Funds and Investment Managers 12
Article 7. Resignation or Removal of Trustee 14
Article 8. Amendment, Division or Termination 15
Article 9. Liability and Indemnification 16
Article 10. Miscellaneous 17
IMC GLOBAL INC.
1998 SUPPLEMENTAL EXECUTIVE
RETIREMENT PLAN, RESTORATION PLAN
AND EXCESS BENEFIT PLAN TRUST
This 1998 Supplemental Executive Retirement Plan, Restoration Plan and
Excess Benefit Plan Trust (this "Trust") is effective this _____ day of
_______________, 1998 (the "Effective Date"), by and between IMC Global
Inc., a Delaware corporation (the "Company"), and Marshall & Ilsley Trust
Company (the "Trustee").
W I T N E S S E T H:
WHEREAS, the Company has adopted three nonqualified defined contribution
plans known as the IMC Global Inc. 1998 Supplemental Executive Retirement
Plan, the IMC Global Inc. 1998 Restoration Plan and the IMC Global Inc.
1998 Excess Benefit Plan (the "Plans"); and
WHEREAS, the Company expects to incur liability under the terms of the
Plans with respect to the individuals participating in the Plans; and
WHEREAS, the Company wishes to establish a grantor trust (the "Trust") and
to contribute to the Trust assets that shall be held therein, subject to
the claims of the Company's creditors in the event of the Company's
Insolvency, as herein defined, until paid to participants in the Plans and
their beneficiaries (collectively, the "Participants") in such manner and
at such times as specified in the Plans; and
WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of the
Plans as unfunded plans for purposes of Title I of the Employee Retirement
Income Security Act of 1974; and
WHEREAS, it is the intention of Company to make contributions to the Trust
to provide itself with a source of funds to assist it in meeting its
liabilities under the Plans.
NOW, THEREFORE, the parties do hereby establish the Trust and agree that
the Trust shall be comprised, held, and disposed of as follows:
Article 1. Establishment and Administration of the Trust and Company
Contributions
1.1. Establishment. This Trust is hereby established for the benefit of
Participants in the Plans, as determined in accordance with the applicable
provisions of the Plans, to provide for the payment of benefits under the
Plans on an unfunded, nonqualified basis.
The Company, from time to time, may add additional plans and/or additional
Participants to be covered by this Trust. Such a designation shall be in
writing, signed by one or more members of the Committee, as defined in
Section 1.7 herein, and filed with the Trustee.
1.2. Irrevocable. The Trust hereby established shall be irrevocable,
subject to the provisions of Article 8 herein.
1.3. Status of the Trust. The Trust is intended to be a grantor trust, of
which the Company is the grantor, within the meaning of subpart E, part I,
subchapter J, chapter 1, subtitle A of the Internal Revenue Code of 1986,
as amended, and shall be construed accordingly. The principal of the
Trust, and any earnings thereon, shall be held separate and apart from
other funds of the Company and shall be used exclusively for the uses and
purposes of Participants and general creditors as herein set forth.
Participants shall have no preferred claim on, or any beneficial ownership
interest in, any assets of the Trust. Any rights created under the Plans
and this Trust shall be mere unsecured contractual rights of Participants
against the Company. Any assets held by the Trust will be subject to the
claims of the Company's general creditors under federal and state law in
the event of Insolvency, as defined in Section 3.1 herein.
1.4. Company Contributions. The Company, in its sole discretion, may at
any time, or from time to time, contribute cash or other property to the
Trust in such amount as the Company determines. The Company shall have the
right, at any time, and from time to time in its sole discretion, to
substitute assets of equal fair market value for any assets held by the
Trust. The Company shall execute any and all instruments necessary to vest
the Trustee with full title to the property transferred to the Trust.
1.5. Determination of a Change in Control. The Board of Directors and the
highest ranking officer of the Company shall have the duty to inform the
Trustee in writing of the occurrence of a Change in Control of the Company.
If any Participant (or person acting on behalf of any Participant), other
than the Company's highest ranking officer, alleges in writing to the
Trustee that a Change in Control has occurred, the Trustee shall determine
whether a Change in Control has occurred. Unless the Trustee has actual
knowledge that a Change in Control of the Company has occurred, or has
received notice from the Company or any Participant (or person acting on
behalf of any Participant) alleging that a Change in Control has occurred,
the Trustee shall have no duty to inquire whether a Change in Control has
occurred. The Trustee may in all events rely on such evidence concerning
the Company's control as may be furnished to the Trustee and that provides
the Trustee with a reasonable basis for making a determination concerning
the Company's control.
1.6. Trustee's Acceptance. The Trustee accepts its duties and obligations
as Trustee hereunder, agrees to accept delivery of funds delivered to it by
the Company pursuant to this Article 1, and agrees to hold such funds (and
any proceeds from the investment of such funds) in trust in accordance with
the terms and conditions of this Trust. The Trustee shall have no right or
obligation to compel the Company to make a deposit or contribution
hereunder.
1.7. The Committee. The Board of Directors of the Company shall designate
a committee (the "Committee") which shall have the powers, rights, and
duties described herein and in the Plans. The Board of Directors will
certify to the Trustee from time to time the person or persons who are
acting as the members of the Committee. The Trustee may rely on the latest
certificate received from the Board of Directors without further inquiry or
verification. The Committee may delegate such of its powers, rights and
duties hereunder as it deems appropriate to the plan administrator
designated in the Plan.
If for any period no persons are acting as members of the Committee, the
Board of Directors of the Company shall act on behalf of, and shall have
all of the powers, rights, and duties otherwise reserved to, the Committee.
The Company warrants that all directions or authorizations by the
Committee, whether for the payment of money or otherwise, will comply with
the provisions of the Plan and this Trust.
Article 2. Payments to Participants
2.1. Payment Schedule. As soon as administratively practicable following
the end of each calendar quarter and as soon as administratively
practicable following a Change in Control, the Committee shall deliver to
the Trustee a schedule (the "Payment Schedule") that: (i) indicates the
amounts payable in respect of the Participants under the Plans; (ii)
provides a formula or other instructions acceptable to the Trustee for
determining the amounts so payable; (iii) designates the manner and form in
which such amount is to be paid (as provided for or available under the
Plans); and (iv) designates the time of commencement for payment of such
amounts.
Except as otherwise provided herein, the Trustee shall make payments to the
Participants in accordance with such Payment Schedule. Prior to a Change
in Control, the Committee shall have the right to modify such schedule
during the Plan Year, which modification, upon delivery to the Trustee,
shall be binding upon the Trustee.
Unless directed otherwise by the Committee, the Trustee shall make
provisions for the reporting and withholding of any federal, state, or
local taxes that may be required to be withheld with respect to the payment
of benefits pursuant to the terms of the Plans and shall pay amounts
withheld to the appropriate taxing authorities or determine that such
amounts have been reported, withheld, and paid by the Company.
In the event the Trustee determines that there are insufficient funds in
the Trust to make full payments to all Participants as provided in the
Payment Schedule or as otherwise determined hereunder, the Trustee shall
immediately make a request to the Company for an infusion of sufficient
additional assets into the Trust to fully fund the obligations. If no such
Company asset contribution is made within a period deemed reasonable by the
Trustee, the Trustee shall make payments to each Participant in an amount
equal to the full payment due to such Participant under the Plans
multiplied by a fraction, the numerator of which is the total amount
available for distribution in the Trust, and the denominator of which is
the total amount of aggregate liabilities to all Participants under the
Plans. The Company will then be required to pay the balance of the
Participant's benefits out of general Company assets.
2.2. Committee Determination of Benefits. The entitlement of a
Participant to benefits under the Plans shall be determined by the
Committee, and any claim for such benefits shall be considered and reviewed
under the procedures set out in the Plans. If no such provision is
contained in the underlying plan document, the procedures contained in
Section 2.4 herein shall be followed.
2.3. Direct Payment of Benefits by the Company. The Company may make
payment of benefits directly to Participants as they become due under the
terms of the Plans. To the extent administratively practicable, the
Company shall notify the Trustee of its decision to make payment of
benefits directly to Participants prior to the time amounts are payable to
Participants. In addition, if the principal of the Trust, and any earnings
thereon, are not sufficient to make payments of benefits in accordance with
the terms of the Plans, the Company shall make the balance of each such
payment as it falls due. The Trustee shall notify the Committee where
principal and earnings are not sufficient.
The Committee may direct the Trustee in writing to reimburse the Company
from the Trust Fund, as defined in Section 5.1 herein, for benefits paid
directly to a Participant by the Company upon receipt by the Trustee of
satisfactory evidence of such payment(s); provided, however, that the
Trustee shall not reimburse the Company for such payment if the Trustee
determines that, after making such reimbursement, the Trust Fund assets are
insufficient to satisfy anticipated distributions therefrom.
2.4. Missing Persons. If any payment directed to be made by the Trustee
from the Trust Fund is not claimed by the person entitled thereto, the
Trustee shall notify the Committee of that fact. The Trustee thereafter
shall have no obligation to search for or ascertain the whereabouts of any
payee under this Trust.
Article 3. Trustee Responsibility Regarding Payments to Participants When
Company is Insolvent
3.1. Insolvency. The Trustee shall cease payment of benefits to
Participants if the Company is Insolvent. The Company shall be considered
"Insolvent" for purposes of this Trust if: (i) the Company is unable to pay
its debts as they become due; or (ii) the Company is subject to a pending
proceeding as a debtor under the United States Bankruptcy Code.
3.2. Claims of General Creditors. At all times during the continuance of
this Trust, as provided in Articles 1 and 8 herein, the principal and
income of the Trust shall be subject to the claims of general creditors of
the Company under federal and state law as set forth below.
(a) The Board of Directors and the highest ranking officer of the Company
shall have the duty to inform the Trustee in writing of the Company's
Insolvency. If a person claiming to be a creditor of the Company alleges
in writing to the Trustee that the Company has become Insolvent, the
Trustee shall determine whether the Company is Insolvent and, pending such
determination, the Trustee shall discontinue payment of benefits to
Participants.
(b) Unless the Trustee has actual knowledge of the Company's Insolvency,
or has received notice from the Company or a person claiming to be a
creditor alleging that the Company is Insolvent, the Trustee shall have no
duty to inquire whether the Company is Insolvent. The Trustee may in all
events rely on such evidence concerning the Company's solvency as may be
furnished to the Trustee and that provides the Trustee with a reasonable
basis for making a determination concerning the Company's solvency.
(c) If at any time the Trustee has determined that the Company is
Insolvent, the Trustee shall discontinue payments to the Participants and
shall hold the assets of the Trust for the benefits of the Company's
general creditors. Nothing in this Trust shall in any way diminish any
rights of Participants to pursue their rights as general creditors of the
Company with respect to benefits due under the Plans or otherwise.
(d) The Trustee shall resume the payment of benefits to Participants in
accordance with Article 2 of this Trust only after the Trustee has
determined that the Company is not Insolvent (or is no longer Insolvent).
3.3. Resumption of Payments to Participants. Provided that there are
sufficient assets, if the Trustee discontinues the payment of benefits from
the Trust pursuant to Section 3.2 hereof and subsequently resumes such
payments, the first payment following such discontinuance shall include the
aggregate amount of all payments due to Participants under the terms of the
Plans for the period of such discontinuance, less the aggregate amount of
any payment made to Participants by the Company in lieu of the payments
provided for hereunder during any such period of discontinuance.
Article 4. Payments to Company
Except as provided in Section 2.3, Article 3, and Section 8.2 hereof, the
Company shall have no right or power to direct the Trustee to return to the
Company or to divert to others any of the Trust assets before all payments
of benefits have been made to Participants pursuant to the terms of the
Plans.
Article 5. Management of the Trust Fund
5.1. The Trust Fund. Unless the context clearly implies or indicates
otherwise, the term "Trust Fund" as of any date means all property of every
kind then held under this Trust by the Trustee.
5.2. Trustee's General Powers, Rights, and Duties. With respect to the
Trust Fund and subject only to the limitations expressly provided in this
Trust (including the powers reserved to the Committee, and the powers,
rights, and duties specifically allocated to an Investment Manager, if so
appointed, as provided in Article 6 herein), or imposed by applicable law,
the Trustee shall have the following powers, rights, and duties in addition
to those vested in it elsewhere in this Trust or by law:
(a) To invest and reinvest part or all of the Trust Fund in any real or
personal property (including investments in any stocks, bonds, debentures,
mutual fund shares (including shares of any fund from which the Trustee or
any affiliate thereof receives an investment advisory fee or any other
fee), notes, commercial paper, treasury bills, options, commodities,
futures contracts, partnership interests, venture capital investments, any
common, commingled, or collective trust funds, or pooled investment funds
described in Section 5.3, any interest-bearing deposits held by any bank or
similar financial institution, and any other real or personal property,
regardless of whether any such investment is issued by or related to the
Company) and to diversify such investments so as to minimize the risk of
large losses unless, under the circumstances, it is clearly prudent not to
do so.
(b) To retain in cash such amounts as the Trustee considers advisable for
payment of distributions, expenses and investment transfers and as are
permitted by applicable law (without accrual of interest to the Trust Fund
notwithstanding that the Trustee or any affiliate thereof may accrue
interest on such cash balances) and to deposit any cash so retained in any
depository (including any bank acting as trustee) which the Trustee may
select.
(c) To manage, sell, insure, and otherwise deal with all real and personal
property held by the Trustee on such terms and conditions as the Trustee
shall decide.
(d) When directed by the Committee prior to a Change in Control or by an
Investment Manager, as described in Section 6.2 herein, either prior to or
after a Change in Control, to vote stock and other voting securities
directly or by proxy (and to delegate the Trustee's powers and discretions
with respect to such stock or other voting securities to any such proxy),
to exercise subscription, conversion, and other rights and options (and
make payments from the Trust Fund in connection therewith), to take any
action and to abstain from taking any action with respect to any
reorganization, consolidation, merger, dissolution, recapitalization,
refinancing, and any other program or change affecting any property
constituting a part of the Trust Fund as the Committee or the Investment
Manager directs in accordance with this Trust.
(e) To hold or register any property from time to time in the Trustee's
name or in the name of a nominee or to hold it unregistered or in such form
that title shall pass by delivery and, with the approval of the Committee,
to borrow from anyone, including any bank acting as trustee, to the extent
permitted by law, such amounts from time to time as the Trustee considers
desirable to carry out this Trust (and to mortgage or pledge all or part of
the Trust Fund as security).
(f) When directed by the Committee or by an Investment Manager, as
described in Section 6.2 herein, in either case prior to a Change in
Control, to acquire, retain, or dispose of such investments as the
Committee or the Investment Manager directs in accordance with this Trust.
(g) To make payments from the Trust Fund to provide benefits that have
become payable under the Plans pursuant to Article 2 herein, or that are
required to be made to the general creditors of the Company as set forth in
Section 3.2 herein.
(h) Prior to a Change in Control, with the prior written consent of the
Company, to begin, maintain, or defend any litigation reasonably necessary
in connection with the administration of the Trust and the Company shall
indemnify the Trustee against all reasonable expenses and liabilities
sustained by the Trustee by reason of any such litigation. Following a
Change in Control, the Trustee shall have this right, without the prior
written consent of the Company.
(i) To withhold, if the Trustee considers it advisable, all or any part of
any payment required to be made hereunder as may be necessary and proper to
protect the Trustee or the Trust Fund against any liability or claim on
account of any estate, inheritance, income, or other tax, or assessment
attributable to any amount payable hereunder, and to discharge any such
liability with any part or all of such payment so withheld, provided that
at least ten (10) business days prior to discharging any such liability
with any amount so withheld the Trustee shall notify the Committee in
writing of the Trustee's intent to do so.
The Trustee shall not be either individually or severally liable for any
taxes of any kind levied or assessed under the existing or future laws
against the Trust assets. The Committee shall be responsible for: (i)
providing information to the Trustee with respect to all taxes to be
deducted and withheld from payments to Participants; (ii) furnishing to
each person receiving payment or distribution from the Trust appropriate
tax information evidencing such payment or distribution and the amount
thereof; and (iii) preparing and filing all information reports and tax
returns required to be filled with any federal, state, or local government
agency or authority with respect to any payments made to any Participant
hereunder. To the extent that any taxes are payable by the Trust to any
federal, state, or local taxing authorities on account of earnings on Trust
assets, the Company shall pay such taxes.
(j) To maintain records reflecting all receipts and payments under this
Trust and such other records as the Committee specifies and the Trustee
agrees to, which records may be audited from time to time by the Committee
or anyone named by the Committee.
(k) To report to the Committee as of each Plan Year end, and at such other
times as the Committee may request, the then net worth of the Trust Fund
(that is, the fair market value of all assets held in the Trust, less
liabilities known to the Trustee, other than liabilities to Participants
and amounts payable from the Trust Fund to creditors who are not entitled
to benefits under the Plans), determined (i) in the case of assets that are
actively traded on an established market and other assets with a readily
ascertainable fair market value, on the basis of such data and information
as the Trustee considers reliable and (ii) in the case of assets without a
readily ascertainable fair market value, as directed by the Committee or an
Investment Manager.
(l) To furnish periodic accounts to the Committee for such periods as the
Committee may specify, showing all investments, receipts, disbursements,
and other transactions involving the Trust Fund during the applicable
period and the assets of the Trust Fund held at the end of that Plan Year.
(m) To furnish the Company with such information in the Trustee's
possession as the Company may need for tax or other purposes. The Company
shall pay, prepare, file, and furnish all federal, state, and local tax
deposits, returns, and reports required by any government agency or
authority.
(n) Prior to a Change in Control, with the prior written consent of the
Company, to employ agents, attorneys, accountants, and other persons (who
also may be employed by the Company, the Committee, or others), to delegate
discretionary powers to such persons, and to reasonably rely upon
information and advice furnished by such persons; provided that each such
delegation and the acceptance thereof by each such person shall be in
writing; and provided further that the Trustee may not delegate its
responsibilities as to the management or control of the assets of the Trust
Fund. Following a Change in Control, the Trustee shall have this right,
without the prior written consent of the Company.
(o) To perform all other acts which in the Trustee's judgment are
appropriate for the proper management, investment, and distribution of the
Trust Fund to the extent such duties have not been assigned to others as
provided herein.
(p) The Trustee may invest in securities (including stock or rights to
acquire stock) or obligations issued by the Company. All rights associated
with assets of the Trust shall be exercised by the Trustee or the person
designated by the Trustee, and shall in no event be exercisable by or rest
with Participants.
Prior to a Change in Control, the Company shall have the right, at any
time, and from time to time in its sole discretion, to substitute assets of
equal fair market value for any asset held by the Trust. This right is
exercisable by the Company in a nonfiduciary capacity without the approval
or consent of any person in a fiduciary capacity.
5.3. Collective Investment Trusts. The Trustee (or, if so authorized, any
Investment Manager appointed pursuant to Section 6.2) may invest any part
or all of the Trust assets for which it has investment responsibility in
any common, collective, or commingled trust fund or pooled investment fund
that is maintained by a bank or trust company (including a bank or trust
company acting as Trustee) provided such investments are consistent with
applicable investment requirements and guidelines so established by the
Committee pursuant to Section 6.1 herein. To the extent that any Trust
assets are invested in any such fund, the provisions of the documents under
which such common, collective, or commingled trust fund or pooled
investment fund are maintained shall govern any investment therein.
5.4. Accounting. The Trustee shall keep accurate and detailed records of
all deposits, investments, receipts, disbursements, and all other
transactions required to be made, including such specific records as shall
be agreed upon in writing between the Company and the Trustee within forty-
five (45) calendar days following the close of each Plan Year and, if
applicable, within forty-five (45) calendar days after the removal or
resignation of the Trustee. The Trustee shall deliver to the Company a
written account of its administration of the Trust during such Plan Year or
during the period from the close of the last preceding Plan Year to the
date of such removal or resignation setting forth all deposits,
investments, receipts, disbursements, and other transactions effected by
it, including a description of all securities and investments purchased and
sold with the cost or net proceeds of such purchases or sales (accrued
interest paid or receivable being shown separately), and showing all cash,
securities, and other property held in the Trust at the end of such Plan
Year or as of the date of such removal or resignation, as the case may be.
The Trustee shall be entitled to hold and to commingle the assets of the
Trust in one fund for investment purposes but at the direction of the
Company prior to a Change in Control, the Trustee shall create one or more
subaccounts. All such accounts, books, and records shall be open to
inspection and audit at all reasonable times by the Company.
5.5. Common Fund. The Trustee shall not be required to make separate
investments of the Trust Fund for the accounts of each Participant in the
absence of such direction by the Committee, and may administer and invest
the deposits made to the Trust by the Company as to the Plans as one Trust
Fund. The Trustee also shall not be required to make any separate
investments of the Trust Fund for the account of any general creditor of
the Company prior to receipt of directions to make payments to such
creditor in accordance with Section 3.2.
5.6. Compensation and Expenses. Reasonable compensation as may be agreed
upon from time to time between the Committee and the Trustee, and all
expenses (except those specifically described in the next sentence)
reasonably incurred by the Trustee and the Committee in the administration
of this Trust, including compensation to agents, actuaries, attorneys,
accountants, and other persons employed by the Trustee or the Committee, as
certified by them, shall be paid by the Company directly. To the extent
such compensation and expenses are not paid by the Company within ninety
(90) calendar days of delivery of an invoice for same by the Trustee, the
Trustee may pay such compensation and expenses from the Trust Fund.
Expenses solely attributable to investment of the Trust Fund (such as
investment manager fees, load or other commission fees, brokerage, postage,
express or insurance charges, and stock transfer stamps expenses) shall be
paid from the Trust Fund to the extent not paid directly by the Company.
5.7. Insurance. The Trustee shall have, without exclusion, all powers
conferred on trustees by applicable law, unless expressly provided
otherwise herein; provided, however, that if an insurance policy is held as
an asset of the Trust, unless specifically directed by the Committee in
writing, the Trustee shall have no power to name a beneficiary of the
policy other than the Trust, to assign the policy (as distinct from
conversion of the policy to a different form) other than to a successor
Trustee, or to loan to any person the proceeds of any borrowing against
such policy.
5.8. Carrying on a Business. Notwithstanding any powers granted to the
Trustee pursuant to this Trust or to applicable law, the Trustee shall not
have any power that could give this Trust the objective of carrying on a
business and dividing the gains therefrom within the meaning of Section
301.7701-2 of the Procedure and Administrative Regulations promulgated
pursuant to the Internal Revenue Code.
Article 6. Investment Funds and Investment Managers
6.1. Investment Funds. Prior to a Change in Control, the Committee or its
agent may direct the Trustee to establish one or more separate investment
accounts within the Trust Fund, each separate account being hereinafter
referred to as an Investment Fund. Except as otherwise provided, the
Trustee shall transfer to each such Investment Fund such portion of the
assets of the Trust Fund as the Committee directs from time to time prior
to a Change in Control, in accordance with the specific provisions of the
Plans.
Prior to a Change in Control, the Committee or its agent may establish, for
the direction of the Trustee, guidelines, objectives, and restrictions
regarding the investment of Trust assets or may direct the Trustee with
respect to the purchase of specific assets within the separate accounts.
The Trustee shall be under no duty to question, and shall not incur any
liability on account of following, any direction of the Committee or its
agent prior to a Change in Control. The Trustee shall be under no duty to
review the investment guidelines, objectives, and restrictions established,
or the specific investment directions given by the Committee for any
Investment Fund. The Trustee shall have no responsibility for investment
elections conveyed to it by the Committee or its agent and shall incur no
liability on account of investing the assets of the Trust Fund in
accordance with such directions.
All interest, dividends, and other income received with respect to, and any
proceeds received from the sale or other disposition of securities or other
property held in, an Investment Fund shall be credited to and reinstated in
such Investment Fund. All expenses of the Trust Fund which are allocable
to a particular Investment Fund shall be so allocated and charged. Prior
to a Change in Control and subject to the provisions of the Plan, the
Committee may direct the Trustee to eliminate an Investment Fund or Funds,
and the Trustee shall thereupon dispose of the assets of such Investment
Fund and reinvest the proceeds thereof in accordance with the directions of
the Committee.
After the occurrence of a Change in Control, the Committee shall have none
of the powers specified above in this Section 6.1.
The Committee shall certify, at the request of the Trustee, the value of
any securities or other property held in any Investment Fund, and such
certification shall be regarded as a direction with regard to such
valuation. The Trustee shall be entitled to conclusively rely upon such
valuation for all purposes under this Trust. The Trustee shall have the
right to request that some part or all of the directions made by the
Committee be in writing and shall assume no liability hereunder for failure
to act pursuant to directions which fail to conform to such request.
6.2. Investment Managers. Prior to a Change in Control the Committee, and
after a Change in Control the Trustee, from time to time, may appoint
and/or dismiss one or more independent Investment Managers, pursuant to a
written investment management agreement describing the powers and duties of
the Investment Manager, to direct the investment and reinvestment of all or
a portion of the Trust Fund or an Investment Fund (hereinafter referred to
as an Investment Account).
The Committee shall furnish the Trustee with written notice of the
appointment of each Investment Manager hereunder, and of the termination of
any such appointment. Such notice shall specify the assets which shall
constitute the Investment Account. The Trustee shall be fully protected in
relying upon the effectiveness of such appointment and the Investment
Manager's continuing satisfaction of the requirements set forth in the
investment management agreement until it receives written notice from the
Committee to the contrary.
The Committee shall provide each Investment Manager appointed with respect
to an Investment Fund with the investment guidelines for that fund and with
any modifications in such investment guidelines made from time to time.
Notwithstanding the fact that an Investment Manager may be appointed with
responsibility for the management of an Investment Fund, the Trustee shall
have the responsibility for the investment of cash balances held by it from
time to time as a part of such Investment Fund in short-term cash
equivalents (such as short-term commercial paper, treasury bills, and
similar securities, and for this purpose, the Trustee may invest in any
appropriate common, commingled, or collective short-term investment fund).
In addition, the Trustee shall have the power, right, and duty to sell any
such short-term investments as may be necessary to carry out the
instructions of the Investment Manager with respect to the investment of
the Investment Fund.
The Trustee shall conclusively presume that each Investment Manager, under
its investment management agreement, is entitled to act, in directing the
investment and reinvestment of the Investment Account for which it is
responsible, in its sole and independent discretion and without limitation,
except for any limitations which from time to time the Committee and the
Trustee agree (in writing) shall modify the scope of such authority. The
Trustee shall have no liability:
(a) For the acts or omissions of any Investment Manager or Managers;
(b) For following directions, including investment directions of an
Investment Manager or the Committee, which are given in accordance with
this Trust; or
(c) For any loss of any kind which may result by reason of errors made by
the Investment Manager or the Committee in the division of the Trust Fund
or Investment Fund into Investment Accounts.
An Investment Manager shall certify, at the request of the Trustee, the
value of any securities or other property held in any Investment Account
managed by such Investment Manager, and such certification shall be
regarded as a direction with regard to such valuation. The Trustee shall
be entitled to conclusively rely upon such valuation for all purposes under
this Trust. The Trustee shall have the right to request that some part or
all of the directions made by an Investment Manager be in writing and shall
assume no liability hereunder for failure to act pursuant to directions
which fail to conform to such request.
Article 7. Resignation or Removal of Trustee
7.1. Resignation or Removal of Trustee. The Trustee may resign at any
time by giving thirty (30) calendar days' prior written notice to the
Committee and the Investment Managers. The Company may remove a Trustee by
giving thirty (30) calendar days' prior written notice to the Trustee and
the Investment Managers provided that such removal shall not become
effective until the time immediately preceding the appointment of a
successor Trustee pursuant to Section 7.2. Also, the Company may not remove
the Trustee for at least two (2) years following the occurrence of a Change
in Control, unless a majority of Participants approve in writing of such
removal.
7.2. Successor Trustee. In the event of the resignation or removal of the
Trustee, a Successor Trustee, which or the parent of which has a market
capitalization of at least $100,000,000, shall be appointed by the Company
in writing as soon as practicable. Written notice of such appointment
shall be given by the Company to the Trustee that is resigning or being
removed (the "Predecessor Trustee") and the Investment Managers.
7.3. Duties of Predecessor Trustee and Successor Trustee. Upon the
appointment of a Successor Trustee, the Predecessor Trustee shall transfer
and deliver the assets of the Trust Fund to such Successor Trustee after
reserving such reasonable amounts as it shall deem necessary to provide for
any expenses, fees, or taxes then or thereafter chargeable against the
Trust Fund. A Predecessor Trustee shall promptly furnish to the Committee
and the Successor Trustee a final account of its administration of the
Trust. A Successor Trustee shall succeed to the right and title of the
Predecessor Trustee in the assets of the Trust Fund and the Predecessor
Trustee shall deliver the property comprising the Trust Fund to the
Successor Trustee together with any instruments of transfer, conveyance,
assignment, and further assurances as the Successor Trustee may reasonably
require. Each Successor Trustee shall have all the powers, rights, and
duties conferred by this Trust as if named the initial Trustee. Subject to
applicable law, no Successor Trustee shall be personally liable for any act
or failure to act of a Predecessor Trustee.
Article 8. Amendment, Division or Termination
8.1. Amendment.
(a) This Trust may not be altered or amended in any substantive respect
(including changing the irrevocable nature of the Trust as provided in
Section 1.2 herein), or revoked or terminated by the Company in whole or in
part, without the express written consent of all Participants; provided,
however, that the Trust may be amended by written agreement between the
Company and the Trustee, as may be necessary, to make nonsubstantive
changes which have no effect upon the irrevocability of the Trust, the
amount of any Participant's benefits, the time of receipt of benefits, the
identity of any recipient of benefits, or the reversion of any assets to
the Company prior to the Trustee's satisfaction of all the Trustee's
obligations hereunder.
(b) The duties and liabilities of the Committee, the Trustee, and each
Investment Manager under this Trust cannot be changed without their written
consent.
8.2. Division of Trust. The Committee may direct a separation of the
Accounts of certain Participants under the Plans and the transfer of such
Accounts to another plan. If such action is directed, the Committee shall
cause to be determined and shall direct the Trustee to set apart that
portion of the assets held under the Trust that is attributable to the
Accounts of such Participants as are designated in such direction by the
Committee. The portion of the assets held under the Trust so set apart
shall, as directed by the Committee, either (a) continue to be held by the
Trustee under such other plan for the benefit of such Participants, or (b)
be transferred directly to the trustee of a separate trust established
under such other plan and held in trust for the benefit of such
Participants pursuant to the terms of such other plan.
8.3. Termination.
(a) All the rights, titles, powers, duties, descriptions, and immunities
imposed on or reserved to the Trustee, the Company, the Committee, the
Board of Directors, and any Investment Managers shall continue in effect
with respect to the Trust until all benefits payable to Participants under
the Plans have been paid and all assets have been distributed by the
Trustee under the Trust and the Plans.
(b) The Trust shall not terminate until the date on which Participants are
no longer entitled to benefits pursuant to the terms of the Plans. Upon
termination of this Trust, the Trustee shall reserve such reasonable
amounts as it may deem necessary to provide for the payment of expenses or
fees then or thereafter chargeable to the Trust Fund. Upon termination of
this Trust, the Trustee shall continue to have such of the powers provided
in the Trust as are necessary or desirable for the orderly liquidation and
distribution of the Trust Fund. Upon termination of the Trust, any assets
remaining in the Trust shall be returned to Company.
(c) Notwithstanding anything in this Trust to the contrary, in the event
that there is a final determination by a court of competent jurisdiction
that one or more Participants are taxable on the amounts in their Accounts
prior to distribution of such amounts to them, the Committee may direct
that the affected Plans be terminated and that the Account balances of all
affected Participants be distributed to them by the Trustee.
Article 9. Liability and Indemnification
9.1. Liabilities Mutually Exclusive. To the extent permitted by law, the
Company, the Trustee, the Committee, the Board of Directors and each member
thereof, and each Investment Manager shall be responsible only for its or
their own acts or omissions.
9.2. Indemnification. The Company hereby agrees to indemnify and hold
harmless the Trustee from and against any losses, damages, liabilities,
claims, costs, or expenses (including reasonable attorneys' fees) which the
Trustee may incur except by reason of the Trustee's negligence or willful
misconduct. In making any distributions and taking any other action
hereunder, the Trustee may rely upon and shall be fully protected in
relying upon any notice, certificate, or other paper or written document
provided by the Company or the Committee and reasonably believed to be
genuine.
9.3. Trustee's Actions Conclusive. Except as otherwise provided by law,
the Trustee's exercise or nonexercise of its powers and discretion in good
faith shall be conclusive on all persons. No one shall be obliged to see
to the application of any money paid or property delivered to the Trustee.
The certificate of the Trustee that it is acting in accordance with this
Trust will fully protect all persons dealing with the Trustee. If there is
a disagreement between the Trustee and anyone as to any act or transaction
reported in any accounting, the Trustee shall have the right to a
settlement of its account by any court having jurisdiction over the Trust.
Article 10. Miscellaneous
10.1. Severability. Any provision of this Trust prohibited by law shall
be ineffective to the extent of any such prohibition, without invalidating
the remaining provisions hereof.
10.2. Nonalienation. Benefits payable to Participants under this Trust
may not be anticipated, assigned (either at law or in equity), alienated,
pledged, encumbered or subjected to attachment, garnishment, levy,
execution, or other legal or equitable process.
10.3. Governing Law. This Trust shall be governed by and construed in
accordance with the laws of the state of Illinois, to the extent not
preempted by federal law.
10.4. Evidence. Evidence required of anyone under this Trust shall be
signed, made, or presented by the proper party or parties and may be by
certificate, affidavit, document, or other information which the person
acting on it considers pertinent and reliable.
10.5. Wavier of Notice. Any notice required under this Trust may be
waived by the person entitled to such notice.
10.6. Counterparts. This Trust and any amendments hereto may be executed
in two or more counterparts, any one of which will be an original without
reference to the others.
10.7. Gender and Number. Except when otherwise indicated by the context,
words denoting the masculine gender shall include the feminine, the
singular shall include the plural, and the plural shall include the
singular.
10.8. Scope of this Trust. This Trust will be binding on all persons
entitled to benefits hereunder and their respective heirs and legal
representatives, and upon the Company, the Committee, the Trustee, and any
Investment Managers and their successors and assigns.
10.9. Statutory References. Any references in this Trust to a section of
the Internal Revenue Code shall include any comparable section or sections
of any future legislation that amends, supplements, or supersedes that
section.
10.10. Merger of Trustee. If the Trustee at any time acting hereunder
shall be merged or consolidated with, or shall sell or transfer
substantially all of its assets and business to another corporation, state
or federal, or shall be in any manner reorganized or reincorporated, then
the corporation resulting therefrom, or the corporation to which such sale
or transfer shall be made, shall be deemed to be the Trustee then acting
hereunder.
10.11. Headings. The headings contained herein are inserted only as a
matter of convenience and for reference and in no way define, limit,
enlarge or describe the scope or intent of the Trust and in no way shall
affect the Trust or the construction of any provision thereof.
10.12. Change in Control. For purposes of this Trust, "Change in Control"
shall be deemed to have occurred upon the first to occur of the following:
(a) 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
(c) of this Section 10.12.
(b) 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;
(c) 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.
For purposes of this definition, the term "Exchange Act" means the
Securities Exchange Act of 1934, as amended from time to time, or any
successor act thereto.
IN WITNESS WHEREOF, the Company and the Trustee have caused this Trust to
be executed on their behalf and their respective seals to be hereunto
affixed and attested by their respective officers thereunto duly
authorized, as of the day and year first above written.
IMC Global Inc. Marshall & Ilsley Trust Company
By: By:
Name: Name:
Its: Its:
Exhibit 10.iii.(p)
EXECUTIVE SEVERANCE AGREEMENT
This Executive Severance Agreement (the "Agreement) is dated as of
__________________, 1999 between __________________ (the "Executive") and
IMC Global Inc., a Delaware corporation (the "Company").
WHEREAS, the Company desires to retain the Executive as its Senior Vice
President, Environment, Health and Safety and the Executive desires to
continue in such position; and
WHEREAS, the Company and the Executive desire to provide appropriate
assurances for the Executive to continue to perform the Executive's duties
and responsibilities thereby promoting the stability of the Company.
NOW, THEREFORE, in consideration of the agreements and covenants contained
herein, the sufficiency of which is acknowledged, the Executive and the
Company hereby 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.
(a) "Base Salary" means the Executive's annualized base salary as adjusted
from time to time.
(b) "Cause" means the Executive (i) grossly neglects her duties,
(ii) engages in misconduct; (iii) breaches a material provision of this
Agreement, including, but not limited to, Section 4; (iv) willfully fails
to cooperate fully with the Company in effecting a smooth transition of the
Executive's duties and responsibilities to such person(s) as may be
designated by the Company. Gross neglect means the willful failure to
perform the essential functions of the Executive's job or the willful
failure to carry out the Company's reasonable directions with respect to
material duties after the Executive is notified in writing by the Company
that the Executive is failing to perform these essential functions or
failing to carry out the reasonable directions of the Company. Such notice
shall specify the functions or directions that the Executive is failing to
perform and what steps need to be taken to cure and shall set forth the
reasonable time frame, which shall be at a minimum 45 days, within which to
cure. "Misconduct" means embezzlement or misappropriation of corporate
funds, or other acts of fraud, dishonesty, or self-dealing; provided,
however, that the Executive shall be given notice and an opportunity within
the next 45 days to explain her position and actions to the Company, which
shall then make a final decision; any significant violation of any
statutory or common law duty of loyalty to the Company; conviction for a
felony; or any significant violation of Company policy or any inappropriate
workplace conduct that seriously disrupts or interferes with Company
operations; provided, however, that if the policy violation or
inappropriate conduct can be cured, then the Executive shall be given
written notice of the policy violation or inappropriate conduct and a
reasonable opportunity to cure, which shall be at a minimum 45 days.
(c) "Company" means IMC Global Inc. and its subsidiaries, as they may exist
from time to time.
(d) "Effective Date" means the date first set forth above.
(e) "Good Reason" for termination of employment by the Executive shall mean
any of the following reasons explained below in paragraphs 1, 2 and 3. In
each case, to constitute a termination for Good Reason entitling the
Executive to Severance Benefits as described in Section 3 of this
Agreement, the following must occur:
(i) Within 90 days after the Executive has or reasonably should have
knowledge that Good Reason exists, the Executive must give the Company
written notice specifying the grounds for her belief that Good Reason
exists;
(ii) The Company shall then have a reasonable opportunity, which shall be
at least 45 days, to cure; and
(iii) If the Company cures the Good Reason within the cure period, then the
Executive shall have no right to terminate employment for Good Reason. If
the Company does not cure the Good Reason within the cure period, then
within 14 days of the completion of the cure period, the Executive may give
written notice of her intent to terminate her employment for Good Reason.
The effective date of such termination for Good Reason shall be two
calendar months after the date of the notice to terminate. At its sole
discretion, the Company shall have the right to accelerate the termination
date by paying the Executive her base pay for the balance of the two-month
notice period.
1. the continued failure by the Company, after notice and a reasonable
opportunity to cure, to (i) maintain for the initial term of this Agreement
the Executive's Base Salary at a rate equal to or higher than the rate in
effect on the Effective Date and for any subsequent term of the Agreement
maintain the Executive's Base Salary at a rate equal to or higher than the
rate in effect on the Effective Date; provided, however, that during any
such subsequent term, 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 corporate officers at a similar level as the Executive on a
proportionate and nondiscriminatory basis; (ii) provide for continued
participation on a comparable basis by the Executive in an annual bonus
plan maintained by the Company in which corporate officers at a similar
level as the Executive participate; (iii) provide for participation in
stock option and other equity incentive plans or programs maintained by the
Company from time to time in which corporate officers at a similar level as
the Executive participate; (iv) provide for participation in all Company
sponsored group or executive medical, dental, life, disability, retirement,
profit-sharing, thrift, non-qualified, deferred compensation, and other
plans maintained by the Company to the same extent as corporate officers at
a similar level as the Executive participate; (v) provide vacation, and
perquisites substantially equivalent to those provided by the Company to
corporate officers at a similar level as the Executive; or (vi) obtain the
express unconditional assumption of this Agreement as required by Section
8, it being understood that nothing contained in this clause alters the
Company's obligations under Section 8 of this Agreement; or
2. a significant adverse change, without the Executive's written consent
that continues after notice and a reasonable opportunity to cure, in
working conditions or status, including but not limited to a significant
adverse change in the nature or scope of the Executive'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 becomes a subsidiary of another entity which
directly results in changes in the nature or scope of the Executive's
authority, powers, functions, duties or responsibilities shall not in and
of itself constitute Good Reason hereunder; or
3. a change, without the Executive's consent, in the Executive's primary
employment location to a location that is more than 50 miles from the
primary location of the Executive's employment as in effect immediately
prior to the Effective Date.
(f) "Severance Event" shall be deemed to have occurred if, and only if,
during the Term of this Agreement, which includes the initial term and any
extension or renewals as provided in Section 2, (i) the Executive's
employment is terminated by the Company other than for Cause or upon the
Executive's death or inability to perform the essential functions of her
position with or without reasonable accommodation or (ii) the Executive
terminates her employment for Good Reason. If, however, the Executive's
employment is terminated whether by the Executive with or without Good
Reason or by the Company with or without Cause in connection with a "change
in control" of the Company, as such phrase is defined in Section 5 of this
Agreement, such termination shall not constitute a Severance Event;
provided, however, the Executive's employment shall not be considered to
have terminated in connection with a change in control of the Company as so
defined unless such change in control has occurred in such manner and such
time as to have made Section 5 of this Agreement effective prior to the
Executive's termination.
2. Term. The term of this Agreement shall commence on the Effective
Date and shall terminate on the second anniversary of the Effective Date;
provided, however, that unless the Company gives written notice of its
intent to terminate the Agreement at least one calendar month prior to the
second anniversary of the Effective Date, this Agreement shall renew
automatically for an additional one year term and shall continue to renew
automatically for additional one year terms unless written notice of the
Company's intent to terminate the Agreement is given to the Executive at
least one calendar month prior to the expiration of the then current term.
3. Severance Benefits. Upon the occurrence of a Severance Event and the
execution of a general release (substantially in the form attached hereto
as Exhibit A) of all claims against the Company and other related entities
or persons without additional consideration, and upon the expiration of
any applicable revocation period, the Executive shall be entitled to
receive the following "Severance Benefits":
(a) An amount equal to the target award for the Executive under the
Company's Management Incentive Compensation Program ("MICP"), or successor
annual bonus plan in effect from time to time, for the fiscal year in which
the Severance Event Occurs reduced pro rata for that portion of the fiscal
year not completed as of the end of the month in which the Severance Event
occurs;
(b) An amount equal to the target award for the Executive under the
Company's 1996 Long-Term Incentive Plan, or successor long-term incentive
plan in effect from time to time, for the fiscal year in which the
Severance Event occurs reduced pro rata for that portion of the fiscal year
not completed as of the end of the month in which the Severance Event
occurs;
(c) An amount equal to two times the Executive's then current Base Salary,
payable in accordance with regular payroll procedures of the Company;
(d) An amount equal to two times the highest annual bonus earned under the
Company's Management Incentive Compensation Program, or successor annual
bonus plan in effect from time to time, during the three consecutive
complete bonus years immediately preceding the date on which the Severance
Event occurs; provided, however, that in the event that the Executive's
employment is terminated prior to the completion of three complete bonus
years, any prorated annual bonus received by the Executive shall be
annualized and the bonus years in which the Executive's employment
commences or terminates shall be deemed to be "complete bonus years" for
purposes of determining the highest annual bonus earned by the Executive
during the three complete bonus years immediately preceding the date on
which the Severance Event occurs;
(e) If the Executive timely and appropriately exercises her right to
continue her coverage under the Company's medical and dental plans as
provided under the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended ("COBRA"), then the Company will pay the employer portion (and
the Executive will pay the employee portion) of such premiums for the
Executive until the earlier of: (i) the expiration of the two year period
following the date of the Severance Event and (ii) the date on which the
Executive is no longer eligible to continue such coverage under clause
4980B(f)(2)(B)(ii), (iii), (iv) or (v) of COBRA. Except as provided in
this paragraph, the Executive's continued participation and coverage under
the group health insurance plans shall be governed by COBRA; and
(f) The Company shall continue the Executive's coverage under its life and
disability insurance policies until the earlier of (i) the expiration of
the two year period following the date of termination and (ii) the date on
which the Executive becomes eligible to participate in and receive similar
benefits under a plan or arrangement sponsored by another employer or under
any Company sponsored retirement plan. Participation shall be on the same
terms and conditions as are applicable to active employees.
Severance Benefits shall be subject to all applicable federal, state and
local deductions and withholdings. Those Severance Benefits described in
paragraphs (a) and (b) shall be paid in a lump sum within 30 days of the
Severance Event. At the option of the Company, the present value of the
Severance Benefits described in paragraphs 3 (c) and (d) above may be paid
in a lump sum at any point during the Severance Benefits period. The
Company's obligation to continue Severance Benefits shall cease immediately
if the Company has or would have had grounds to terminate the Executive's
employment immediately for Cause. In the event the Executive dies or
becomes disabled before all Severance Benefits are paid to her, the
remaining amounts due to her under Sections 3(c) and 3(d) shall be reduced
by the proceeds the Executive's estate receives under any life insurance
policy with respect to which the premiums are paid by the Company or any
benefits the Executive receives under any Company disability policy; but
subject to such reductions, those remaining amounts, if any, shall be paid
to the Executive or her estate. If any family member of the Executive is
receiving medical and/or dental coverage under Section 3(e) at the time of
the Executive's death or disability and such family member constitutes a
"qualified beneficiary" under COBRA, such medical and/or dental coverage
shall continue in accordance with the requirements of COBRA, provided that
such family member pays the full cost of the premium for such coverage.
The Executive understands and acknowledges that the Severance Benefits
constitute her sole benefits upon termination.
4. Exclusivity of Services and Confidential/ Proprietary Information.
(a) Executive acknowledges that during her employment with the Company she
has developed, acquired, and had access to and will develop, acquire and
have access to trade secrets or other proprietary or confidential
information belonging to the Company and that such information gives the
Company a substantial business advantage over others who do not have such
information. Accordingly, the Executive agrees to the following
obligations that she acknowledges to be reasonably designed to protect the
Company's legitimate business interests without unnecessarily or
unreasonably restricting her post-employment opportunities:
(i) during employment with the Company and for a period of two years
following the Executive's termination of employment, regardless of the
reason for the termination or by whom initiated, she will not engage or
assist others in engaging in competition with the Company, directly or
indirectly, whether as an employer, proprietor, partner, stockholder (other
than the holder of less than 5% of the stock of a corporation the
securities of which are traded on a national securities exchange or in the
over-the-counter market), director, officer, employee, consultant, agent,
or otherwise, in the business of producing and distributing potash,
phosphate, animal feed ingredients or salt or any other significant
business in which the Company is engaged or is preparing to engage in at
the time of termination;
(ii) during employment with the Company and for a period of two years
following the Executive's termination of employment, regardless of the
reason for the termination or by whom initiated, she will not solicit, in
competition with the Company, directly or indirectly, any person who is a
client, customer or prospect (as such terms are defined below) (including,
without limitation, purchasers of the Company's products) for the purpose
of performing services and/or providing goods and services of the kind
performed and/or provided by the Company in the business of producing and
distributing potash, phosphate, animal feed ingredients or salt or any
other significant business in which the Company is engaged or is preparing
to engage in at the time of termination;
(iii) during employment with the Company and for a period of two years
following the Executive's termination of employment, regardless of the
reason for the termination or by whom initiated, she will not induce or
persuade or attempt to induce or persuade any employee or agent of the
Company to terminate her or her employment, agency, or other relationship
with the Company in order to enter into any employment agency or other
relationship in competition with the Company;
(iv) the covenants contained in this Section 4(a) shall apply within any
jurisdiction of North America, it being understood that the geographic
scope of the business and strategic plans of the Company extend throughout
North America and are not limited to any particular region thereof and that
such business may be engaged in effectively from any location in such area;
and
(v) as used herein, the terms "client," "customer" and "prospect" shall
be defined as any client, customer or prospect of any business in which the
Company is or has been substantially engaged within the one year period
prior to the Executive's termination of employment (a) to which or to whom
the Executive submitted or assisted in the submission of a presentation or
proposal of any kind on behalf of the Company; (b) with which or with whom
the Executive had substantial contact relating to the business of the
Company; or (c) about which or about whom the Executive acquired
substantial confidential or other information as a result of or in
connection with the Executive's employment, at any time during the one year
period preceding the Executive's termination of employment for any reason.
Notwithstanding the foregoing, if the Company consents in writing, it shall
not be a violation of this Section 4(a) for the Executive to engage in
conduct otherwise prohibited by this Section.
(b) The Executive agrees that she will not at any time during employment
or thereafter for the longest time permitted by applicable law, use,
disclose, or take any action which may result in the use or disclosure of
any trade secrets or other proprietary or confidential information of the
Company, except to the extent that the Company may specifically authorize
in writing. This obligation shall not apply when and to the extent that any
trade secret, proprietary or confidential information of the Company
becomes publicly available other than due to the Executive's act or
omission. In connection with this Section 4, the Executive has executed
and shall abide by the terms of the separate agreement attached hereto as
Exhibit B.
(c) The Executive agrees that upon termination of her employment she will
immediately surrender and return to the Company all records and other
documents obtained by her, entrusted to her, or otherwise in her possession
or control during the course of her employment by the Company, together
with all copies thereof; provided, however, that subject to Company review
and authorization, the Executive may retain copies of such documents as
necessary for the Executive's personal records for federal income tax
purposes.
(d) The Executive acknowledges that the provisions contained in this
Section 4 are reasonable and necessary because of the substantial harm that
would be caused to the Company by the Executive engaging in any of the
activities prohibited or restricted herein. Nevertheless, it is the intent
and understanding of each party hereto that if, in any action before any
court, agency or other tribunal legally empowered to enforce the covenants
contained in this Section 4, any term, restriction, covenant or promise
contained therein is found to be unenforceable due to unreasonableness or
due to any other reason, then such term, restriction, covenant or promise
shall be deemed modified to the extent necessary to make it enforceable by
such court or agency.
(e) The Executive acknowledges that her breach of this Section 4 will
result in immediate and irreparable harm to the Company's business
interests, for which damages cannot be calculated easily and for which
damages are an inadequate full remedy. Accordingly, and without limiting
the right of the Company to pursue all other legal or equitable remedies
available for the violation by the Executive of the covenants contained in
this Section 4, it is expressly agreed that remedies other than injunctive
relief cannot fully compensate the Company for the irreparable injury that
the Company could suffer due to any such violation, threatened violation or
continuing violation and that the Company shall be entitled to injunctive
relief, without the necessity of proving actual monetary loss, to prevent
any such violation, threatened violation or continuing violation thereof.
5. Change in Control.
(a) Effective Date. For purposes of this Section 5, the term "Effective
Date" shall mean the date on which a Change in Control of the Company (as
defined in Section 5(i)) occurs. This Section 5 shall not become
effective, and the Company shall have no obligation hereunder, if the
employment of the Executive with the Company shall terminate prior to a
Change in Control of the Company. If there is a Change in Control and this
Section becomes effective, then this Section shall govern the terms and
conditions of the Executive's employment and termination thereof and the
provisions of Sections 1, 2, 3, and 4 of this Agreement shall no longer be
effective.
(b) Right to Change in Control Severance Benefits. The Executive shall be
entitled to receive from the Company Change in Control Severance Benefits
as described in Section 5(g) herein, if during the term of this Agreement
there has been a Change in Control of the Company and there is a
Termination (as defined in Section 5(f)) prior to the expiration of the
Employment Term (as defined in Section 5(c)).
(c) Employment Term. For purposes of this Section 5, the term "Employment
Term" shall mean the period commencing on the Effective Date of this
Section 5 and ending on the earlier to occur of (1) the last day of the
month in which occurs the third anniversary of the Effective Date of this
Section 5 or (2) the last day of the month in which the Executive attains
mandatory retirement age pursuant to the terms of a mandatory retirement
plan of the Company as such were in effect and applicable to the Executive
immediately prior to the Effective Date of this Section 5.
(d) Employment. The Company hereby agrees to continue the Executive in its
employ, and the Executive hereby agrees to remain in the employ of the
Company, until the expiration of the Employment Term. During the
Employment Term, the Executive shall exercise such position and authority
and perform such responsibilities as are commensurate with the position and
authority being exercised and duties being performed by the Executive
immediately prior to the Effective Date of this Section 5, which services
shall be performed at the location where the Executive was employed
immediately prior to the Effective Date of this Section 5 or at such other
location as the Company may reasonably require; provided, that the
Executive shall not be required to accept another location that she deems
unreasonable in the light of her personal circumstances.
(e) Compensation and Benefits. During the Employment Term, the Executive
shall receive the following compensation and benefits:
1. She shall receive an annual base salary which is not less than her Base
Salary immediately prior to the Effective Date of this Section 5, with the
opportunity for increases, from time to time thereafter, which are in
accordance with the Company's regular executive compensation practices.
2. She shall be eligible to participate on a reasonable basis, and to
continue her existing participation, in annual incentive, stock option,
restricted stock, long-term incentive performance and any other
compensation plan which provides opportunities to receive compensation in
addition to her Base Salary which is the greater of (i) the opportunities
provided by the Company for executives with comparable duties or (ii) the
opportunities under any such plans in which she was participating
immediately prior to the Effective Date of this Section 5.
3. She shall be entitled to receive and participate in salaried employee
benefits (including, but not limited to, medical, life and accident
insurance, investment, stock ownership and disability benefits) and
perquisites which are the greater of (i) the employee benefits and
perquisites provided by the Company to executives with comparable duties or
(ii) the employee benefits and perquisites to which she was entitled or in
which she participated immediately prior to the Effective Date of this
Section 5.
4. She shall be entitled to continue to accrue credited service for
retirement benefits and to be entitled to receive retirement benefits under
and pursuant to the terms of the Company's qualified retirement plan for
salaried employees, the Company's supplemental executive retirement plan,
and any successor or other retirement plan or agreement in effect on the
Effective Date of this Section 5 in respect of her retirement, whether or
not a qualified plan or agreement, so that her aggregate monthly retirement
benefit from all such plans and agreements (regardless when she begins to
receive such benefit) will be not less than it would be had all such plans
and agreements in effect immediately prior to the Effective Date of this
Section 5 continued to be in effect without change until and after she
begins to receive such benefit.
(f) Termination. The term "Termination" shall mean termination, prior to
the expiration of the Employment Term, of the employment of the Executive
with the Company for any reason other than death, disability (as described
below), cause (as described below), or voluntary resignation (as described
below).
1. The term "disability" means physical or mental incapacity qualifying the
Executive for long-term disability under the Company's long-term disability
plan.
2. The term "cause" means (i) the willful and continued failure of the
Executive substantially to perform her duties with the Company (other than
any failure due to physical or mental incapacity) after a demand for
substantial performance is delivered to her by the Board of Directors which
specifically identifies the manner in which the Board believes she has not
substantially performed her duties or (ii) willful misconduct materially
and demonstrably injurious to the Company. No act or failure to act by the
Executive shall be considered "willful" unless done or omitted to be done
by her not in good faith and without reasonable belief that her action or
omission was in the best interest of the Company. The unwillingness of the
Executive to accept any or all of a change in the nature or scope of her
position, authorities or duties, a reduction in her total compensation or
benefits, a relocation that she deems unreasonable in light of her personal
circumstances, or other action by or request of the Company in respect of
her position, authority or responsibility that she reasonably deems to be
contrary to this Agreement, may not be considered by the Board of Directors
to be a failure to perform or misconduct by the Executive. Notwithstanding
the foregoing, the Executive shall not be deemed to have been terminated
for cause for purposes of this Section 5 unless and until there shall have
been delivered to her a copy of a resolution, duly adopted by a vote of
three-quarters of the entire Board of Directors of the Company at a meeting
of the Board called and held (after reasonable notice to the Executive and
an opportunity for the Executive and her counsel to be heard before the
Board) for the purpose of considering whether the Executive has been guilty
of such a willful failure to perform or such willful misconduct as
justifies termination for cause hereunder, finding that in the good faith
opinion of the Board the Executive has been guilty thereof and specifying
the particulars thereof.
3. The resignation of the Executive shall be deemed "voluntary" if it is
for any reason other than one or more of the following:
(a) The Executive's resignation or retirement (other than mandatory
retirement, as aforesaid) is requested by the Company other than for cause;
(b) Any significant change in the nature or scope of the Executive's
position, authorities or duties from those described in Section 5(d) of
this Agreement;
(c) Any reduction in her total compensation or benefits from that provided
in Section 5(e);
(d) The breach by the Company of any other provision of this Section 5; or
(e) The reasonable determination by the Executive that, as a result of a
Change in Control of the Company and a change in circumstances in her
position, she is unable to exercise the authorities and responsibility
attached to her position and contemplated by Section 5(d) of this
Agreement.
4. Termination that entitles the Executive to the payments and benefits
provided in Section 5(g) shall not be deemed or treated by the Company as
the termination of the Executive's employment or the forfeiture of her
participation, award or eligibility for the purpose of any plan, practice
or agreement of the Company referred to in Section 5(e).
(g) Change in Control Severance Payments. In the event of and within 30
days following Termination, the Company shall pay to the Executive the
following benefits (collectively, "Change in Control Severance Payments"):
1. Her Base Salary and all other benefits due her as if she had remained an
employee pursuant to this Section 5 through the remainder of the month in
which Termination occurs, less applicable withholding taxes and other
authorized payroll deductions;
2. An amount equal to the target award for the Executive under the
Company's annual bonus plan for the fiscal year in which Termination
occurs, reduced pro rata for that portion of the fiscal year not completed
as of the end of the month in which Termination occurs; provided, however,
that if the Executive has deferred her award for such year under the plan,
the payment due the Executive under this Paragraph (2) shall be paid in
accordance with the terms of the deferral;
3. An amount equal to the target award for the Executive under the
Company's long-term incentive plan for the fiscal year in which Termination
occurs, reduced pro rata for that portion of the fiscal year not completed
as of the end of the month in which Termination occurs;
4. A lump sum severance allowance in an amount which is equal to the sum of
the amounts determined in accordance with the following subparagraphs (a)
and (b):
(a) an amount equal to three times the Executive's Base Salary at the rate
in effect immediately prior to Termination; and
(b) an amount equal to three times the highest annual bonus earned under
the Company's Management Incentive Compensation Program, or successor
annual bonus plan in effect from time to time, during the three consecutive
complete bonus years immediately prior to Termination; provided, however,
that in the event that the Executive's employment is terminated prior to
the completion of three complete bonus years, any prorated annual bonus
received by the Executive shall be annualized and the bonus years in which
the Executive's employment commences or terminates shall be deemed to be
"complete bonus years" for purposes of determining the highest annual bonus
earned by the Executive during the three complete bonus years immediately
prior to Termination.
(h) Non-Competition and Confidentiality. The Executive agrees that:
1. There shall be no obligation on the part of the Company to provide any
further Change in Control Severance Benefits (other than payments or
benefits already earned or accrued) described in Section 5(g) if, when and
so long as the Executive shall be employed by or otherwise engage in any
business which is competitive with any business of the Company or of any of
its subsidiaries, as such business existed as of the Effective Date of this
Section 5, in which the Executive was engaged during her employment, and if
such employment or activity is likely to cause serious damage to the
Company or any of its subsidiaries; and
2. during and after the Employment Term, she will not divulge or
appropriate to her own use or the use of others any secret or confidential
information pertaining to the businesses of the Company or any of its
subsidiaries obtained during her employment by the Company, it being
understood that this obligation shall not apply when and to the extent any
of such information becomes publicly known or available other than because
of her act or omission.
(i) Definition of "Change in Control". "Change in Control" of the Company
means, and shall be deemed to have occurred upon, the first to occur of
any of the following events:
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 Securities Exchange Act of 1934, as amended (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 5(i);
2. Individuals who, as of the effective date of this Section 5, 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 effective date of
this Section 5, 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.
(j) Excise Tax Payments. If any of the payments to be made under Section 5
or any payments which are construed as being made under Section 5, will be
subject to the tax (the "Excise Tax") imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code") (or any similar tax
that may hereafter be imposed), the Company shall pay to the Executive at
the time specified in Paragraph 1 below an additional amount (the "Gross-up
Payment") such that the net amount retained by the Executive, after
deduction of any Excise Tax on the Total Payments (as hereinafter defined)
and any federal, state and local income tax and Excise Tax upon the Gross-
up Payment provided for by this paragraph, but before deduction for any
federal, state or local income tax on the Change in Control Severance
Payments, shall be equal to the Total Payments.
1. For purposes of determining whether any of the Change in Control
Severance Payments will be subject to the Excise Tax and the amount of such
Excise Tax, (i) any other payments or benefits received or to be received
by the Executive in connection with a Change in Control (as that term is
defined in Section 5(i)) of the Company or the Executive's termination of
employment (whether pursuant to the terms of this Agreement or any other
plan, arrangement or agreement with the Company, any person whose actions
result in a Change of Control of the Company or any person affiliated with
the Company or such person) (which, together with the Change in Control
Severance Payments, shall constitute the "Total Payments") shall be treated
as "parachute payments" within the meaning of Section 280G(b)(2) of the
Code, and all "excess parachute payments" within the meaning of Section
280G(b)(1) of the Code shall be treated as subject to the Excise Tax,
unless in the opinion of tax counsel selected by the Company's independent
auditors such other payments or benefits (in whole or in part) do not
constitute parachute payments, or such excess parachute payments (in whole
or in part) represent reasonable compensation for services actually
rendered within the meaning of Section 280G(b)(4) of the Code in excess of
the base amount within the meaning of Section 280G(b)(3) of the Code or are
otherwise not subject to the Excise Tax, (ii) the amount of the Total
Payments which shall be treated as subject to the Excise Tax shall be equal
to the lesser of (A) the total amount of the Total Payments or (B) the
amount of excess parachute payments within the meaning of Section
280G(b)(1) of the Code (after applying clause (i) above), and (iii) the
value of any non-cash benefits or any deferred payment or benefit shall be
determined by the Company's independent auditors in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code.
2. For purposes of determining the amount of the Gross-up Payment, the
Executive shall be deemed to pay federal income taxes at the highest
marginal rate of federal income taxation for the calendar year in which the
Gross-up Payment is to be made and the applicable state and local income
taxes at the highest marginal rate of taxation for the calendar year in
which the Gross-up Payment is to be made, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state
and local taxes. In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account hereunder at the
time the Gross-up Payment is made, the Executive shall repay to the Company
at the time that the amount of such reduction in Excise Tax is finally
determined the portion of the Gross-up Payment attributable to such
reduction (plus the portion of the Gross-up Payment attributable to the
Excise Tax and federal and state and local income tax imposed on the
portion of the Gross-up Payment being repaid by the Executive if such
repayment results in a reduction in Excise Tax and/or a federal and state
and local income tax deduction), plus interest on the amount of such
repayment at the rate provided in Section 1274(b)(2)(B) of the Code. In
the event that the Excise Tax is determined to exceed the amount taken into
account hereunder at the time the Gross-up Payment is made (including by
reason of any payment, the existence or amount of which cannot be
determined at the time of the Gross-up Payment), the Company shall make an
additional Gross-up Payment in respect of such excess (plus any interest
payable with respect of such excess) at the time that the amount of such
excess is finally determined.
3. The Gross-up Payment or portion thereof provided for in Paragraphs 1and
2 above shall be paid not later than the thirtieth day following payment of
any amounts under this Section 5; provided, however, that if the amount of
such Gross-up Payment or portion thereof cannot be finally determined on or
before such day, the Company shall pay to the Executive on such day an
estimate, as determined in good faith by the Company, of the minimum amount
of such payments and shall pay the remainder of such payments (together
with interest at the rate provided in Section 1274(b)(2)(B) of the Code) as
soon as the amount thereof can be determined, but in no event later than
the forty-fifth day after payment of any amounts under this Section 5.
4. In the event that the amount of the estimated payments exceeds the
amount subsequently determined to have been due, such excess shall
constitute a loan by the Company to the Executive, payable on the fifth day
after demand by the Company (together with interest at the rate provided in
Section 1274(b)(2)(B) of the Code).
5. All Gross-up Payments will be paid to the Executive from the Trust
established under the Trust Agreement between IMC Global Inc. and Wachovia
Bank Trust Company, N.A., which has been established to protect payment
obligations of the Company under this Agreement. Any repayment due the
Company from the Executive as a result of the circumstances described in
the last sentence of the preceding paragraph shall be made by the Executive
after the Executive has received such excess amounts from the Trust.
6. If there are any changes in the Code which otherwise would or might
affect the workings of this Section 5(j), then Section 5(j) shall be deemed
to be revised in such a way as to provide to the Executive the maximum
benefits she would be entitled to receive under the current language of
Section 5(j) and the Code.
(k) Enforcement Costs. The Company is aware that upon the occurrence of a
Change in Control, the Board of Directors or a stockholder of the Company
may then cause or attempt to cause the Company to refuse to comply with its
obligations under this Section 5, or may cause or attempt to cause the
Company to institute, or may institute, litigation seeking to have this
Section 5 declared unenforceable, or may take, or attempt to take, other
action to deny the Executive the benefits intended under this Section 5.
In these circumstances, the purpose of this Section 5 could be frustrated.
It is the intent of the parties that the Executive not be required to incur
the legal fees and expenses associated with the protection or enforcement
of her rights under this Section 5 by litigation or other legal action
because such costs would substantially detract from the benefits intended
to be extended to the Executive hereunder, nor be bound to negotiate any
settlement of her rights hereunder under threat of incurring such costs.
Accordingly, if at any time after the Effective Date of this Section 5, it
should appear to the Executive that the Company is or has acted contrary to
or is failing or has failed to comply with any of its obligations under
this Section 5 for the reason that it regards this Section 5 to be void or
unenforceable or for any other reason, or that the Company has purported to
terminate her employment for cause or is in the course of doing so in
either case contrary to this Section 5, or in the event that the Company or
any other person takes any action to declare this Section 5 void or
unenforceable, or institutes any litigation or other legal action designed
to deny, diminish or to recover from the Executive the benefits provided or
intended to be provided to her hereunder, and the Executive has acted in
good faith to perform her obligations under this Section 5, the Company
irrevocably authorizes the Executive from time to time to retain counsel of
her choice at the expense of the Company to represent her in connection
with the protection and enforcement of her rights hereunder, including
without limitation representation in connection with termination of her
employment contrary to this Section 5 or with the initiation or defense of
any litigation or other legal action, whether by or against the Executive
or the Company or any director, officer, stockholder or other person
affiliated with the Company, in any jurisdiction. The reasonable fees and
expenses of counsel selected from time to time by the Executive as
hereinabove provided shall be paid or reimbursed to the Executive by the
Company on a regular, periodic basis upon presentation by the Executive of
a statement or statements prepared by such counsel in accordance with its
customary practices, up to a maximum aggregate amount of $200,000. Counsel
so retained by the Executive may be counsel representing other officers or
key executives of the Company in connection with the protection and
enforcement of their rights under similar agreements between them and the
Company, and, unless in her sole judgement use of common counsel could be
prejudicial to her or would not be likely to reduce the fees and expenses
chargeable hereunder to the Company, the Executive agrees to use her best
efforts to agree with such other officers or executives to retain common
counsel.
(l) Successors and Assigns. Except as otherwise provided herein, this
Section 5 shall be binding upon and inure to the benefit of the Executive
and his legal representatives, heirs, and assigns; provided, however, that
in the event of the Executive's death prior to payment or distribution of
all amounts, distributions, and benefits due him under this Section 5, each
such unpaid amount and distribution shall be paid in accordance with this
Section 5 to the person or persons designated by the Executive to the
company to receive such payment or distribution and in the event the
Executive has made no applicable designation, to the person or persons
designated by the Executive as the beneficiary or beneficiaries of proceeds
of life insurance payable in the event of the Executive's death under the
Company's group life insurance plan.
6. Dispute Resolution. The Executive and the Company shall not initiate
arbitration or other legal proceeding (except for any claim under Section
4) against the other party or against any directors, officers, employees,
agents or representatives of the Company or its affiliates, relating in any
way to this Agreement, to the Executive's retention by the Company, to the
termination of this Agreement or of such retention, or to any or all other
claims for employment or other discrimination under any federal, state or
local law, regulation, ordinance or executive order until 30 days after the
party against whom the claim(s) is made ("respondent") receives written
notice from the claiming party of the specific nature of any purported
claim(s) and, to the extent known or reasonably anticipated, the amount of
any purported damages attributable to each such claim(s). The Executive
and the Company further agree that if respondent submits the claiming
party's claim(s) to the CPR Institute for Dispute Resolution or
JAMS/Endispute for nonbinding mediation prior to the expiration of such 30
day period, the claiming party may not institute arbitration or other legal
proceedings against respondent until the earlier of: (a) the completion of
good-faith mediation efforts or (b) 90 days after the date on which the
respondent received written notice of the claimant's claim(s). The
mediation shall be conducted in Chicago, Illinois or such other location to
which the parties may agree. The Company agrees to pay the cost of the
mediator's services.
Subject to the foregoing, the Executive and the Company agree that any and
all claims or disputes relating to this Agreement, to the termination of
this Agreement or to such retention, to the Executive's termination of
employment or to her retention, that one party or that the Executive may
have against any directors, officers, employees, agents, or representatives
of the Company or its affiliates, including without limitation, claims for
employment or other discrimination under any federal, state, or local law,
regulation, ordinance, or executive order, shall be submitted for
arbitration and resolved by an arbitrator selected in accordance with the
rules and procedures of the CPR Institute for Dispute Resolution or
JAMS/Endispute, it being understood and agreed that no more than one
arbitrator shall be retained for any arbitration conducted hereunder. The
arbitration proceeding shall be conducted in Chicago, Illinois or such
other location to which the parties may agree. If either party pursues a
claim and such claim results in an arbitrator's decision or award, both
parties agree to accept such decision or award as final and binding, and
judgment upon the decision or award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. The parties shall share
the cost of the arbitrator's services. Notwithstanding any of the
foregoing provisions of this Section, the Company may in its discretion
immediately pursue any and all available legal and equitable remedies for
the Executive's breach, threatened breach or continuing breach of any
provision of Section 4 in any court, agency, or other tribunal of competent
jurisdiction.
7. Entire Agreement, Amendment, Waiver. This Agreement constitutes the
entire agreement between the Company and the Executive with respect to the
subject matter hereof. This Agreement supersedes any prior agreements made
between the parties with respect to the subject matter hereof. The parties
may not amend this Agreement except by written instrument signed by both
parties. No waiver by either party at any time of any breach by the other
of any provision of this Agreement shall be deemed a waiver of similar or
dissimilar provision at the same time or any prior or subsequent time.
8. Assumption. This Agreement shall inure to benefit of, and be binding
upon, the successors and assignees of the Company. The Company shall
require any successor or assignee, whether direct or indirect, by purchase,
merger, consolidation or otherwise, to all or substantially all of the
business or assets of the Company, expressly and unconditionally to assume
and agree to perform the Company's obligations under this Agreement.
9. Notice. Any notice, request, or other communication required or
permitted to be given hereunder shall be made to the addresses hereinafter
set forth or to any other address designated by either of the parties
hereto by notice similarly given:
If to the Company: If to the Executive:
Senior Vice President, Human Resources
IMC Global Inc.
2100 Sanders Road
Northbrook, IL 60062
All such notices, requests or other communications shall be sufficient if
made in writing either (i) by personal delivery to the party entitled
thereto, (ii) by registered or certified mail, return receipt requested or
(iii) by express courier service. The notice, request or other
communication shall be deemed effective upon personal delivery or upon
actual or constructive receipt by the party entitled thereto if by
registered or certified mail or express courier service; provided, however,
that a notice, request or other communication received after regular
business hours shall be deemed to be received on the next succeeding
business day of the Company.
10. Severability. The provisions of this Agreement shall be regarded as
durable, and if any provision or portion thereof is declared invalid or
unenforceable by a court of competent jurisdiction, the validity and
enforceability of the remainder and applicability thereof shall not be
affected.
11. Applicable Law. This Agreement shall at all times be governed by and
construed, interpreted and enforced in accordance with the internal laws
(as opposed to the conflict of laws provisions) of the State of Illinois.
IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by
its duly authorized officer and the Executive has signed this Agreement as
of the day and year first above written.
IMC GLOBAL INC.
By:________________________ __________________________
Title: Chairman of the Board of
Directors and Chief Executive
Officer
EXHIBIT A
WAIVER AND RELEASE OF CLAIMS
In exchange for the Severance Benefits described in the attached
Executive Severance Agreement (the "Agreement"), which I acknowledge I
would not otherwise be entitled to receive, I freely and voluntarily
agree to this WAIVER AND RELEASE OF CLAIMS ("WAIVER"):
1. My employment with IMC Global Inc. will terminate effective
_______________________.
2. I acknowledge that the Severance Benefits described in the
attached Agreement are the sole payments to which I am entitled and
that I am not entitled to any additional severance payments.
3. I, and anyone claiming through me, hereby waive and release any
and all claims that I may have ever had or that I may now have against
IMC Global Inc., its parents, divisions, partnerships, affiliates,
subsidiaries, and other related entities and their successors and
assigns, and past, present and future officers, directors, employees,
agents and attorneys of each of them in their individual or official
capacity (hereinafter collectively referred to as "Released Parties").
Among the claims that I am waiving are claims relating to my employment
or termination of employment, including, but not limited to, claims of
discrimination in employment brought under the Age Discrimination in
Employment Act, Title VII of the Civil Rights Act of 1964, the
Americans With Disabilities Act or other federal, state or local
employment discrimination, employment, wage laws, ordinances or
regulations or any common law or statutory claims of wrongful discharge
or breach of contract or any other common law or statutory claims;
whether for damages, lost wages or for any other relief or remedy.
4. I understand and agree that this WAIVER will be binding on me and
my heirs, administrators and assigns. I acknowledge that I have not
assigned any claims or filed or initiated any legal proceedings against
any of the Released Parties.
5. Except as may be required by law, I agree that I will not disclose
the existence or terms of this WAIVER to anyone except my accountant,
attorney or spouse, each of whom shall also be bound by this
confidentiality provision.
6. I understand that I have twenty-one (21) days to consider whether
to sign this WAIVER and return it to B. Russell Lockridge, Senior Vice
President, Human Resources of IMC Global Inc. IMC Global Inc. hereby
advises me of my right to consult with an attorney before signing the
WAIVER and I acknowledge that I have had an opportunity to consult with
an attorney and have either held such consultation or have determined
not to consult with an attorney.
7. I understand that I may revoke my acceptance of this WAIVER by
delivering notice of my revocation to B. Russell Lockridge within seven
(7) days of the day I sign the WAIVER. If I do not revoke my
acceptance of this WAIVER within seven days of the day I sign it, it
will be legally binding and enforceable.
IMC GLOBAL INC. AGREED AND ACCEPTED:
By: __________________________ ___________________________
Title: ________________________ ___________________________
Print Name
Date:_________________________ Date:_______________________
Exhibit 10.iii.(q)
EMPLOYMENT AGREEMENT
THIS AGREEMENT between IMC Global Inc., a Delaware corporation (the
"Company"), and E. Paul Dunn (the "Executive"), is made as of the 13th
day of July, 1999, to become effective as provided below.
WHEREAS, the Company wishes to attract and retain well-qualified
executives and key personnel and to assure itself of the continuity of
its management.;
WHEREAS, the Executive is an officer or other key executive of the
Company with significant management responsibilities in the conduct of
its business;
WHEREAS, the Company recognizes that the Executive is a valuable
resource of the Company and the Company desires to be assured of the
continued services of the Executive;
WHEREAS, the Company is concerned that in the event of a possible or
threatened change in control of the Company, uncertainties necessarily
arise and the Executive may have concerns about the continuation of his
employment status and responsibilities and may be approached by others
offering competing employment opportunities, and the Company therefore
desires to provide the Executive assurance as to the continuation of
his employment status and responsibilities in such event;
WHEREAS, the Company further desires to assure that, if a possible or
threatened change in control should arise and the Executive should be
involved in deliberations or negotiations in connection therewith, the
Executive would be in a secure position to consider and participate in
such transaction as objectively as possible in the best interests of
the Company and to this end desires to protect the Executive from any
direct or implied threat to his financial well being;
WHEREAS, the Executive is willing to continue to serve as such but
desires assurance that in the event of such a change in control he will
continue to have the employment status and responsibilities he could
reasonably expect absent such event and that in the event this turns
out not to be the case he will have fair and reasonable severance
protection on the basis of his service to the Company to that time.
NOW, THEREFORE, it is hereby agreed by and between the parties as
follows:
1. Operation of Agreement. The "effective date of this
Agreement" shall be the date on which a change in control of the
Company (as described in Section 2) occurs. This Agreement shall not
become effective, and the Company shall have no obligation hereunder,
if the employment of the Executive with the Company shall terminate
prior to a change in control of the Company. The Executive shall have
no right on account of this Agreement to be retained in the employ of
the Company or to be retained in any particular position in the
Company, unless and until a change in control has occurred.
2. Change in Control. The term "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.
(a) 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 Securities Exchange Act of 1934, as
amended (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 (c) of this definition;
(b) 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;
(c) 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 Corporate 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 (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
(d) approval by the stockholders of the Company of a plan of
complete liquidation or dissolution of the Company.
3. Employment. The Company hereby agrees to continue the
Executive in its employ, and the Executive hereby agrees to remain in
the employ of the Company, for the period commencing on the effective
date of this Agreement and ending on the earlier to occur of (a) the
last day of the month in which occurs the third anniversary of the
effective date of this Agreement or (b) the last day of the month in
which the Executive attains mandatory retirement age pursuant to the
terms of a mandatory retirement plan of the Company as such were in
effect and applicable to the Executive immediately prior to the
effective date of this Agreement (the "Employment Period"). During the
Employment Period, the Executive shall exercise such position and
authority and perform such responsibilities as are commensurate with
the position and authority being exercised and duties being performed
by the Executive immediately prior to the effective date of this
Agreement, which services shall be performed at the location where the
Executive was employed immediately prior to the effective date of this
Agreement or at such other location as the Company may reasonably
require; provided that the Executive shall not be required to accept
any such other location that he deems unreasonable in the light of his
personal circumstances.
4. Compensation and Benefits. During the Employment Period, the
Executive shall receive the following compensation and benefits:
(a) He shall receive an annual base salary which is not less
than his annual base salary immediately prior to the effective
date of this Agreement, with the opportunity for increases, from
time to time thereafter which are in accordance with the
Company's regular executive compensation practices.
(b) He shall be eligible to participate on a reasonable basis,
and to continue his existing participation, in annual incentive,
stock option, restricted stock, long-term incentive performance
plans, and any other incentive compensation plan which provides
opportunities to receive compensation in addition to his annual
base salary, which are the greater of (i) the opportunities
provided by the Company for executives with comparable duties or
(ii) the opportunities under any such plans in which he was
participating immediately prior to the effective date of this
Agreement.
(c) He shall be entitled to receive and participate in salaried
employee benefits (including, but not limited to, medical, life
and accident insurance, investment, stock ownership, and
disability benefits) and perquisites which are the greater of
(i) the employee benefits and perquisites provided by the
Company to executives with comparable duties or (ii) the
employee benefits and perquisites to which he was entitled or in
which he participated immediately prior to the effective date of
this Agreement.
(d) He shall be entitled to continue to receive service credit
for retirement benefits and to be entitled to receive retirement
benefits under and pursuant to the terms of the Company's
qualified retirement plan for salaried employees and any
successor or other retirement plan or agreement in effect on the
effective date of this Agreement in respect of his retirement,
whether or not a qualified plan or agreement, so that his
aggregate retirement benefit from all such plans and agreements
(regardless of when he begins to receive such benefit) will be
not less than it would be had all such plans and agreements in
effect immediately prior to the effective date of this Agreement
continued to be in effect without change until and after he
begins to receive such benefit.
5. Termination. The term "Termination" shall mean termination,
prior to the expiration of the Employment Period, of the employment of
the Executive with the Company for any reason other than death,
disability (as described below), cause (as described below), or
voluntary resignation (as described below).
(a) The term "disability" means physical or mental incapacity
qualifying the Executive for long-term disability under the
Company's long-term disability plan.
(b) The term "cause" means (i) the willful and continued failure
of the Executive substantially to perform his duties with the
Company (other than any failure due to physical or mental
incapacity) after a demand for substantial performance is
delivered to him by the Board of Directors which specifically
identifies the manner in which the Board believes he has not
substantially performed his duties or (ii) willful misconduct
materially and demonstrably injurious to the Company. No act or
failure to act by the Executive shall be considered "willful"
unless done or omitted to be done by him not in good faith and
without reasonable belief that his action or omission was in the
best interest of the Company. The unwillingness of the Executive
to accept any or all of a change in the nature or scope of his
position, authorities or duties, a reduction in his total
compensation or benefits, a relocation that he deems unreasonable
in light of his personal circumstances, or other action by or
request of the Company in respect of his position, authority, or
responsibility that he reasonably deems to be contrary to this
Agreement, may not be considered by the Board of Directors to be
a failure to perform or misconduct by the Executive.
Notwithstanding the foregoing, the Executive shall not be deemed
to have been terminated for cause for purposes of this Agreement
unless and until there shall have been delivered to him a copy of
a resolution, duly adopted by a vote of three-quarters of the
entire Board of Directors of the Company at a meeting of the
Board called and held (after reasonable notice to the Executive
and an opportunity for the Executive and his counsel to be heard
before the Board) for the purpose of considering whether the
Executive has been guilty of such a willful failure to perform or
such willful misconduct as justifies termination for cause
hereunder, finding that in the good faith opinion of the Board
the Executive has been guilty thereof and specifying the
particulars thereof.
(c) The resignation of the Executive shall be deemed "voluntary"
if it is for any reason other than one or more of the following:
(i) The Executive's resignation or retirement (other
than mandatory retirement, as aforesaid) is requested by
the Company other than for cause;
(ii) Any significant change in the nature or scope of
the Executive's position, authorities or duties from those
described in Section 3;
(iii) Any reduction in his total compensation or
benefits from that provided in Section 4;
(iv) The breach by the Company of any other provision
of this Agreement; or
(v) The reasonable determination by the Executive
that, as a result of a change in control of the Company and
a change in circumstances thereafter significantly
affecting his position, he is unable to exercise the
authorities and responsibilities attached to his position
and contemplated by Section 3.
(d) Termination that entitles the Executive to the payments and
benefits provided in Section 6 shall not be deemed or treated by
the Company as the termination of the Executive's employment or
the forfeiture of his participation, award, or eligibility for
the purpose of any plan, practice or agreement of the Company
referred to in Section 4.
6. Termination Payments and Benefits. In the event of and
within 30 days following Termination, the Company shall pay to the
Executive:
(a) His base salary and all other benefits due him as if he had
remained an employee pursuant to this Agreement through the
remainder of the month in which Termination occurs less
applicable withholding taxes and other authorized payroll
deductions;
(b) An amount equal to the target award for the Executive under
the Company's annual bonus plan for the fiscal year in which
Termination occurs, reduced pro rata for that portion of the
fiscal year not completed as of the end of the month in which
Termination occurs, provided that if the Executive has deferred
his award for such year under the Company's deferred compensation
plan, the payment due the Executive under this Paragraph (b)
shall be paid in accordance with the terms of the deferral;
(c) An amount equal to the target award for the Executive under
the Company's long-term incentive plan for the year in which
Termination occurs, reduced pro rata for that portion of the
fiscal year not completed as of the end of the month in which
Termination occurs; and
(d) A lump sum severance allowance in an amount which is equal
to the sum of the amounts determined in accordance with the
following subparagraphs (i) and (ii):
(i) An amount equivalent to three times his annual
base salary at the rate in effect immediately prior to
Termination; and
(ii) An amount equivalent to three times the highest
annual bonus earned under the Company's Management
Incentive Compensation Program, or successor bonus plan in
effect from time to time, during the three consecutive
complete bonus years immediately prior to Termination;
provided, however, that in the event that the Executive's
employment is terminated prior to the completion of three
complete bonus years, any prorated annual bonus received by
the Executive shall be annualized and the bonus years in
which the Executive's employment commences or terminates
shall be deemed to be "complete bonus years" for purposes
of determining the highest annual bonus earned by the
Executive during the three complete bonus years immediately
prior to Termination.
7. Non-Competition and Confidentiality. The Executive agrees
that:
(a) there shall be no obligation on the part of the Company to
provide any further payments or benefits (other than payments or
benefits already earned or accrued) described in Section 6 if,
when, and so long as the Executive shall be employed by or
otherwise engage in any business which is competitive with any
business of the Company or of any of its subsidiaries, as such
business existed as of the effective date of this Agreement, in
which the Executive was engaged during his employment, and if
such employment or activity is likely to cause or causes serious
damage to the Company or any of its subsidiaries; and
(b) during and after the Employment Period, he will not divulge
or appropriate to his own use or the use of others any secret or
confidential information pertaining to the business of the
Company or any of its subsidiaries obtained during his employment
by the Company, it being understood that this obligation shall
not apply when and to the extent any of such information becomes
publicly known or available other than because of his act or
omission.
8. Arrangements Not Exclusive or Limiting. The specific
arrangements referred to herein are not intended to exclude or limit
the Executive's participation in other benefits available to executive
personnel generally, or to preclude or limit other compensation or
benefits as may be authorized by the Board of Directors of the Company
at any time, or to limit or reduce any compensation or benefit to which
the Executive would be entitled but for this Agreement.
9. Enforcement Costs. The Company is aware that upon the
occurrence of a change in control, the Board of Directors or a
stockholder of the Company may then cause or attempt to cause the
Company to refuse to comply with its obligations under this Agreement,
or may cause or attempt to cause the Company to institute, or may
institute, litigation seeking to have this Agreement declared
unenforceable, or may take, or attempt to take, other action to deny
the Executive the benefits intended under this Agreement. In these
circumstances, the purpose of this Agreement could be frustrated. It
is the intent of the parties that the Executive not be required to
incur the legal fees and expenses associated with the protection or
enforcement of his rights under this Agreement by litigation or other
legal action because such costs would substantially detract from the
benefits intended to be extended to the Executive hereunder, nor be
bound to negotiate any settlement of his rights hereunder under threat
of incurring such costs. Accordingly, if at any time after the
effective date of this Agreement, it should appear to the Executive
that the Company is or has acted contrary to or is failing or has
failed to comply with any of its obligations under this Agreement for
the reason that it regards this Agreement to be void or unenforceable
or for any other reason, or that the Company has purported to terminate
his employment for cause or is in the course of doing so in either case
contrary to this Agreement, or in the event that the Company or any
other person takes any action to declare this Agreement void or
unenforceable, or institutes any litigation or other legal action
designed to deny, diminish or to recover from the Executive the
benefits provided or intended to be provided to him hereunder, and the
Executive has acted in good faith to perform his obligations under this
Agreement, the Company irrevocably authorizes the Executive from time
to time to retain counsel of his choice at the expense of the Company
to represent him in connection with the protection and enforcement of
him rights hereunder, including without limitation representation in
connection with termination of his employment contrary to this
Agreement or with the initiation or defense of any litigation or other
legal action, whether by or against the Executive or the Company or any
director, officer, stockholder or other person affiliated with the
Company, in any jurisdiction. The reasonable fees and expenses of
counsel selected from time to time by the Executive as hereinabove
provided shall be paid or reimbursed to Executive by the Company on a
regular, periodic basis upon presentation by the Executive of a
statement or statements prepared by such counsel in accordance with its
customary practices, up to a maximum aggregate amount of $200,000.
Counsel so retained by the Executive may be counsel representing other
officers or key executives of the Company in connection with the
protection and enforcement of their rights under similar agreements
between them and the Company, and, unless in his sole judgment use of
common counsel could be prejudicial to him or would not be likely to
reduce the fees and expenses chargeable hereunder to the Company, the
Executive agrees to use his best efforts to agree with such other
officers or executives to retain common counsel.
10. Notices. Any notices, requests, demands and other
communications provided for by this Agreement shall be in writing and
personally delivered by hand or sent by registered or certified mail,
if to the Executive, to him at the last address he has filed in writing
with the Company or, if to the Company, to its corporate secretary at
its principal executive office.
11. Non-Alienation. The Executive shall not have any right to
pledge, hypothecate, anticipate, or in any way create a lien upon any
amounts provided under this Agreement, and no payments or benefits due
hereunder shall be assignable in anticipation of payment either by
voluntary or involuntary acts or by operation of law. So long as the
Executive lives, no person, other than the parties hereto, shall have
any rights under or interest in this Agreement or the subject matter
hereof.
12. Entire Agreement; Amendment. This Agreement constitutes the
entire agreement superseding any prior agreement of the parties in
respect of the subject matter hereof. No provision of this Agreement
may be amended, waived, or discharged except by the mutual written
agreement of the parties. The consent of any other person to any such
amendment, waiver or discharge shall not be required.
13. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the Company, its successors or assigns, by
operation of law or otherwise, including without limitation any
corporation or other entity or person which shall succeed (whether
direct or indirect, by purchase, merger, consolidation, or otherwise)
to all or substantially all of the business and/or assets of the
Company, and the Company will require any successor, by agreement in
form and substance satisfactory to the Executive, expressly to assume
and agree to perform this Agreement. Except as otherwise provided
herein, this Agreement shall be binding upon and inure to the benefit
of the Executive and his legal representatives, heirs, and assigns;
provided, however, that in the event of the Executive's death prior to
payment or distribution of all amounts, distributions, and benefits due
him hereunder, each such unpaid amount and distribution shall be paid
in accordance with this Agreement to the person or persons designated
by the Executive to the Company to receive such payment or distribution
and in the event the Executive has made no applicable designation, to
the person or persons designated by the Executive as the beneficiary or
beneficiaries of proceeds of life insurance payable in the event of the
Executive's death under the Company's group life insurance plan.
14. Governing Law. Except to the extent required to be governed
by the law of the State of Delaware because the Company is incorporated
under the laws of that state, the validity, interpretation, and
enforcement of this Agreement shall be governed by the law of whichever
of the State of Illinois or the State of Delaware that to the greater
extent permits or does not prevent the enforcement of this Agreement in
accordance with its terms.
15. Severability. In the event that any provision or portion of
this Agreement shall be determined to be invalid or unenforceable for
any reason, the remaining provisions of this Agreement shall be
unaffected thereby and shall remain in full force and effect.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all
of which together constitute one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
signed by its duly authorized officer and the Executive has signed this
Agreement as of the day and year first above written.
IMC GLOBAL INC. E. PAUL DUNN
By:________________________ __________________________
Title: Chairman of the Board
of Directors and Chief
Executive Officer
Exhibit 10.iii.(r)
July 13, 1999
E. Paul Dunn
Vice President and Treasurer
IMC Global Inc.
2100 Sanders Road
Northbrook, Illinois 60062
Dear Paul:
This Agreement is to assure you that in the event you become entitled
to payments by operation of the Employment Agreement dated July 13,
1999 ("Employment Agreement") between you and IMC Global Inc.
("Global") due to a "Change in Control" (as that term is defined in the
Employment Agreement) of Global, and if any of the payments to be made
under the Employment Agreement or any payments which are construed as
being made under the Employment Agreement, ("Agreement Payments") will
be subject to the tax ("Excise Tax") imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended ("Code") (or any similar tax
that may hereafter be imposed), Global shall pay to you (at the time
specified in Paragraph (c) below) an additional amount ("Gross-up
Payment") such that the net amount retained by you, after deduction of
any Excise Tax on the Total Payments (as hereinafter defined) and any
federal, state and local income tax and Excise Tax upon the Gross-up
Payment provided for by this paragraph, but before deduction for any
federal, state or local income tax on the Agreement Payments, shall be
equal to the Total Payments.
a) For purposes of determining whether any of the
Agreement Payments will be subject to the Excise Tax and the amount
of such Excise Tax, (i) any other payments or benefits received or
to be received by you in connection with a Change in Control of
Global or your termination of employment (whether pursuant to the
terms of this Agreement or any other plan, arrangement or agreement
with Global, any person whose actions result in a Change of Control
of Global or any person affiliated with Global or such person)
(which, together with the Agreement Payments, shall constitute the
"Total Payments") shall be treated as "parachute payments" within
the meaning of Section 280G(b)(2) of the Code, and all "excess
parachute payments" within the meaning of Section 280G(b)(1) of the
Code shall be treated as subject to the Excise Tax, unless in the
opinion of tax counsel selected by Global's independent auditors
such other payments or benefits (in whole or in part) do not
constitute parachute payments, or such excess parachute payments (in
whole or in part) represent reasonable compensation for services
actually rendered within the meaning of Section 280G(b)(4) of the
Code in excess of the base amount within the meaning of Section
280G(b)(3) of the Code or are otherwise not subject to the Excise
Tax, (ii) the amount of the Total Payments which shall be treated as
subject to the Excise Tax shall be equal to the lesser of (a) the
total amount of the Total Payments or (b) the amount of excess
parachute payments within the meaning of Section 280G(b)(1) of the
Code (after applying clause (i), above), and (iii) the value of any
non-cash benefits or any deferred payment or benefit shall be
determined by Global's independent auditors in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code.
b) For purposes of determining the amount of the Gross-up
Payment, you shall be deemed to pay federal income taxes at the
highest marginal rate of federal income taxation for the calendar
year in which the Gross-up Payment is to be made and the applicable
state and local income taxes at the highest marginal rate of
taxation for the calendar year in which the Gross-up Payment is to
be made, net of the maximum reduction in federal income taxes which
could be obtained from deduction of such state and local taxes. In
the event that the Excise Tax is subsequently determined to be less
than the amount taken into account hereunder at the time the Gross-
up Payment is made, you shall repay to Global at the time that the
amount of such reduction in Excise Tax is finally determined the
portion of the Gross-up Payment attributable to such reduction (plus
the portion of the Gross-up Payment attributable to the Excise Tax
and federal and state and local income tax imposed on the portion of
the Gross-up Payment being repaid by you if such repayment results
in a reduction in Excise Tax and/or a federal and state and local
income tax deduction), plus interest on the amount of such repayment
at the rate provided in Section 1274(b)(2)(B) of the Code. In the
event that the Excise Tax is determined to exceed the amount taken
into account hereunder at the time the Gross-up Payment is made
(including by reason of any payment the existence or amount of which
cannot be determined at the time of the Gross-up Payment), Global
shall make an additional Gross-up Payment in respect of such excess
(plus any interest payable with respect of such excess) at the time
that the amount of such excess is finally determined.
c) The Gross-up Payment or portion thereof provided for
in Paragraphs (a) and (b) above shall be paid not later than the
thirtieth day following payment of any amounts under your Employment
Agreement; provided, however, that if the amount of such Gross-up
Payment or portion thereof cannot be finally determined on or before
such day, Global shall pay to you on such day an estimate, as
determined in good faith by Global, of the minimum amount of such
payments and shall pay the remainder of such payments (together with
interest at the rate provided in Section 1274(b)(2)(B) of the Code)
as soon as the amount thereof can be determined, but in no event
later than the forty-fifth day after payment of any amounts under
the Employment Agreement.
In the event that the amount of the estimated payments exceeds the
amount subsequently determined to have been due, such excess shall
constitute a loan by Global to you, payable on the fifth day after
demand by Global (together with interest at the rate provided in
Section 1274 (b)(2)(B) of the Code).
All Gross-up Payments will be paid to you from the Trust established
under the Trust Agreement between IMC Global Inc. and Wachovia Bank
Trust Company, N.A., which has been established to protect payment
obligations of Global under this Agreement. Any repayment due
Global from you as a result of the circumstances described in the
last sentence of the preceding paragraph shall be made by you after
you have received such excess amounts from the Trust.
This Agreement supersedes any and all previous agreements entered
into between you and Global concerning Gross-up Payments.
Global is pleased to be able to provide you with this additional
assurance of economic protection in the event of a Change in
Control.
Please sign, date and return one original of this letter.
Sincerely yours,
/s/ Robert E. Fowler
- ---------------------
Robert E. Fowler, Jr.
Chief Executive Officer
I have read this Agreement and understand and accept its terms.
Executive:____________________________ Date:______________________
Exhibit 10.iii.(s)
IMC GLOBAL INC.
DEFERRED COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS
1. Purpose
The purpose of the Deferred Compensation Plan for Non-
Employee Directors (the "Plan") is to attract and retain well-qualified
persons who are not employees of IMC Global Inc. (the "Company") or any
of its subsidiaries for service as directors of the Company by
providing such persons with the opportunity to defer all or a portion
of the compensation which they earn as directors of the Company.
2. Administration
The Board of Directors of the Company (the "Board") shall
have the authority to administer and interpret the provisions of the
Plan and to prescribe forms and promulgate rules and regulations with
respect thereto. All determinations of the Board with respect to the
plan shall be final and binding upon all persons.
3. Eligibility
Directors of the Company who are not employees of the Company
or any of its subsidiaries are eligible to participate in the Plan.
4. Election to Defer
(a) An election to defer, or to cease to defer, compensation
earned as a director of the Company shall be effective only with
respect to compensation earned in calendar years following the year in
which the election is made. An election to defer shall specify the
time of payment of the compensation subject to such election, plus
interest credited thereon prior to the payment date. All elections
shall be in writing and shall be made on such forms, at such time and
in such manner as the Board may from time to time prescribe.
(b) An election shall be binding upon, and shall inure to
the benefit of the participant, the participant's designated
beneficiary, the heirs, legatees and personal representatives of the
participant and beneficiary and the successors and assigns of the
Company.
5. Deferral of Compensation
(a) Each participant may, with respect to compensation
earned as a director of the Company, elect to have all or a portion of
such compensation deferred and, together with the interest credited
thereon, paid in cash in the manner set forth in paragraph 5(d) below.
(b) A bookkeeping account shall be established for each
participant. The account shall reflect the amount to which the
participant is entitled in accordance with paragraph 5(c) below.
(c) The account of a participant who elects to defer
compensation shall be credited with the dollar amount of compensation
so deferred on each date that the participant is entitled to payment
for services as a director. Interest on the balance of the account
shall be computed and credited quarterly on March 31, June 30,
September 30 and December 31 of each year at the prime rate published
in the "Money Rates" section of The Wall Street Journal on the first
business day of the calendar quarter ending on such date plus two
percentage points (2%).
(d) Payment to the participant of amounts deferred pursuant
to a deferral election, together with the interest credited thereon,
shall be made in a single cash payment on the earlier of (i) the
payment date specified in the participant's election or (ii) the month
of January in the second calendar year following the participant's
retirement or other termination of service as a director of the
Company.
6. Payment in the Event of Participant's Death
(a) Any of the deferred compensation which shall not have
been paid to the participant during his or her lifetime shall be paid
within 60 days after the participant's death to such person or persons
as the participant may designate in writing to receive the same. The
participant shall have the right during his or her lifetime to
designate and to change the designation of the person or persons to
whom the Company shall make any payments of deferred compensation
remaining unpaid at the death of the participant. The Company shall
rely upon the last of such written designations in its possession in
making any such payments.
(b) If any of the deferred compensation shall remain unpaid
upon the death of the last to survive of the participant or the
participant's beneficiary, the Company shall pay the aggregate amount
thereof to the executor or administrator of the estate of the last to
survive of the participant and the participant's beneficiary.
7. No Right of Assignment or Acceleration
The right of the participant, and the participant's
beneficiary, to receive deferred compensation is personal and is not
subject to the acceleration or assignment. The Company shall have no
liability for the payment of any of the deferred compensation to any
other person or in any other manner than as provided in this Plan.
8. Amendment or Discontinuance
The Board may amend, rescind or terminate the Plan as it
shall deem advisable; provided, however, that no change shall be made
with respect to compensation deferred under the Plan which would impair
a participant's rights to such compensation without his or her consent.
9. Governing Law
This Plan and all determinations made and actions taken
pursuant hereto shall be governed by the laws of the State of Illinois
pertaining to contracts made and to be performed wholly within such
jurisdiction, except as federal law may apply.
10. Effective Date
The Plan shall be effective with respect to compensation
earned for service as a director of the Company on and after January 1,
1998.
Exhibit 10.iii.(t)
IMC GLOBAL INC.
1998 RESTORATION PLAN
(Effective as of January 1, 1998)
Contents Page
Article 1. Introduction 1
Article 2. Definitions 1
Article 3. Eligibility 2
Article 4. Matching Contributions 3
Article 5. Profit Sharing Contributions 3
Article 6. Deemed Investment Earnings 4
Article 7. Establishment of Trust 5
Article 8. Distributions 5
Article 9. Administration of the Plan 7
Article 10. Amendment and Termination 7
Article 11. General Provisions 8
IMC GLOBAL INC.
1998 RESTORATION PLAN
Article 1. Introduction
1.1. Title. The title of this Plan shall be the "IMC Global Inc. 1998
Restoration Plan."
1.2. Purpose. This Plan shall constitute an unfunded nonqualified
deferred compensation arrangement established for the purpose of
providing deferred compensation to a select group of management or
highly compensated employees (as defined for purposes of Title I of
ERISA) of the Company and adopting Affiliates. The Plan is intended to
be maintained and administered in connection with the "IMC Global Inc.
Profit Sharing and Savings Plan" for the benefit of selected employees
of the Company and adopting Affiliates whose benefits under the
Qualified Plan are restricted by the limitations of Sections
401(a)(17), 402(g) and 415 of the Code or are reduced as a result of
voluntary deferrals of compensation under the "IMC Global Inc 1998
Voluntary Nonqualified Deferred Compensation Plan".
Article 2. Definitions
"Accounts" means the Matching Contributions Account and Profit Sharing
Contributions Account maintained on behalf of a Participant.
"Affiliate" means an entity that, together with the Company, is
considered as a single employer under Section 414(b) or (c) of the
Code.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the committee described in Section 10.1 of the
Qualified Plan which is a named fiduciary of and responsible for the
administration of the Qualified Plan.
"Company" means IMC Global Inc., a Delaware corporation.
"Effective Date" means January 1, 1998.
"Employer" means, both collectively and individually as determined by
the context of the applicable provision, the Company and any Affiliate
which adopts this Plan with the approval of the Company.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Matching Contributions" means the contributions made on behalf of a
Participant pursuant to Section 4.1 of this Plan.
"Matching Contributions Account" means the account maintained on behalf
of each Participant which will represent the amount of the Matching
Contributions made on behalf of such Participant pursuant to Section
4.1 of the Plan and the amount of the deemed investment earnings and
losses on such Participant's Matching Contributions.
"Participant" means any eligible employee of an Employer who is
participating under the Plan pursuant to Article 3.
"Permitted Investment" means such fund or type of investment as may be
approved by the Committee from time to time for purposes of this Plan.
"Plan" means this "IMC Global Inc. 1998 Restoration Plan".
"Plan Year" means the calendar year.
"Profit Sharing Contributions" means the contributions made on behalf
of a Participant pursuant to Section 5.1 of this Plan.
"Profit Sharing Contributions Account" means the account maintained on
behalf of each Participant which will represent the amount of Profit
Sharing Contributions made on behalf of such Participant pursuant to
Section 5.1 of the Plan and the amount of deemed investment earnings
and losses on such Participant's Profit Sharing Contributions.
"Qualified Plan" means the "IMC Global Inc. Profit Sharing and Savings
Plan," as amended from time to time.
"Valuation Date" means the last day of each calendar quarter.
Article 3. Eligibility
The Committee shall designate, as of the Effective Date and as of the
beginning of each Plan Year thereafter, each employee of an Employer
who is eligible to participate in this Plan; provided, that only those
employees of an Employer who are in a select group of management or are
highly compensated (within the meaning of Title I of ERISA) may be
designated as eligible to participate in this Plan. The Committee
shall not designate any employee of an Employer as eligible to
participate in the Plan for a Plan Year unless such employee: (i) is
eligible to participate in the Qualified Plan for such Plan Year; and
(ii) is in salary grade 20 or above or is otherwise selected in a
nondiscriminatory manner by the Committee.
Article 4. Matching Contributions
4.1. Matching Contributions. For each Plan Year, a Matching
Contribution shall be credited to each Participant's Matching
Contributions Account in an amount equal to (i) the excess of the
amount of the matching contributions that would have been made with
respect to the Employee Contributions and Salary Reduction
Contributions (as defined in the Qualified Plan) of such Participant
for such Plan Year if Employee Contributions and Salary Reduction
Contributions had been made by the Participant under the Qualified Plan
without regard to the limitations of Sections 401(a)(17), 402(g) and
415 of the Code and without regard to voluntary deferrals of
compensation by the Participant under the IMC Global Inc. 1998
Voluntary Nonqualified Deferred Compensation Plan over the amount of
the matching contributions actually made for the Participant under the
Qualified Plan for such Plan Year, reduced by (ii) FICA withholding on
the amount so determined.
4.2. Matching Contributions Account. The Committee shall establish
and maintain a Matching Contributions Account for each Participant who
is entitled to receive Matching Contributions under this Article 4.
The Participant's Matching Contributions Account shall be a bookkeeping
account maintained by the Company and shall reflect the amount of the
Matching Contributions credited hereunder on behalf of the Participant.
The amount of any deemed investment earnings and losses on the amounts
reflected in a Participant's Matching Contributions Account shall be
credited or charged to his Matching Contributions Account in accordance
with Article 6.
Article 5. Profit Sharing Contributions
5.1. Profit Sharing Contributions. For each Plan Year, a Profit
Sharing Contribution shall be credited to the Profit Sharing
Contributions Account of each Participant for whom a profit sharing
contribution is made for such Plan Year under the Qualified Plan in an
amount equal to (i) the excess of the amount of the profit sharing
contribution that would have been made for the Participant under the
Qualified Plan for such Plan Year if such profit sharing contribution
had been made to the Qualified Plan without regard to the limitations
of Sections 401(a)(17), 402(g) and 415 of the Code and without regard
to voluntary deferrals of compensation by the Participant under the IMC
Global Inc. 1998 Voluntary Nonqualified Deferred Compensation Plan over
the amount of the profit sharing contribution actually made for the
Participant under the Qualified Plan for the Plan Year, reduced by (ii)
required FICA withholding on the amount so determined (if vested) and
on the amount of any previously made Profit Sharing Contributions (and
deemed investment earnings thereon) that have become vested during the
Plan Year.
5.2. Profit Sharing Contributions Account. The Committee shall
establish and maintain a Profit Sharing Contributions Account for each
Participant who is entitled to receive Profit Sharing Contributions
under this Article 5. The Participant's Profit Sharing Contributions
Account shall be a bookkeeping account maintained by the Company and
shall reflect the amount of the Profit Sharing Contributions credited
hereunder on behalf of the Participant. The amount of any deemed
investment earnings and losses on the amounts reflected in a
Participant's Profit Sharing Contributions Account shall be credited or
charged to his Profit Sharing Contributions Account in accordance with
Article 6.
Article 6. Deemed Investment Earnings6.1. (a) Permitted Investments.
Each Participant may designate from time to time, in accordance with
rules and procedures established by the Committee, that all or a
portion of his Accounts be deemed to be invested in one or more
Permitted Investments.
(b) Receipts. Each Participant's Accounts shall be deemed to receive
all interest, dividends, earnings and other property which would have
been received with respect to a Permitted Investment deemed to be held
in such Accounts if the Company actually owned such Permitted
Investment. Cash deemed received with respect to a Permitted
Investment shall be credited to the Accounts as of the date it would
have been available for reinvestment if the Company actually owned the
Permitted Investment.
(c) Elections. All elections to be made by a Participant pursuant to
this Article 6 shall be made only by such Participant; provided, that
if such Participant dies before his entire Account balances are
distributed pursuant to the terms of the Plan, or if the Committee
determines that such Participant is legally incompetent or otherwise
incapable of managing his own affairs, the Committee shall have the
authority to itself make the elections pursuant to this Section 6.1 on
behalf of such Participant, or designate such Participant's designated
beneficiary, legal representative or some near relative of such
Participant to make the elections pursuant to this Section 6.1 on
behalf of such Participant.
(d) Actual Investment Not Required. The Company need not actually
make any Permitted Investment. If the Company should from time to
time make any investment similar to a Permitted Investment, such
investment shall be solely for the Company's own account and the
Participant shall have no right, title or interest therein.
Accordingly, each Participant is solely an unsecured creditor of the
Company with respect to any amount distributable to him under the Plan.
6.2. Crediting of Contributions. The Company shall credit all
Matching Contributions and all Profit Sharing Contributions made on
behalf of a Participant pursuant to Article 4 and Article 5,
respectively, to such Participant's Matching Contributions Account or
Profit Sharing Contributions Account, as appropriate, within a
reasonable period following the end of the Plan Year for which such
contributions are made.
Article 7. Establishment of Trust
7.1. Establishment of Trust. The Company may, in its sole discretion,
establish a grantor trust (as described in Section 671 of the Code) for
the purpose of accumulating assets to provide for the obligations
hereunder. The assets and income of such trust shall be subject to the
claims of the general creditors of an Employer hereunder, but only to
the extent that such assets and income are attributable to the
contributions of that individual Employer. The establishment of such a
trust shall not affect the Employers' liability to pay benefits
hereunder except that any such liability shall be offset by any
payments actually made to a Participant under such a trust. In the
event such a trust is established, the amount to be contributed thereto
shall be determined by the Company and the investment of such assets
shall be made in accordance with the trust document.
7.2. Status of Trust. Participants shall have no direct or secured
claim in any asset of the trust or in specific assets of their Employer
and will have the status of general unsecured creditors of their
Employer for any amounts due under this Plan. The assets and income of
the trust will be subject to the claims of any Employer's creditors,
but only to the extent that such assets and income are attributable to
the contributions of that individual Employer.
Article 8. Distributions
8.1. Distribution of Matching Contributions Account. Each Participant
shall at all times have a one hundred percent (100%) vested and
nonforfeitable interest in his Matching Contributions Account. If a
Participant's employment with his Employer and all Affiliates is
terminated for any reason, including death, retirement, total and
permanent disability, resignation or dismissal, the balance in the
Participant's Matching Contributions Account (determined as of the
Valuation Date on or immediately preceding the date on which the
distribution is processed) shall be distributed to the Participant (or,
in the event of the Participants's death, to his beneficiary) as soon
as administratively practicable after the end of the calendar quarter
in which the Participant's termination of employment occurs. Such
payment shall be made in the form of a lump sum payment. If such
Participant is entitled to a Matching Contribution for the Plan Year in
which his employment terminates that is not reflected in the Matching
Contributions Account balance so distributed to the Participant, the
amount of such Matching Contribution shall be distributed to the
Participant as soon as administratively practicable after the end of
the Plan Year in which the Participant's termination of employment
occurs.
8.2. Distribution of Profit Sharing Contributions Account. A
Participant shall become one hundred percent (100%) vested in his
Profit Sharing Contributions Account upon the completion of five years
of Service (as defined in the Qualified Plan). If a Participant's
employment with his Employer and all Affiliates is terminated by reason
of his death, his retirement after attaining age 65 or after he has
completed five years of Service (as defined in the Qualified Plan), the
balance in the Participant's Profit Sharing Contributions Account
(determined as of the Valuation Date on which the distribution is
processed) shall be distributed to the Participant (or, in the event of
the Participant's death, to his beneficiary) as soon as
administratively practicable after the end of the calendar quarter in
which the Participant's termination of employment occurs. Such payment
shall be made in the form of a lump sum payment. If such Participant
is entitled to a Profit Sharing Contribution for the Plan Year in which
his employment terminates that is not reflected in the Profit Sharing
Contributions Account balance so distributed to the Participant, the
amount of such Profit Sharing Contribution shall be distributed to the
Participant as soon as administratively practicable after the end of
the Plan Year in which the Participant's termination of employment
occurs. If a Participant's employment with his Employer and all
Affiliates is terminated before the Participant has completed five
years of Service (as defined in the Qualified Plan) for a reason other
than his death or retirement after attaining age 65, the balance in the
Participant's Profit Sharing Contributions Account shall be forfeited.
8.3. Involuntary Distributions. Notwithstanding the foregoing
provisions of this Article 8, the Committee may on its own initiative
authorize the Company to distribute to any Participant (or to a
designated beneficiary in the event of the Participant's death) all or
any portion of the Participant's Matching Contributions Account and
Profit Sharing Contributions Account. Such payment would be
specifically authorized in the event that there is a change in tax law,
a published ruling or similar announcement issued by the Internal
Revenue Service, a regulation issued by the Secretary of the Treasury,
a decision by a court of competent jurisdiction involving a Participant
or a beneficiary, or a closing agreement made under Section 7121 of the
Code that is approved by the Internal Revenue Service and involves a
Participant, and the Committee determines that a Participant has or
will recognize income for federal income tax purposes with respect to
amounts deferred under this Plan prior to the time such amounts are
paid to the Participant.
8.4. Designation of Beneficiaries. Each Participant may name any
person (who may be named concurrently, contingently or successively) to
whom the Participant's Accounts under the Plan are to be paid if the
Participant dies before such Accounts are fully distributed. Each such
beneficiary designation will revoke all prior designations by the
Participant, shall not require the consent of any previously named
beneficiary, shall be in a form prescribed by the Committee and will be
effective only when filed with the Committee during the Participant's
lifetime. If a Participant fails to designate a beneficiary before his
death, as provided above, or if the beneficiary designated by a
Participant dies before the date of the Participant's death or before
payment of the Participant's Accounts, the Committee, in its
discretion, may pay the Participant's Accounts (a) to the surviving
spouse of such deceased Participant, if any, or (b) if there shall be
no surviving spouse, the surviving children of such deceased
Participant, if any, in equal shares, or (c) if there shall be no
surviving spouse or children, to the executors or administrators of the
estate of such deceased Participant, or (d) if no executor or
administrator shall have been appointed for the estate of such deceased
Participant within six months from the date of the Participant's death,
to the person or persons who would be entitled under the intestate
succession laws of the state of the Participant's domicile to receive
the Participant's personal estate.
Article 9. Administration of the Plan
The Plan shall be administered by the Committee. The duties and
authority of the Committee under the Plan shall include (a) the
interpretation of the provisions of the Plan, (b) the adoption of any
rules and regulations which may become necessary or advisable in the
operation of the Plan, (c) the making of such determinations as may be
permitted or required pursuant to the Plan, and (d) the taking of such
other actions as may be required for the proper administration of the
Plan in accordance with its terms. Any decision of the Committee with
respect to any matter within the authority of the Committee shall be
final, binding and conclusive upon the Company and each Participant,
former Participant, designated beneficiary, and each person claiming
under or through any Participant or designated beneficiary; and no
additional authorization or ratification by the board of directors of
the Company shall be required. Any action taken by the Committee with
respect to any one or more Participants shall not be binding on the
Committee as to any action to be taken with respect to any other
Participant. A member of the Committee may be a Participant, but no
member of the Committee may participate in any decision directly
affecting his rights or the computation of his benefits under the Plan.
Each determination required or permitted under the Plan shall be made
by the Committee in the sole and absolute discretion of the Committee.
Article 10. Amendment and Termination
10.1. Amendment. The Company shall have the right to amend the Plan
by action of the board of directors of the Company (or a duly appointed
delegate thereof) from time to time, except that no such amendment
shall, without the consent of the Participant to whom deferred
compensation has been credited to any Account under this Plan,
adversely affect the right of the Participant (or his beneficiary) to
receive payments of such deferred compensation under the terms of this
Plan.
10.2. Plan Termination. The Plan may be terminated with respect to
the Company or any Employer at any time by action of the board of
directors of the Company (or a duly appointed delegate thereof) in its
sole discretion. The Plan shall be automatically terminated with
respect to any Employer upon the termination of the Qualified Plan with
respect to such Employer pursuant to Section 15.3 of the Qualified
Plan. Notwithstanding the foregoing, no termination of this Plan shall
alter the right of a Participant (or his beneficiary) to payments of
amounts previously credited to such Participant's Accounts under the
Plan.
Article 11. General Provisions
11.1. Non-Alienation of Benefits. A Participant's rights to the
amounts credited to his Accounts under the Plan shall not be salable,
transferable, pledgeable or otherwise assignable, in whole or in part,
by the voluntary or involuntary acts of any person, or by operation of
law, and shall not be liable or taken for any obligation of such
person. Any such attempted grant, transfer, pledge or assignment shall
be null and void and without any legal effect.
11.2. Withholding for Taxes. Notwithstanding anything contained in
this Plan to the contrary, each Employer shall withhold from any
distribution made under the Plan such amount or amounts as may be
required for purposes of complying with the tax withholding provisions
of the Code or any applicable State law for purposes of paying any tax
attributable to any amounts distributable or creditable under the Plan.
11.3. Immunity of Committee Members. The members of the Committee may
rely upon any information, report or opinion supplied to them by any
officer of an Employer or any legal counsel, independent public
accountant or actuary, and shall be fully protected in relying upon any
such information, report or opinion. No member of the Committee shall
have any liability to the Company or any Participant, former
Participant, designated beneficiary, person claiming under or through
any Participant or designated beneficiary or other person interested or
concerned in connection with any decision made by such member of the
Committee pursuant to the Plan which was based upon any such
information, report or opinion if such member of the Committee relied
thereon in good faith.
11.4. Plan Not to Affect Employment Relationship. Neither the
adoption of the Plan nor its operation shall in any way affect the
right and power of an Employer to dismiss or otherwise terminate the
employment or change the terms of the employment or amount of
compensation of any Participant at any time for any reason or without
cause. By accepting any payment under this Plan, each Participant,
former Participant, designated beneficiary and each person claiming
under or through such person, shall be conclusively bound by any action
or decision taken or made under the Plan by the Committee.
11.5. Notices. Any notice required to be given by the Company or the
Committee hereunder shall be in writing and shall be delivered in
person or by registered mail, return receipt requested. Any notice
given by registered mail shall be deemed to have been given upon the
date of delivery, correctly addressed to the last known address of the
person to whom such notice is to be given.
11.6. Gender and Number; Headings. Wherever any words are used herein
in the masculine gender they shall be construed as though they were
also used in the feminine gender in all cases where they would so
apply; and wherever any words are used herein in the singular form they
shall be construed as though they were also used in the plural form in
all cases where they would so apply. Headings of sections and
subsections of the Plan are inserted for convenience of reference and
are not part of the Plan and are not to be considered in the
construction thereof.
11.7. Controlling Law. The Plan shall be construed in accordance with
the internal laws of the State of Illinois, to the extent not preempted
by any applicable federal law.
11.8. Successors. The Plan is binding on all persons entitled to
benefits hereunder and their respective heirs and legal
representatives, on the Committee and its successor and on any Employer
and its successor, whether by way of merger, consolidation, purchase or
otherwise.
11.9. Severability. If any provision of the Plan shall be held
illegal or invalid for any reason, such illegality or invalidity shall
not affect the remaining provisions of the Plan, and the Plan shall be
enforced as if the invalid provisions had never been set forth therein.
IN WITNESS WHEREOF, IMC Global Inc. has caused its corporate seal to be
hereunto affixed by its officers thereunto duly authorized this ______
day of ____________, 1999.
IMC GLOBAL INC.
By:
(Corporate Seal)
ATTEST:
Exhibit 10.iii.(u)
IMC GLOBAL INC.
1998 VOLUNTARY NONQUALIFIED
DEFERRED COMPENSATION PLAN
IMC Global Inc. has established this IMC Global Inc.
Voluntary Nonqualified Deferred Compensation effective as of January 1,
1998, in order to enable eligible employees of IMC Global Inc. and its
Affiliates to defer the receipt of all or a portion of their annual
cash bonuses and up to one-half of their base salary and to be credited
with interest on a tax favored basis on such deferred amounts until
retirement, death, disability or other termination of employment.
ARTICLE I
DEFINITIONS
1.01 "Account" means the record of a Participant's interest
in the Plan attributable to Participant Deferrals made on behalf of
such Participant and hypothetical investment earnings thereon.
1.02 "Affiliate" means (a) a member of a controlled group of
corporations of which the Company is a member or (b) an unincorporated
trade or business which is under common control with the Company as
determined in accordance with Code Section 414(c). For purposes
hereof, a "controlled group of corporations" means a controlled group
of corporations as defined in Code Section 1563(a), determined without
regard to Code Sections 1563(a)(4) and 1563(e)(3)(C).
1.03 "Beneficiary" means the person or persons, natural or
otherwise, designated by a Participant to receive any benefit payable
under the Plan in the event of the Participant's death. To be
effective, any such designation and any alteration or revocation
thereof shall be in writing, in such form as the Plan Administrator may
prescribe and shall be filed with the Plan Administrator prior to the
Participant's death. If at the time a death benefit becomes payable no
designation of Beneficiary is on file with the Plan Administrator, or
if the designated Beneficiary does not survive the Participant, the
Beneficiary shall be the Participant's surviving spouse, or in the
event there is no such surviving spouse, the Participant's estate.
1.04 "Board" means the Board of Directors of the Company.
1.05 "Change in Control" shall be deemed to have occurred
upon the first to occur of the following:
(a) 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 (c) of this Section 1.05.
(b) 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;
(c) 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
(d) the consummation of a plan of complete liquidation or
dissolution of the Company.
For purposes of this definition, the term "Exchange Act" means the
Securities Exchange Act of 1934, as amended from time to time, or any
successor act thereto.
1.06 "Code" means the Internal Revenue Code of 1986, as from
time to time amended.
1.07 "Company" means IMC Global Inc.
1.08 "Election Date" means with respect to a Plan Year
December 15 of the immediately preceding Plan Year.
1.09 "Eligible Employee" means an employee of the Company or
an Affiliate who is based in the United States of America, in grade 20
or above and is eligible to participate in the IMC Global Inc.
Management Incentive Compensation Program.
1.10 "Final Distribution Date" means the date on which a
Participant's active employment with the Company and all Affiliates
terminates, whether by reason of retirement, death, long term
disability or other termination of active employment.
1.11 "In-Service Distribution Date" means a date prior to a
Participant's Final Distribution Date which is selected by the
Participant for the payment of Participant Deferrals in accordance with
rules and procedures established by the Plan Administrator.
1.12 "Participant" means each Eligible Employee who has
elected to participate in the Plan.
1.13 "Participant Deferrals" means the amounts deferred by a
Participant pursuant to Section 3.01.
1.14 "Plan" means the IMC Global Inc. 1998 Voluntary
Nonqualified Deferred Compensation Plan.
1.15 "Plan Administrator" means such person or persons as may
be designated by the Board to administer the Plan.
1.16 "Plan Year" means the calendar year.
1.17 "Trust" means the IMC Global Inc. 1998 Supplemental
Executive Retirement Plan, Restoration Plan and Excess Benefit Plan
Trust.
1.18 "Trustee" means Marshall & Ilsley Trust Company or any
successor Trustee of the Trust.
1.19 "Valuation Date" means the last day of each calendar
quarter.
ARTICLE II
PARTICIPATION
An Eligible Employee shall become a Participant by electing,
in accordance with procedures established by the Plan Administrator, to
make Participant Deferrals pursuant to Section 3.01 hereof.
ARTICLE III
DEFERRALS
3.01 Participant Deferrals. Each Eligible Employee may
elect, in accordance with rules and procedures established by the Plan
Administrator, on or before the Election Date for a Plan Year, to make
a Participant Deferral under the Plan equal to all or any portion (up
to 100%) of the Eligible Employee's annual cash bonus for such Plan
Year. Each Eligible Employee may also elect, in accordance with rules
and procedures established by the Plan Administrator, on or before the
Election Date for a Plan Year, to make Participant Deferrals equal to
all or any portion (up to 50%) of the Eligible Employee's base salary
for such Plan Year. Participant Deferrals under the Plan by a
Participant shall reduce the amount of the applicable type of
compensation otherwise payable currently to such Participant.
3.02 Company Contributions to Trust. As soon as practicable
after the end of each Plan Year, and not later than 30 days after a
Change in Control, the Company shall contribute to the Trustee to be
held under the provisions of the Trust, but subject to the claims of
the creditors of the Company in the event of the Company's insolvency
as provided in the Trust, such amount as may be necessary to provide
the Trust with assets for the Plan having a fair market value at least
equal to the sum of the Account balances of all Participants as of the
end of the Plan Year or the date of the Change in Control, whichever is
applicable. Notwithstanding the transfer of contributions to the
Trust, however, such deferred amounts shall remain obligations of the
Company to the Participants and shall be reflected on the Company's
books by separate accounting entries.
The provisions of this Section 3.02 may not be amended after
the date of a Change in Control without the written consent of a
majority in both number and interest of the Participants in this Plan,
other than those Participants who are both (i) not employed by the
Company or a subsidiary as of the date of the Change in Control and
(ii) not receiving nor could have commenced receiving benefits under
the Plan as of the date of the Change in Control, both immediately
prior to the Change of Control and at the date of such amendment.
ARTICLE IV
ACCOUNTS AND INVESTMENTS
4.01 Deferred Compensation Accounts. Participant Deferrals
made by a Participant shall be credited to the Participant's Account as
of the first day of the calendar quarter that includes the date(s) on
which, but for the Participant's election to defer, such amounts would
have been payable to the Participant. The amount in a Participant's
Account shall also be credited as of each Valuation Date with interest
at the prime rate published in the "Money Rates" section of The Wall
Street Journal on the first business day of the calendar quarter ending
on such Valuation Date plus two percentage points (2%).
4.02 Rollover of Previously Deferred Amounts. Amounts
previously deferred as of December 31, 1997 by a Participant under the
Company's prior deferred compensation arrangement, as set forth in the
IMC Global Inc. Management Incentive Compensation Program, that have
not been paid to the Participant, plus associated earnings, shall be
credited to the Participant's Account as of January 1, 1998 and shall
be credited with interest as of each Valuation Date thereafter as
provided in Section 4.01.
4.03 Investment of Trust Funds. Amounts contributed to the
Trust by the Company shall be invested by the Trustee in accordance
with the provisions of the Trust; provided, however, that Trust
investments need not reflect the interest to be credited to the
Accounts of Participants, and the earnings or investment results of the
Trust shall not affect the amounts to be credited to Participants'
Accounts under the Plan.
ARTICLE V
DISTRIBUTION OF BENEFITS
5.01 Final Distribution Date. Upon a Participant's Final
Distribution Date, the Participant (or the Participant's Beneficiary if
the Participant is deceased) shall be paid the Participant's entire
Account balance as of the Valuation Date coinciding with or next
following the Final Distribution Date in a single lump sum payment as
soon as practicable after such date; provided, however, that the
Participant may elect, in accordance with rules and procedures
established by the Plan Administrator, to be paid his or her Account
balance in annual installments over a period of up to 10 years.
5.02 In-Service Distribution Date. Participant Deferrals to
be paid on an In-Service Distribution Date, together with the interest
credited thereon, shall be paid to the Participant as of the Valuation
Date coinciding with or next following the In-Service Distribution Date
in a single lump sum payment as soon as practicable after such date;
provided, however, that the Participant may elect, in accordance with
rules and procedures established by the Plan Administrator, to be paid
such amounts in annual installments over a period of up to 10 years.
ARTICLE VI
PLAN ADMINISTRATION
6.01 Administration of Plan. The Company shall have the sole
responsibility for making contributions to the Trust as provided under
Article III and shall have the sole authority to amend or terminate, in
whole or in part, this Plan at any time. The Plan Administrator shall
have the sole responsibility for the administration of the Plan.
The Company does not guarantee to any Participant in any
manner the effect under any tax law or Federal or state statute of the
Participant's participation in this Plan.
6.02 Claims Procedure. The Plan Administrator shall make all
determinations as to the right of any person to a benefit under this
Plan. Any denial by the Plan Administrator of a claim for benefits
under the Plan by a Participant or Beneficiary shall be stated in
writing by the Plan Administrator and shall set forth the specific
reasons for the denial. In addition, the Plan Administrator shall
afford a reasonable opportunity to any Participant or Beneficiary whose
claim for benefits has been denied for a review of the decision denying
the claim.
6.03 Powers and Duties of Plan Administrator. The Plan
Administrator shall have such duties and powers as may be necessary to
discharge its duties hereunder, including, but not by any way of
limitation, the following:
(a) to construe and interpret the Plan, decide all questions
of eligibility and determine the amount, manner and time
of payment of any benefits hereunder;
(b) to prescribe procedures to be followed by Participants
in filing elections or revocations thereof;
(c) to prepare and distribute, in such manner as the Plan
Administrator determines to be appropriate, information
explaining the Plan;
(d) to receive from the Company and from Participants such
information as shall be necessary for the proper
administration of the Plan;
(e) to furnish the Company, upon request, such reports with
respect to the administration of the Plan as are
reasonable and appropriate;
(f) to receive, review and keep on file (as it deems
convenient and proper) reports of benefit payments by
the Company and reports of disbursements for expenses
directed by the Plan Administrator; and
(g) to appoint individuals to assist in the administration
of the Plan and any other agents it deems advisable,
including legal counsel.
The Plan Administrator shall have no power to add to,
subtract from or modify any of the terms of the Plan, or to change or
add to any benefits provided by the Plan, or to waive or fail to apply
any requirements of eligibility for a benefit under the Plan.
6.04 Rules, Procedures and Decisions. The Plan Administrator
may adopt such rules and procedures as it deems necessary, desirable or
appropriate. All rules, procedures and decisions of the Plan
Administrator shall be uniformly and consistently applied to all
Participants in similar circumstances. When making a determination or
calculation, the Plan Administrator shall be entitled to rely upon
information furnished by a Participant, the Company or the legal
counsel of the Company.
6.05 Authorization of Benefit Payments. The Plan
Administrator shall issue directions to the Company or the Trustee
concerning all benefits which are to be paid pursuant to the provisions
of the Plan.
6.06 Indemnification of Plan Administrator. The Plan
Administrator shall be indemnified by the Company against any and all
liabilities arising by reason of any act or failure to act made in good
faith pursuant to the provisions of the Plan, including expenses
reasonably incurred in the defense of any claim relating thereto.
ARTICLE VII
MISCELLANEOUS
7.01 No Right to Employment, etc. Neither the creation of
this Plan nor anything contained herein shall be construed as giving
any Participant hereunder or other employees of the Company or any
subsidiary any right to remain in the employ of the Company or any
subsidiary.
7.02 Successors and Assigns. All rights and obligations of
this Plan shall inure to, and be binding upon the successors and
assigns of the Company.
7.03 Inalienability. Except so far as may be contrary to the
laws of any state having jurisdiction in the premises, a Participant or
Beneficiary shall have no right to assign, transfer, hypothecate,
encumber, commute or anticipate his or her interest in any payments
under this Plan and such payments shall not in any way be subject to
any legal process to levy upon or attach the same for payment of any
claim against any Participant or Beneficiary.
7.04 Incompetency. If any Participant or Beneficiary is, in
the opinion of the Plan Administrator, legally incapable of giving a
valid receipt and discharge for any payment, the Plan Administrator
may, at its option, direct that such payment or any part thereof be
made to such person or persons who in the opinion of the Plan
Administrator are caring for and supporting such Participant or
Beneficiary, unless it has received due notice of claim from a duly
appointed guardian or conservator of the estate of the Participant or
Beneficiary. A payment so made will be a complete discharge of the
obligations under this Plan to the extent of and as to that payment,
and neither the Plan Administrator nor the Company will have any
obligation regarding the application of the payment.
7.05 Unfunded Plan. The rights and interests of a
Participant with respect to the balance in the Participant's Account
shall be solely those of a general creditor of the Company. It is
intended that the Plan shall be an unfunded plan maintained primarily
for the purpose of providing deferred compensation for a select group
of management or highly compensated employees.
7.06 Controlling Law. To the extent not preempted by the
laws of the United States of America, the laws of the State of Illinois
shall be the controlling state law in all matters relating to this
Plan.
7.07 Severability. If any provisions of this Plan shall be
held illegal or invalid for any reason, the illegality or invalidity
shall not affect the remaining parts of this Plan, but this Plan shall
be construed and enforced as if the illegal and invalid provisions
never had been included herein.
7.08 Gender and Number. Whenever the context requires or
permits, the gender and number of words shall be interchangeable.
7.09 Expenses. The expenses of administering the Plan shall
be paid by the Company.
7.10 Division of the Plan. The Plan Administrator may direct
a separation of the Accounts of certain Participants under the Plan and
the transfer of such Accounts to another plan. If such action is
directed, the Plan Administrator shall cause to be determined and shall
direct the Trustee to set apart that portion of the assets held under
the Trust that is attributable to the Accounts of such Participants as
are designated in such direction by the Plan Administrator. The
portion of the assets held under the Trust so set apart shall, as
directed by the Plan Administrator, either (a) continue to be held by
the Trustee under such other plan for the benefit of such Participants,
or (b) be transferred directly to the trustee of a separate trust
established under such other plan and held in trust for the benefit of
such Participants pursuant to the terms of such other plan.
ARTICLE VIII
AMENDMENT AND TERMINATION
8.01 Amendment to Conform with Law. The Company may by
amendment make such changes in, additions to, and substitutions in the
provisions of this Plan, to take effect retroactively or otherwise, as
deemed necessary or advisable for the purpose of conforming this Plan
to any present or future law relating to plans of this or a similar
nature, and to the administrative regulations and rulings promulgated
thereunder.
8.02 Other Amendments and Termination. The Company may amend
or terminate this Plan at any time, without the consent of any
Participant or Beneficiary. Notwithstanding the foregoing, this Plan
shall not be amended or terminated so as to reduce or cancel the
benefits which have accrued to a Participant or Beneficiary prior to
the later of the date of adoption of the amendment or termination or
the effective date thereof, and in the event of such amendment or
termination, any such accrued benefit hereunder shall not be reduced or
canceled.
8.03 Manner and Form of Amendment or Termination. Any
amendment or termination of this Plan by the Company shall be made only
by action of the Board or any officer of the Company duly authorized by
the Board. Certification of any amendment or termination of this Plan
shall be furnished to the Plan Administrator by the Company.
8.04 Notice of Amendment or Termination. The Plan
Administrator shall notify Participants or Beneficiaries who are
affected by any amendment or termination of this Plan within a
reasonable time thereof.
Dated: IMC GLOBAL INC.
By:
Name:
Title:
Exhibit 10.iii.(v)
FIRST AMENDMENT TO THE
IMC GLOBAL INC. 1998 RESTORATION PLAN
WHEREAS, IMC Global Operations Inc. (the "Company") has heretofore
adopted and maintains the IMC Global Inc. 1998 Restoration Plan (the
"Plan"); and
WHEREAS, the Company desires to amend the Plan in certain
respects;
NOW, THEREFORE, pursuant to the power of amendment contained in
Section 10.1 of the Plan, the Plan is hereby amended, effective as of
January 1, 1998, in the following respects:
1. The second sentence of Section 1.2 is amended to provide as
follows:
The Plan is intended to be maintained and administered in
connection with the "IMC Global Inc. Profit Sharing and Savings Plan"
for the benefit of selected employees of the Company and adopting
Affiliates whose benefits under the Qualified Plan are restricted by
the limitations of Sections 401(a)(17), 402(g) and 415 of the Code or
are reduced as a result of voluntary deferrals of compensation under
the "IMC Global Inc 1998 Voluntary Nonqualified Deferred Compensation
Plan".
2. Section 4.1 is amended to provide as follows:
4.1. Matching Contributions. For each Plan Year, a Matching
Contribution shall be credited to each Participant's Matching
Contributions Account in an amount equal to (i) the excess of the
amount of the matching contributions that would have been made with
respect to the Employee Contributions and Salary Reduction
Contributions (as defined in the Qualified Plan) of such Participant
for such Plan Year if Employee Contributions and Salary Reduction
Contributions had been made by the Participant under the Qualified Plan
without regard to the limitations of Sections 401(a)(17), 402(g) and
415 of the Code and without regard to voluntary deferrals of
compensation by the Participant under the IMC Global Inc. 1998
Voluntary Nonqualified Deferred Compensation Plan over the amount of
the matching contributions actually made for the Participant under the
Qualified Plan for such Plan Year, reduced by (ii) FICA withholding on
the amount so determined.
In addition, for the Plan Year ended December 31, 1998, a
supplemental Matching Contribution shall be credited to each
Participant's Matching Contributions Account in an amount equal to the
difference between (i) the sum of 100% of the amount contributed for
such Plan Year by such Participant pursuant to Sections 4.1(a) and
4.1(b) of the Qualified Plan that does not exceed 3% of the
Participant's Compensation (as defined in the Qualified Plan) for such
Plan Year and 50% of the amount contributed for such Plan Year by such
Participant pursuant to Sections 4.1(a) and 4.1(b) of the Qualified
Plan that exceeds 3% but does not exceed 6% of the Participant's
Compensation (as defined in the Qualified Plan) for such Plan Year and
(ii) the amount of Employer Matching Contributions (as defined in the
Qualified Plan) contributed for the Participant under the Qualified
Plan with respect to payroll periods ending in such Plan Year.
3. Section 5.1 is amended to provide as follows:
5.1. Profit Sharing Contributions. For each Plan Year, a
Profit Sharing Contribution shall be credited to the Profit Sharing
Contributions Account of each Participant for whom a profit sharing
contribution is made for such Plan Year under the Qualified Plan in an
amount equal to (i) the excess of the amount of the profit sharing
contribution that would have been made for the Participant under the
Qualified Plan for such Plan Year if such profit sharing contribution
had been made to the Qualified Plan without regard to the limitations
of Sections 401(a)(17), 402(g) and 415 of the Code and without regard
to voluntary deferrals of compensation by the Participant under the IMC
Global Inc. 1998 Voluntary Nonqualified Deferred Compensation Plan over
the amount of the profit sharing contribution actually made for the
Participant under the Qualified Plan for the Plan Year, reduced by (ii)
required FICA withholding on the amount so determined (if vested) and
on the amount of any previously made Profit Sharing Contributions (and
deemed investment earnings thereon) that have become vested during the
Plan Year.
4. Section 6.2 is amended to provide as follows:
6.2. Crediting of Contributions. The Company shall credit all
Matching Contributions and all Profit Sharing Contributions made on
behalf of a Participant pursuant to Article 4 and Article 5,
respectively, to such Participant's Matching Contributions Account or
Profit Sharing Contributions Account, as appropriate, within a
reasonable period following the end of the Plan Year for which such
contributions are made.
5. Section 8.1 is amended to provide as follows:
8.1. Distribution of Matching Contributions Account. Each
Participant shall at all times have a one hundred percent (100%) vested
and nonforfeitable interest in his Matching Contributions Account. If
a Participant's employment with his Employer and all Affiliates is
terminated for any reason, including death, retirement, total and
permanent disability, resignation or dismissal, the balance in the
Participant's Matching Contributions Account (determined as of the
Valuation Date on or immediately preceding the date on which the
distribution is processed) shall be distributed to the Participant (or,
in the event of the Participants's death, to his beneficiary) as soon
as administratively practicable after the end of the calendar quarter
in which the Participant's termination of employment occurs. Such
payment shall be made in the form of a lump sum payment. If such
Participant is entitled to a Matching Contribution for the Plan Year in
which his employment terminates that is not reflected in the Matching
Contributions Account balance so distributed to the Participant, the
amount of such Matching Contribution shall be distributed to the
Participant as soon as administratively practicable after the end of
the Plan Year in which the Participant's termination of employment
occurs.
6. Section 8.2 is amended to provide as follows:
8.2. Distribution of Profit Sharing Contributions Account. A
Participant shall become one hundred percent (100%) vested in his
Profit Sharing Contributions Account upon the completion of five years
of Service (as defined in the Qualified Plan). If a Participant's
employment with his Employer and all Affiliates is terminated by reason
of his death, his retirement after attaining age 65 or after he has
completed five years of Service (as defined in the Qualified Plan), the
balance in the Participant's Profit Sharing Contributions Account
(determined as of the Valuation Date on which the distribution is
processed) shall be distributed to the Participant (or, in the event of
the Participant's death, to his beneficiary) as soon as
administratively practicable after the end of the calendar quarter in
which the Participant's termination of employment occurs. Such payment
shall be made in the form of a lump sum payment. If such Participant
is entitled to a Profit Sharing Contribution for the Plan Year in which
his employment terminates that is not reflected in the Profit Sharing
Contributions Account balance so distributed to the Participant, the
amount of such Profit Sharing Contribution shall be distributed to the
Participant as soon as administratively practicable after the end of
the Plan Year in which the Participant's termination of employment
occurs. If a Participant's employment with his Employer and all
Affiliates is terminated before the Participant has completed five
years of Service (as defined in the Qualified Plan) for a reason other
than his death or retirement after attaining age 65, the balance in the
Participant's Profit Sharing Contributions Account shall be forfeited.
IN WITNESS WHEREOF, the Company has caused its corporate seal to
be hereunto affixed by its officers thereunto duly authorized this
_____ day of _____________, 1999.
IMC GLOBAL OPERATIONS INC.
By:
Name:
Title:
(corporate seal)
ATTEST:
EXHIBIT 12
<TABLE>
IMC Global Inc.
Computation of Ratio of Earnings to Fixed Charges
<CAPTION>
Years Ended December 31
------------------------------------------------
1999 1998 1997 1996 1995
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Fixed charges:
Interest charges $ 154.5 $ 161.1 $ 40.2 $ 43.6 $ 57.8
Rent expense 7.8 8.5 6.0 5.8 5.0
------- ------- ------- ------- -------
Total fixed charges $ 162.3 $ 169.6 $ 46.2 $ 49.4 $ 62.8
======= ======= ======= ======= =======
Earnings:
Earnings (loss) from
continuing operations
before minority interest $(465.8) $ 216.9 $ 224.6 $ 388.7 $ 471.5
Interest charges 154.5 161.1 40.2 43.6 57.8
Rent expense 7.8 8.5 6.0 5.8 5.0
------- ------- ------- ------- -------
Total earnings $(303.5) $ 386.5 $ 270.8 $ 438.1 $ 534.3
======= ======= ======= ======= =======
Ratio of earnings
to fixed charges (1.87) 2.28 5.86 8.87 8.51
Adjusted ratio of
earnings to fixed charges 2.81(a) 3.19(b) 9.84(c) 10.59(d) 8.51
======= ======= ======= ======= =======
(a)The adjusted ratio of earnings to fixed charges for the year ended
December 31, 1999 excludes charges of $758.9 million resulting from
the Company's restructuring program.
(b)The adjusted ratio of earnings to fixed charges for the year ended
December 31, 1998 excludes a charge of $195.1 million resulting
from the Company-wide profit improvement program and $14.0 million
as a result of the loss on the sale of IMC Vigoro.
(c) The adjusted ratio of earnings to fixed charges for the year ended
December 31, 1997 excludes a charge of $183.7 million related to
the write-down of the historical carrying value of the Company's
25.0 percent interest in Main Pass.
(d)The adjusted ratio of earnings to fixed charges for the year ended
December 31, 1996 excludes a charge of $84.9 million related to the
merger of The Vigoro Corporation in to a wholly-owned subsidiary of
the Company.
</TABLE>
Exhibit 13
Financial Table of Contents
Management's Discussion and Analysis of Financial Condition
and Results of Operations p.27
Report of Management p.41
Report of Independent Auditors p.41
Consolidated Statement of Operations p.42
Consolidated Balance Sheet p.43
Consolidated Statement of Cash Flows p.44
Consolidated Statement of Stockholders' Equity p.45
Notes to Consolidated Financial Statements p.46
Quarterly Results (Unaudited) p.72
Five Year Comparison p.73
Introduction
--------------------------
Management's Discussion and Analysis of Financial Condition and Results
of Operations should be read in conjunction with the financial
statements and the accompanying notes.
IMC Global Inc. (Company or IMC) is one of the world's leading
producers of phosphate and potash crop nutrients, salt and animal feed
ingredients.
The Company's current operational structure consists of four continuing
business units corresponding to its major product lines as follows: IMC
Phosphates (Phosphates), IMC Potash (Potash), IMC Salt (Salt) and IMC
Feed Ingredients (Feed Ingredients). As a result of the planned
divestiture of IMC Chemicals (Chemicals), all financial information for
Chemicals has been stated as discontinued operations. In early 2000,
the Company decided to explore strategic options, including divestiture
or a joint venture, for the Salt business unit and a production
facility located in Ogden, Utah.
Management's Discussion and Analysis of Financial Condition and Results
of Operations highlights the primary factors affecting changes in the
operating results of the Company's continuing operations during the
three year period, excluding the impact of certain special charges. In
1999, the Company incurred special charges from continuing operations
of $776.8 million, after tax and minority interest, or $6.78 per share,
comprised of: (i) a $95.6 million, or $0.83 per share, restructuring
charge related to a Company-wide rightsizing program (Rightsizing
Program); (ii) a $35.0 million, or $0.31 per share, charge related to
additional asset write-offs and environmental accruals; (iii) a $521.2
million, or $4.55 per share, charge resulting from a change in the
method of evaluating the recoverability of goodwill; and (iv) a $125.0
million, or $1.09 per share, charge for deferred income taxes arising
from a recent change in tax law. As a result of the special charges
recorded in 1999, the Company expects to increase annual pre-tax
earnings by an estimated $70.0 million, or $0.40 per share. The
increase in earnings is anticipated to result from rightsizing and cost
reduction initiatives including a Company-wide headcount reduction. In
1998, the Company incurred special charges from continuing operations
of $123.3 million, after tax and minority interest, or $1.07 per share,
comprised of: (i) a $113.4 million, or $0.99 per share, restructuring
charge related to a Company-wide profit improvement program (Project
Profit); (ii) a $9.1 million, or $0.08 per share, charge related to the
Company's sale of IMC Vigoro (Vigoro) (Vigoro Sale); and (iii) $0.8
million, or $0.01 per share, of other charges. As a result of Project
Profit, the Company is on target to achieve a reduction in operating
costs in excess of $100.0 million over the two year period ending
December 31, 2000, with $65.0 million realized in 1999. The reduction
in costs resulted from the simplification of the business, shutdown of
high-cost operations, exit from low-margin businesses and headcount
reductions. In 1997, the Company incurred special charges from
continuing operations of $112.2 million, after tax, or $1.19 per share,
related to a write-down of the Company's 25.0 percent interest in Main
Pass 299 (Main Pass) as a result of a merger with Freeport-McMoRan,
Inc. (FTX) (FTX Merger).
All of these special charges significantly impacted the results of
continuing operations of the Company and are referred to throughout
Management's Discussion and Analysis of Financial Condition and Results
of Operations. For additional detail on these charges, see Note 2,
"Change in Accounting for Goodwill," Note 3, "Restructuring and Other
Charges," Note 5, "Other Divestitures," Note 6, "Acquisitions" and Note
12, "Income Taxes," of Notes to Consolidated Financial Statements.
[Chart]
Net Sales
- ---------
(In millions)
1999 1998 1997
---- ---- ----
$2,369.3 $2,383.1 $2,116.0
[Chart]
Gross Margins
- -------------
(In millions)
1999(a) 1998(a) 1997
---- ---- ----
$584.6 $721.9 $574.9
(a) Before special charges.
[Chart]
Earnings from Continuing Operations
- -----------------------------------
(In millions)
1999(a) 1998(a) 1997(a)
---- ---- ----
$165.7 $233.1 $182.0
(a) Before special charges.
Results of Operations
Overview
1999 Compared to 1998
- ---------------------
Net sales of $2,369.3 million in 1999 were essentially unchanged from
$2,383.1 million in 1998. Gross margins in 1999 were $584.6 million,
excluding special charges of $41.9 million, a decrease of 19 percent
from comparable 1998 margins of $721.9 million, excluding special
charges of $23.1 million.
Earnings from continuing operations in 1999 were $165.7 million, or
$1.45 per share, excluding special charges of $776.8 million, or $6.78
per share. Earnings from continuing operations in 1998 were $233.1
million, or $2.03 per share, excluding special charges of $123.3
million, or $1.07 per share.
Sales and earnings from continuing operations for 1999 reflected
significantly reduced phosphate pricing and lower phosphate and potash
volumes compared to 1998. Partially offsetting the phosphate and potash
reductions were higher salt sales and earnings, driven by a full year
of operations of the salt business unit, which was acquired as part of
the Harris Chemical Group, Inc. (Harris) acquisition in April 1998
(Harris Acquisition).
The Company incurred a net loss in 1999 of $773.3 million, or $6.75 per
share, including: (i) $776.8 million, or $6.78 per share, related to
the special charges discussed above; (ii) $155.2 million, or $1.35 per
share, of losses resulting from the Company's decision to sell the
Chemicals business unit, exit the oil and gas business and adjust the
loss on the disposal of IMC AgriBusiness (AgriBusiness); (iii) $0.5
million of extraordinary gains related to the early extinguishment of
debt; and (iv) $7.5 million, or $0.07 per share, of charges related to
a cumulative effect of a change in accounting principle. The Company
incurred a net loss in 1998 of $9.0 million, or $0.08 per share,
including: (i) $123.3 million, or $1.07 per share, related to the
special charges discussed above; (ii) $121.8 million, or $1.07 per
share, of losses from discontinued operations; and (iii) $3.0 million,
or $0.03 per share, of extraordinary gains related to the early
extinguishment of debt. See Note 1, "Summary of Significant Accounting
Policies" and Note 4, "Discontinued Operations," of Notes to
Consolidated Financial Statements.
1998 Compared to 1997
- ---------------------
Net sales of $2,383.1 million in 1998 increased 13 percent from
$2,116.0 million in 1997. Gross margins for 1998 were $721.9 million,
excluding special charges of $23.1 million, an increase of 26 percent
from comparable 1997 margins of $574.9 million.
Earnings from continuing operations in 1998 were $233.1 million, or
$2.03 per share, excluding the special charges of $123.3 million, or
$1.07 per share, discussed above. Earnings from continuing operations
in 1997 were $182.0 million, or $1.92 per share, excluding the special
charges of $112.2 million, or $1.19 per share, discussed above.
Sales and earnings from continuing operations for 1998 were driven by
increased sales by Potash and Phosphates, which improved 13 percent and
six percent, respectively, compared to 1997 amounts. In addition,
sales and earnings for 1998 included the operations of Salt, which was
acquired in April 1998.
The Company incurred a net loss in 1998 of $9.0 million, or $0.08 per
share, including: (i) $123.3 million, or $1.07 per share, related to
the special charges discussed above; (ii) $121.8 million, or $1.07 per
share, of losses from discontinued operations; and (iii) $3.0 million,
or $0.03 per share, of extraordinary gains related to the early
extinguishment of debt. The Company generated net earnings in 1997 of
$62.9 million, or $0.67 per share, including: (i) $112.2 million, or
$1.19 per share, related to the special charges discussed above; (ii)
$18.0 million, or $0.19 per share, of earnings from discontinued
operations; and (iii) $24.9 million, or $0.26 per share, of
extraordinary charges related to the early extinguishment of debt.
<TABLE>
IMC Phosphates
<CAPTION>
Year ended December 31 %Increase(Decrease)
1999 1998 1997 1999 1998
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net sales $1,332.4 $1,572.8 $1,484.8 (15) 6
Gross margins $ 224.4(c) $ 375.6(d) $ 298.7 (40) 26
As a percentage of net
sales 17% 24% 20%
Sales volumes (000 tons)(a) 6,699 7,313 7,105 (8) 3
Average DAP price per
short ton(b) $ 160 $ 178 $ 176 (10) 1
(a)Sales volumes include tons sold captively and represent dry
product tons, primarily DAP.
(b)FOB plant.
(c)Excludes special charges of $10.6 million.
(d)Excludes special charges of $17.2 million.
</TABLE>
1999 Compared to 1998
- --------------------
Phosphates' net sales of $1,332.4 million in 1999 decreased 15 percent
from $1,572.8 million in 1998. Lower average sales realizations of
concentrated phosphates, particularly diammonium phosphate (DAP),
unfavorably impacted net sales by $125.0 million. DAP prices decreased
throughout 1999 to a low, as of December 31, 1999, of approximately
$130 per short ton as a result of the depressed agricultural economy.
Decreased shipments of concentrated phosphates unfavorably impacted net
sales by an additional $109.6 million. The majority of the volume
decline resulted from decreased shipments of DAP and granular triple
superphosphate (GTSP), which were lower by approximately nine percent
and 16 percent, respectively. The decrease in domestic DAP and GTSP
volumes was a result of lower agricultural commodity prices and the
depressed agricultural economy. Internationally, decreased DAP volumes
primarily resulted from reduced demand from lower crop purchases as a
result of low grain prices and higher customer inventories.
Gross margins in 1999 of $224.4 million, excluding special charges of
$10.6 million, fell 40 percent from $375.6 million in 1998, excluding
special charges of $17.2 million. The decrease was primarily a result
of the decreased prices and volumes discussed above, partially offset
by favorable raw material costs and savings realized from Project
Profit.
1998 Compared to 1997
- --------------------
Phosphates' net sales of $1,572.8 million in 1998 increased six percent
from $1,484.8 million in 1997. Increased shipments of concentrated
phosphates contributed an additional $57.7 million to net sales. The
majority of the volume growth came from increased domestic shipments of
DAP and granular monoammonium phosphate (GMAP), which each increased 17
percent, partially offset by decreased GTSP volumes of 13 percent. The
increase in DAP and GMAP volumes was primarily a result of a strong
spring season, an increase in the number of supply contracts and spot
sales to certain larger co-ops. The volume decrease in GTSP was
primarily a result of the availability in the marketplace of
aggressively priced imports. International sales volumes rose slightly
compared to 1997 as increased shipments of GMAP and merchant acid were
partially offset by decreased shipments of DAP. In addition, average
sales realizations of concentrated phosphates, particularly DAP,
favorably impacted net sales by $20.5 million. Net sales were also
favorably impacted by $6.6 million due to higher domestic phosphate
rock sales volumes.
Gross margins in 1998 of $375.6 million, excluding special charges of
$17.2 million, climbed 26 percent from $298.7 million in 1997,
primarily as a result of the increased volumes and prices discussed
above as well as favorable raw material costs.
<TABLE>
IMC Feed Ingredients
<CAPTION>
Year ended December 31 %Increase(Decrease)
1999 1998 1997 1999 1998
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net sales $173.5 $164.4 $163.5 6 1
Gross margins $ 41.6(b) $ 30.6(c) $ 40.3 36 (24)
As a percentage of net sales 24% 19% 25%
Sales volumes (000 tons) 914 853 826 7 3
Average feed phosphates
price per short ton(a) $ 209 $ 212 $ 217 (1) (2)
(a) FOB plant.
(b) Excludes special charges of $0.7 million.
(c) Excludes special charges of $1.8 million.
</TABLE>
1999 Compared to 1998
- ---------------------
Sales for Feed Ingredients of $173.5 million in 1999 increased six
percent compared to $164.4 million in 1998, primarily from improved
volumes.
Gross margins of $41.6 million in 1999, excluding special charges of
$0.7 million, increased 36 percent compared to $30.6 million in 1998,
excluding special charges of $1.8 million, primarily as a result of
lower raw material costs and the higher volumes discussed above.
1998 Compared to 1997
- ---------------------
Sales for Feed Ingredients of $164.4 million in 1998 increased slightly
compared to $163.5 million in 1997.
Gross margins of $30.6 million in 1998, excluding special charges of
$1.8 million, decreased 24 percent compared to $40.3 million in 1997.
This margin decrease was primarily a result of a change in the transfer
price of phosphoric acid from Phosphates.
<TABLE>
IMC Potash
<CAPTION>
Year ended December 31 %Increase(Decrease)
1999 1998 1997 1999 1998
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net sales $692.1 $700.1 $617.4 (1) 13
Gross margins $242.7(c) $283.3 $237.7 (14) 19
As a percentage of net sales 35% 40% 39%
Sales volumes (000 tons)(a) 8,110 8,402 8,941 (3) (6)
Average potash price per
short ton(b) $ 82 $ 81 $ 70 1 16
(a) Sales volumes include tons sold captively.
(b) FOB plant/mine.
(c) Excludes special charges of $7.7 million.
</TABLE>
1999 Compared to 1998
- ---------------------
Potash's net sales of $692.1 million in 1999 decreased one percent from
$700.1 million in 1998. This decline was attributable to unfavorable
domestic volumes caused by lower agricultural demand due to low
commodity prices for corn and soybean crops. Partially offsetting the
unfavorable domestic volumes were increased export volumes to Asia and
Latin America. Average potash sales realizations increased slightly in
1999 compared to prior year levels.
Gross margins of $242.7 million in 1999, excluding special charges of
$7.7 million, decreased 14 percent compared with $283.3 million in
1998, primarily as a result of the lower sales volumes discussed above,
as well as higher Canadian provincial resource taxes, increased water
control costs at the Esterhazy potash mine and higher natural gas
costs. See Note 16, "Contingencies," of Notes to Consolidated
Financial Statements.
1998 Compared to 1997
- ---------------------
Potash's net sales increased 13 percent to $700.1 million in 1998 from
$617.4 million in 1997. This increase resulted from acquisitions made
by the Company as well as price increases during the year, partially
offset by decreased volumes. Sales for 1998 included a full year of
operating results for Western Ag-Minerals, which was acquired in
September 1997. The Company also acquired a salt and potash production
facility located in Ogden, Utah as part of the Harris Acquisition in
April 1998. See Note 18, "Subsequent Events," of Notes to Consolidated
Financial Statements. The incremental sales in 1998 from these two
acquisitions was $80.0 million. Average sales realizations increased
16 percent as a result of price increases effective in March and
September 1998. Sales volumes declined six percent as a result of a
decrease in domestic shipments of nine percent, partially offset by an
increase in international tonnage of five percent. Domestic sales
volumes declined as a result of low demand for agricultural products
due to an excellent harvest coupled with low commodity prices, while
the increase in international shipments was attributable to greater
potash exports to Brazil and China. The increase in average sales
realizations, partially offset by decreased volumes, favorably impacted
net sales by $3.0 million.
Gross margins of $283.3 million in 1998 increased 19 percent compared
with $237.7 million in 1997, primarily as a result of the acquisitions
and price increases discussed above.
<TABLE>
IMC Salt
<CAPTION>
Year ended December 31 %Increase(Decrease)
1999 1998 1997(d) 1999 1998(d)
---- ---- ------- ---- -------
<S> <C> <C> <C> <C> <C>
Net sales $321.7 $177.4 - 81 -
Gross margins $103.7(c) $ 57.1 - 82 -
As a percentage of net sales 32% 32% -
Sales volumes (000 tons)(a) 11,511 5,761 - 100 -
Average salt price per
short ton(b) $ 28 $ 31 - (10) -
(a) Sales volumes includes tons sold captively.
(b) FOB plant/mine.
(c) Excludes special charges of $5.6 million.
(d) Acquired as part of the Harris Acquisition in April 1998.
</TABLE>
The Salt business unit was acquired as part of the Harris Acquisition
in April 1998; consequently, operating results for the year ended
December 31, 1998 included only partial year activity. Pro forma net
sales and gross margins, adjusted to include full-year operating
results for 1998, were $267.3 million and $95.0 million, respectively.
In early 2000, the Company decided to explore strategic options, including
divestiture or a joint venture, for the Salt business unit. See Note 18,
"Subsequent Events," of Notes to Consolidated Financial Statements.
1999 Compared to 1998
- ---------------------
Salt's net sales increased 20 percent to $321.7 million in 1999 from
comparable net sales of $267.3 million in 1998. The increase was
attributable to higher 1999 volumes in the highway deicing, general
trade and rock salt businesses which were impacted by the milder winter
weather experienced during 1998.
Gross margins of $103.7 million in 1999, excluding special charges of
$5.6 million, increased nine percent from comparable gross margins of
$95.0 million in 1998. The increase in 1999 margins was primarily a
result of the volume increases discussed above.
1998 Compared to 1997
- ---------------------
Salt's pro forma net sales and gross margins for 1998 were lower than
comparable pre-acquisition amounts in 1997 of $299.6 million and $122.6
million, respectively, primarily due to the mild weather conditions in
1998.
Selling, General and Administrative Expenses
Selling, general and administrative expenses were $143.9 million,
$140.7 million and $131.8 million in 1999, 1998 and 1997, respectively,
excluding special charges of $20.6 million and $9.9 million in 1999 and
1998, respectively. The increase in 1999 compared to 1998 primarily
resulted from a full year of operations for Salt. The increase in 1998
compared to 1997 primarily resulted from the Harris Acquisition,
partially offset by an overall reduction in general corporate spending
and the Vigoro Sale. See Note 5, "Other Divestitures" and Note 6,
"Acquisitions," of Notes to Consolidated Financial Statements.
Other (Income) Expense
Other income consisted primarily of gains on sale of assets and foreign
currency transactions.
Interest Expense
The decrease in interest expense in 1999 compared with 1998 was the
result of payments of debt using proceeds received from the divestiture
of AgriBusiness and cash flows from operations. The increase in
interest expense in 1998 compared with 1997 was attributable to debt
assumed as part of the Harris Acquisition and the issuance of
additional debt to fund the acquisition. See "Capital Resources and
Liquidity," as well as Note 4, "Discontinued Operations," Note 6,
"Acquisitions" and Note 10, "Financing Arrangements," of Notes to
Consolidated Financial Statements.
Minority Interest
Minority interest includes benefits related to special charges of $28.1
million and $31.6 million in 1999 and 1998, respectively. The decrease
in minority interest in 1999 compared with 1998 was primarily
attributable to significantly lower IMC-Agrico Company (IMC-Agrico)
earnings in 1999 compared to 1998. The decrease in minority interest
in 1998 compared to 1997 was primarily the result of the FTX Merger.
See Note 6, "Acquisitions" and Note 7, "Minority Interest," of Notes to
Consolidated Financial Statements.
Income Taxes
See Note 12, "Income Taxes," of Notes to Consolidated Financial
Statements.
Special Charges
Restructuring Charges
During the fourth quarter of 1999, the Company implemented the
Rightsizing Program which was designed to simplify and focus the
Company's core businesses. The key components of the Rightsizing
Program are: (i) the shutdown and permanent closure of the Nichols and
Payne Creek facilities at Phosphates resulting from an optimization
program that will reduce rock and concentrate production costs through
higher utilization rates at the lowest-cost facilities; (ii) an asset
rightsizing program at Potash resulting from a recently revised mine
plan; (iii) closure of a facility at Salt; and (iv) corporate and
business unit headcount reductions. In conjunction with the
Rightsizing Program, the Company recorded a special charge of $179.0
million, $95.6 million after tax and minority interest, or $0.83 per
share, in the fourth quarter of 1999. For more details related to the
Rightsizing Program, see Note 3, "Restructuring and Other Charges," of
Notes to Consolidated Financial Statements.
During the fourth quarter of 1998, the Company developed and began
execution of Project Profit. Project Profit was comprised of four
major initiatives: (i) the combination of certain activities within the
Potash and Phosphates business units in an effort to realize certain
operating and staff function synergies; (ii) restructuring of the
phosphate rock mining, concentrated phosphate and salt
production/distribution operations and processes in an effort to reduce
costs; (iii) simplification of current business activities by
eliminating businesses not deemed part of the Company's core
competencies; and (iv) reduction of operational and corporate
headcount. In conjunction with Project Profit, the Company recorded a
special charge of $193.3 million, $113.4 million after tax and minority
interest, or $0.99 per share, in the fourth quarter of 1998. For more
details related to Project Profit, see Note 3, "Restructuring and Other
Charges," of Notes to Consolidated Financial Statements.
Write-down of Goodwill
Effective October 1, 1999, the Company elected to change its method for
assessing the recoverability of goodwill (not associated with impaired
assets) from one based on undiscounted cash flows to one based on
discounted cash flows. The Company believes the discounted cash flow
approach is preferable because it is consistent with the basis used by
the Company for investment decisions (acquisitions and capital
projects) and takes into account the specific and detailed operating
plans and strategies of each business and the timing of cash flows. The
adoption of the discounted cash flow method may result in greater
earnings volatility since any subsequent decreases in discounted cash
flows of certain segments may result in the write-down of goodwill.
As a result of the change to a discounted cash flow methodology, the
Company recorded a non-cash write-down of goodwill of $521.2 million,
or $4.55 per share, in the fourth quarter of 1999. See Note 2, "Change
in Accounting for Goodwill," of Notes to Consolidated Financial
Statements.
Other Charges
In the fourth quarter of 1999, the Company recorded a $125.0 million,
or $1.09 per share, deferred tax provision for a tax basis difference
related to the Company's investment in Phosphate Resource Partners
Limited Partnership (PLP). This special charge was necessitated as a
result of a change in the tax law in December 1999. See Note 12,
"Income Taxes," of Notes to Consolidated Financial Statements.
During the fourth quarter of 1999, and in connection with the
Rightsizing Program, the Company undertook a detailed review of its
accounting records and valuation of various assets and liabilities. As
a result, the Company recorded a special charge of $58.8 million, $35.0
million after tax and minority interest, or $0.31 per share, related to
asset write-offs and environmental accruals. Of the $58.8 million
charge, $38.2 million was included in Cost of goods sold and $20.6
million was included in Selling, general and administrative expenses.
See Note 3, "Restructuring and Other Charges," of Notes to Consolidated
Financial Statements.
In 1998, the Company sold the Vigoro business unit, a consumer lawn and
garden and professional products business. In connection with this
sale, the Company recorded a special charge of $14.0 million, $9.1
million after tax, or $0.08 per share. Of the $14.0 million charge,
$4.1 million was included in Cost of goods sold and $9.9 million was
included in Selling, general and administrative expenses. See Note 5,
"Other Divestitures," of Notes to Consolidated Financial Statements.
In 1997, and in connection with the FTX Merger, the Company
relinquished its 25.0 percent interest in Main Pass to McMoRan
Exploration Company (MMR), a newly formed public entity consisting of
the former sulphur business of PLP and Main Pass. As a result, the
Company recorded a special charge of $183.7 million, $112.2 million
after tax, or $1.19 per share, to write-down the assets of Main Pass to
their fair value. See Note 6, "Acquisitions," of Notes to Consolidated
Financial Statements.
Capital Resources and Liquidity
-------------------------------
The Company generates significant cash from operations and has
sufficient borrowing capacity to meet its operating and discretionary
spending requirements.
The Company generated $658.6 million of EBITDA in 1999 compared with
$789.8 million in 1998. Management places significant emphasis on
EBITDA as one of the key standards for measuring consolidated
performance. Although EBITDA is a leading indicator used by
management, it is not a replacement of measurement standards defined by
and required by generally accepted accounting principles such as
operating earnings, cash flows from operating activities and net
income.
Operating activities generated $458.4 million of cash in 1999 compared
with $269.1 million in 1998. The increase of $189.3 million was
primarily due to a decrease in working capital. The change in working
capital was the result of a planned reduction in inventory and a
decrease in receivables, partially offset by lower payables.
Net cash provided by investing activities increased $778.8 million in
1999 from a use of funds of $709.7 million in 1998 to a source of funds
of $69.1 million in 1999. The increase was primarily a result of a
decrease in acquisitions, reduced capital expenditures and proceeds of
$295.9 million from the sale of AgriBusiness and the Company's
investment in the oil and gas business.
Capital expenditures in 1999 were $248.4 million and consisted
primarily of expanded potash capacity; salt business consolidation; and
new computer system and production equipment upgrades. Capital
expenditures in 1998 were $367.6 million and consisted primarily of
mine expansion and development costs; oil and gas exploration and
development; and system development and production equipment upgrades.
The decrease of $119.2 million compared to 1998 was primarily a result
of reduced mine expansion efforts and the absence in 1999 of
expenditures for the discontinued operations of Chemicals as well as
the oil and gas business. The Company estimates that its capital
expenditures from continuing operations for 2000 will approximate
$170.0 million, $150.0 million after minority interest, and will be
financed primarily from operations.
Cash used by financing activities increased $998.8 million in 1999 from
a source of funds of $441.5 million in 1998 to a use of funds of $557.3
million in 1999. This increased use of funds was primarily due to net
debt payments of $501.6 million in 1999 compared to net debt proceeds
of $544.8 million in 1998. Total borrowings decreased by approximately
$500.0 million in 1999, from $3,047.0 million at December 31, 1998 to
$2,548.6 million at December 31, 1999, primarily as a result of using
cash flows from operations and proceeds from the divestiture of
AgriBusiness to reduce debt.
As of December 31, 1999, the Company had the ability to borrow under a
shelf registration statement which permits the issuance of
approximately $750.0 million of securities. As of December 31, 1999,
the Company also had $506.0 million of commercial paper outstanding
supported by $1.0 billion of credit facilities. Net available
borrowings under these credit facilities at December 31, 1999 were
approximately $442.2 million. See Note 10, "Financing Arrangements,"
of Notes to Consolidated Financial Statements.
The Company may acquire shares of its stock on an ongoing basis and is
authorized as of December 31, 1999 to purchase up to 4.5 million
shares. Additionally, in early 2000, the Company's Board of Directors
authorized the purchase of up to an additional 5.4 million shares
through the use of a forward stock repurchase program executed by a
financial institution. Management considers market conditions,
alternate uses of cash and shareholder returns, among other factors,
when evaluating share repurchases.
The Company believes that its cash, other liquid assets, operating cash
flows and access to capital markets, taken together, provide adequate
resources to fund ongoing operating requirements as well as future
capital expenditures related to the expansion of and investment in
existing businesses and development of new projects.
[Chart]
EBITDA(a)
- ---------
(In millions)
1999 1998 1997
---- ---- ----
$658.6 $789.8 $464.5
(a)Earnings from continuing operations before special charges,
minority interest, interest charges, taxes, depreciation, depletion
and amortization and after PLP distribution.
[Chart]
Capital Expenditures
- --------------------
(In millions)
1999 1998 1997
---- ---- ----
$248.4 $367.6 $244.0
[Chart]
Debt-to-Total Capitalization
- ----------------------------
1999 1998 1997
---- ---- ----
70.2% 62.1% 42.4%
Market Risk
-------------
The Company is exposed to the impact of interest rate changes on
borrowings, fluctuations in the functional currency of foreign
operations and the impact of fluctuations in the purchase price of
natural gas, ammonia and sulphur consumed in operations, as well as
changes in the market value of its financial instruments. The Company
periodically enters into derivatives in order to minimize foreign
currency risks, but not for trading purposes.
The functional currency of all operations outside the United States is
the respective local currency. Foreign currency translation effects
are included in Accumulated other comprehensive income. The Company
uses foreign currency forward exchange contracts, which typically
expire within one year, to hedge transaction exposure related to assets
and liabilities denominated in currencies other than the entities'
functional currencies, including intercompany loans. Realized and
unrealized gains and losses on foreign currency forward exchange
contracts used to hedge the currency fluctuations on transactions
denominated in foreign currencies and the offsetting realized and
unrealized losses and gains on hedged transactions are recorded in
Other income and expense. The Company had $93.6 million and $106.2
million of foreign currency forward exchange contracts outstanding as
of December 31, 1999 and 1998, respectively. As of December 31, 1999
and 1998, the difference between the contract amounts and fair value
was immaterial.
The Company also uses foreign currency forward exchange contracts,
which typically expire within one year, to reduce the exchange rate
risk related to certain forecasted foreign currency transactions. The
carrying amounts of these contracts are adjusted to their market values
at each balance sheet date and recorded in Other income and expense.
The Company had $156.5 million of foreign currency forward exchange
contracts outstanding as of December 31, 1999, which are being used for
the purpose described above. As of December 31, 1999, the difference
between the contract amounts and fair value was immaterial.
The Company conducted sensitivity analyses of its derivatives and other
financial instruments assuming the following: (i) a one percentage
point adverse change in interest rates on outstanding borrowings; (ii)
a ten percent adverse change in foreign currency exchange rates; and
(iii) a ten percent adverse change in the purchase price of natural
gas, ammonia and sulphur all from their levels at December 31, 1999.
Holding all other variables constant, the hypothetical adverse changes
would not materially affect the Company's financial position. These
analyses did not consider the effects of the reduced level of economic
activity that could exist in such an environment and certain other
factors.
Further, in the event of a change of such magnitude, management would
likely take actions to further mitigate its exposure to possible
changes. However, due to the uncertainty of the specific actions that
would be taken and their possible effects, the sensitivity analyses
assume no changes in the Company's financial structure.
Contingencies
-------------
See Note 16, "Contingencies," of Notes to Consolidated Financial
Statements.
Environmental, Health and Safety Matters
----------------------------------------
The Company's Program
The Company has adopted the following Environmental, Health and Safety
(EHS) Policy (Policy):
As a key to the Company's success, the Company is
committed to the pursuit of excellence in health and
safety, and environmental stewardship. Every employee
will strive to continuously improve the Company's
performance and to minimize adverse environmental,
health and safety impacts. The Company will
proactively comply with all environmental, health and
safety laws and regulations.
This Policy is the cornerstone of the Company's comprehensive EHS plan
(EHS Plan) to achieve sustainable, predictable, measurable and
verifiable EHS performance. Integral elements of the EHS Plan include:
(i) improving the Company's EHS procedures and protocols; (ii)
upgrading its related facilities and staff; (iii) performing baseline
and verification audits; (iv) formulating improvement plans; and (v)
assuring management accountability. The Company has phased in
implementation of this EHS Plan and each facility is in a different
stage of plan integration. The Company conducts audits to confirm that
each facility has implemented the EHS Plan and has achieved regulatory
compliance, continuous EHS improvement and integration of EHS
management systems into day-to-day business functions.
The Company produces and distributes crop and animal nutrients, salt
and deicing products, boron-based chemicals and sodium-bicarbonate.
These activities subject the Company to an ever-evolving myriad of
international, federal, state, provincial and local EHS laws which
regulate, or propose to regulate: (i) product content; (ii) use of
products by both the Company and its customers; (iii) conduct of mining
and production operations, including safety procedures used by
employees; (iv) management and handling of raw materials; (v) air and
water quality impacts by the Company's facilities; (vi) disposal of
hazardous and solid wastes; and (vii) post-mining land reclamation.
For new regulatory programs, it is difficult to ascertain future
compliance obligations or estimate future costs until implementing
regulations have been finalized and definitive regulatory
interpretations have been adopted. The Company intends to respond to
these regulatory requirements at the appropriate time by implementing
necessary physical or procedural modifications.
The Company has expended, and anticipates that it will continue to
expend, substantial resources, both financial and managerial, to comply
with EHS standards. In 2000, environmental capital expenditures will
total approximately $56.5 million, primarily related to: (i)
modification or construction of wastewater treatment areas in Florida;
(ii) modification and construction projects associated with
phosphogypsum stacks at the concentrates plants in Florida and
Louisiana; and (iii) remediation of contamination at current or former
operations. Additional expenditures for land reclamation activities
will total approximately $15.5 million. In 2001, the Company expects
environmental capital expenditures will be approximately $86.9 million
and expenditures for land reclamation activities to be approximately
$13.5 million. No assurance can be given that greater-than-anticipated
EHS capital expenditures will not be required in 2000 or in the future.
Based on current information, it is the opinion of management that the
Company's contingent liability arising from EHS matters, taking into
account established reserves, will not have a material adverse effect
on the Company's financial position or results of operations.
Product Requirements and Impacts
- --------------------------------
The Company's primary businesses include the production and sale of
crop and animal nutrients, salt and deicing products, boron-based
chemicals and sodium-bicarbonate. International, federal, state and
provincial standards: (i) require registration of many Company
products before those products can be sold; (ii) impose labeling
requirements on those products; and (iii) require producers to
manufacture the products to formulations set forth on the labels.
Various environmental, natural resource and public health agencies at
all regulatory levels have begun evaluating alleged health and
environmental impacts that might arise from the handling and use of
products such as those manufactured by the Company. Most of these
evaluations are in the initial stages. During 1999, the United States
Environmental Protection Agency (EPA), the state of California, and The
Fertilizer Institute each completed independent assessments of
potential risks posed by crop nutrient materials. These assessments
concluded that, based on the available data, crop nutrient materials
generally do not pose harm to human health or the environment. Despite
these conclusions, some agencies have implemented or are still
considering standards that may modify customers' use of the Company's
products because of the alleged impacts. It is unclear whether any
further evaluations that may be conducted will result in additional
regulatory requirements for the producing industries, including the
Company or its customers. At this preliminary stage, the Company
cannot estimate the potential impact of these standards on the market
for the Company's products or on the expenditures that may be necessary
to meet new requirements.
Operating Requirements and Impacts
- ----------------------------------
Permitting
The Company holds numerous environmental, mining and other permits or
approvals authorizing operation at each of its facilities. A decision
by a government agency to deny or delay issuing an application for a
new or renewed permit or approval, or to revoke or substantially modify
an existing permit or approval, 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 or other permits or approvals. Recently, a
number of organizations and community groups in a variety of locations
have relied upon guidance and materials issued by the EPA to challenge
federally authorized permits that these groups believe might have a
disproportionate impact on minority or low-income communities. A
challenge of this type at one of the Company's facilities, even though
unfounded, could impact the ability of that facility to obtain timely
permits.
In addition, over the next two to six years, Phosphates will be
continuing its efforts to obtain permits in support of its anticipated
Florida mining operations at the Ona and Pine Level properties. These
properties contain in excess of 100 million tons of phosphate rock
reserves. For years, the Company has successfully permitted mining
properties in Florida and anticipates that it will be able to permit
these properties. Nevertheless, a denial of these permits or the
issuance of permits with cost-prohibitive conditions would adversely
impact the Company by preventing it from mining at Ona or Pine Level.
Mining Operations
In the last several years, regulatory agencies in the United States and
Canada have undertaken a review of potential health impacts from diesel
emissions on miners in underground mining operations. The Province of
Ontario has adopted, and the United States Mine Safety and Health
Administration has proposed, limits of exposure to diesel emissions for
all underground mining operations including salt and potash. Moreover,
in 1998, the National Institute for Occupational Safety and Health
(NIOSH) began a multi-year study to determine whether exposure to
exhaust generated by diesel equipment used in underground mining
operations results in adverse, long-term health effects to miners.
This study involves a review of Potash's two potash mines in Carlsbad,
New Mexico. The Company cannot currently estimate the extent of
expenditures that may be necessary to address conclusions of the NIOSH
study, once completed, or additional regulatory standards that may arise.
Management of Residual Materials
Mining and processing potash, salt and phosphate generates residual
materials that must be managed. Potash tailings, which contain
primarily salt, iron and clay, are stored in surface disposal sites.
Salt residuals are managed in piles. Phosphate mining residuals, such
as overburden and sand tailings, are used in reclamation, while clay
residuals are deposited in clay ponds. Phosphate processing generates
phosphogypsum which is stored in phosphogypsum stack systems. The
Company has incurred and will continue to incur significant costs to
manage its potash, salt and phosphate residual materials in accordance
with environmental laws, regulations and permit requirements.
For potash and salt residuals in Saskatchewan, the Department of
Environmental and Resource Management (Department) has required all
mine operators to obtain approval of facility decommissioning and
reclamation plans (Plans) that will apply once mining operations at any
facility are terminated. These Plans must specify procedures for
decommissioning all mine facilities and for handling potash and salt
residual materials, including salt piles and potash tailings management
areas. As part of these Plans, the Department will require operators
to provide financial assurance that the Plans will be carried out.
Along with other members of the Saskatchewan potash industry, the
Company filed its Plans for its Saskatchewan potash mines in 1997. The
Department rejected those potash industry Plans that did not provide
for the underground disposal of all surface tailings. The potash
industry is cooperating with the Department to evaluate technically
feasible, cost-effective and environmentally responsible disposal.
Costs for decommissioning in accordance with the Plans are likely to be
significant. However, the Company does not anticipate expending such
funds in the foreseeable future. Facility decommissioning will not
occur until a facility has closed, and such closure is not imminent
given the anticipated life of the Company's mines. Also,
implementation of the Plans has been deferred until the Department and
the industry can reach agreement over the appropriate technical
approach for long-term potash tailings management. This approach may
change as advances are made in tailings management technology. Changes
also occur from time to time in rules and regulations governing
tailings management. Finally, the Company will not be required to
provide financial assurance until an appropriate assurance mechanism
has been specified by the Department. For these reasons, the Company
cannot predict with certainty the financial impact of these
decommissioning requirements on the Company.
Monitoring of the Company's Saskatchewan potash tailing management
areas has indicated that some of these areas might have impacted local
groundwater. The consequences of this impact are unknown and it is
uncertain whether any corrective action will be required. As a result,
management cannot currently estimate the financial impact that these
groundwater results may have on the Company.
IMC Salt's Saskatchewan salt mine also submitted its decommissioning
plan in 1997. The plan provided for dissolution and underground
reinjection of the facility's residual salt pile and was conditionally
approved. The dissolution process has begun; however, the Department
still has not specified the type of financial assurance that it will
require the facility to provide.
With regard to phosphate processing, Florida law may require Phosphates
to close one or more of its unlined phosphogypsum stacks and/or
associated cooling ponds after March 25, 2001 if the stack system or
pond is demonstrated to cause an exceedance of Florida's groundwater
quality standards. Phosphates has already begun closure activities at
its unlined gypsum stack at its New Wales facility in Central Florida.
Phosphates cannot predict at this time whether Florida law will require
closure of any of its other stack systems. The costs of such closure
and decommissioning could be significant. In addition, Phosphates
currently operates an unlined cooling pond at New Wales. Monitoring
indicates that discharges from the unlined cooling pond are within
Florida groundwater standards. Phosphates received a permit in August
1999 to continue operating this pond through March 25, 2001. Over the
past several years, the Company has successfully permitted this pond
and anticipates that it will be able to obtain future permits.
However, if Phosphates does not receive the permit, it will need to
line or relocate the cooling pond, which is estimated to cost
approximately $45.0 million.
Restructuring Charges
- ---------------------
In connection with the Company's Rightsizing Program, Phosphates has
discontinued mining or processing operations at a number of its
facilities including the Payne Creek and Noralyn mines and the Nichols
concentrates plant. Such discontinuation will trigger decommissioning,
closure and reclamation requirements under a number of Florida
regulations and Company permits. These activities are estimated to cost
$41.0 million, for which reserves have been established. Although the
Company believes that it has reasonably estimated these costs, additional
expenditures could be required to address unanticipated environmental
conditions as they arise.
Remedial Activities
- -------------------
Remediation at Company Facilities
Many of the Company's formerly owned or current facilities have been in
operation for a number of years. The historical use and handling of
regulated chemical substances, crop and animal nutrients and additives,
salt and by-product or process tailings at these facilities by the
Company and predecessor operators have resulted in soil and groundwater
contamination. In addition, through the FTX Merger, the Company
assumed responsibility for contamination at some crop nutrient
facilities that were owned or operated by FTX, PLP or their
predecessors.
At many of these facilities, spills or other unintended releases of
regulated substances have occurred previously and potentially could
occur in the future, possibly requiring the Company to undertake or
fund cleanup efforts. In some instances, 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.
At other locations, the Company has entered into consent orders with
appropriate governmental agencies to perform required remedial
activities that will address identified site conditions. Expenditures
for these known conditions currently are not expected to be material.
However, material expenditures by the Company could be required in the
future to remediate the contamination at these or at other current or
former sites.
The Company believes that, pursuant to several indemnification
agreements, it is entitled to at least partial, and in many instances
complete, indemnification for the costs that may be expended by the
Company to remedy environmental issues at certain facilities. These
agreements address issues that resulted from activities occurring prior
to the Company's acquisition of facilities or businesses from parties
including PPG Industries, Inc.; Kaiser Aluminum & Chemical Corporation;
Beatrice Companies, Inc.; Estech, Inc.; ARCO; Conoco; The Williams
Companies; Kerr-McGee Inc.; and certain other private parties. The
Company has already received and anticipates receiving amounts pursuant
to the indemnification agreements for certain of its expenses incurred
to date as well as future anticipated expenditures.
During 1999, under a consent order with the state of South Carolina,
the Company successfully deconstructed its former fertilizer production
facility in Spartanburg, South Carolina. Subsequently, the EPA
performed an expanded site investigation (ESI) at this facility to
determine whether the Company will be required to conduct any
additional remedial activities. Because the results of that ESI have
not been finalized, the Company cannot determine the cost of any
remedial action that ultimately may be required. Recently, several
attorneys purportedly representing 600 neighbors of the Spartanburg
facility have expressed their intention to file suit against the
Company for alleged personal injury and property damage. Until these
suits are filed, the Company is unable to determine the magnitude of
potential exposure; however, the Company intends to vigorously contest
any actions that may be brought.
Remediation at Third-Party Facilities
Along with impacting the sites at which the Company has operated,
parties have alleged that the Company's historic operations have
resulted in contamination to neighboring off-site areas or third-party
facilities. In some instances, the Company has agreed, pursuant to
consent orders with appropriate governmental agencies, to undertake
investigations, which currently are in progress, to determine whether
remedial action may be required to address contamination. The
Company's remedial liability at these sites, either alone or in the
aggregate, currently is not expected to be material. As more
information is obtained regarding these sites, this expectation could
change.
In September 1999, four plaintiffs filed Moore et al. vs. Agrico
Chemical Company et al., a class-action lawsuit naming Agrico Chemical
Company, FTX, PLP and a number of unrelated defendants. The suit seeks
unspecified compensation for alleged property damage, medical
monitoring, remediation of an alleged public health hazard and other
appropriate damages purportedly arising from operation of the
neighboring fertilizer and crop protection chemical facilities in
Lakeland, Florida. Agrico Chemical Company owned the Landia portion of
these facilities for approximately 18 months during the mid-1970s.
Because the litigation is in its early stages, management cannot
determine the magnitude of any exposure to the Company; however, the
Company intends to vigorously contest this action and to seek any
indemnification to which it may be entitled. Concurrent with this
litigation, the EPA has undertaken on-site and off-site investigations
of these facilities to determine whether any remediation of existing
contamination may be necessary. Pursuant to an indemnification
agreement with the Company, The Williams Companies have assumed
responsibility for any costs that Agrico Chemical Company might incur
for remediation as a result of the EPA's actions.
Superfund
- ---------
The Comprehensive Environmental Response Compensation and Liability Act
(Superfund) imposes liability, without regard to fault or to the
legality of a party's conduct, on certain categories of persons who are
considered to have contributed to the release of "hazardous substances"
into the environment. Currently, the Company is involved or concluding
involvement at less than 20 Superfund or equivalent state sites. The
Company's remedial liability at these sites, either alone or in the
aggregate, is not currently expected to be material. As more
information is obtained regarding these sites and the potentially
responsible parties involved, this expectation could change.
Oil and Gas
- -----------
Through the FTX Merger, the Company assumed responsibility for
contamination and environmental impacts at a significant number of oil
and gas facilities that were businesses operated by FTX, PLP or their
predecessors. The Company recorded an additional $18.3 million, $10.8
million after tax, of environmental exit costs as a result of
additional information which became available to the Company in the
fourth quarter of 1999 concerning the Company's obligations with
respect to previously owned oil and gas properties. The Company is
currently involved in eight such claims, which allege destruction of
marshland by oil and gas operations or contamination resulting from
disposal of oil and gas residual materials. The Company's liability
for these claims, either alone or in the aggregate, taking into account
established reserves, is not expected to have a material adverse effect
on the Company's financial position or results of operations. As more
information is obtained regarding these claims or as new claims arise,
this expectation could change.
Year 2000 Disclosure
--------------------
The Company completed its Year 2000 readiness initiatives and did not
experience any significant problems. The Company does not anticipate
any significant adverse business effects related to this issue. The
Company incurred approximately $7.5 million in cumulative costs of
projects dedicated solely to Year 2000 remediation.
Recently Issued Accounting Guidance
-----------------------------------
The Company does not believe that Statement of Financial Accounting
Standards (SFAS) No. 133, "Accounting for Derivative Instruments and
Hedging Activities," which the Company is required to adopt on January
1, 2001, will have a material impact on the Company's financial
statements.
Forward-Looking Statements
--------------------------
All statements, other than statements of historical fact, contained
within Management's Discussion and Analysis of Financial Condition and
Results of Operations 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: general business and economic conditions
in the agricultural industry or in localities where the Company or its
customers operate; weather conditions; the impact of competitive
products; pressure on prices realized by the Company for its products;
constraints on supplies of raw materials used in manufacturing certain
of the Company's products; capacity constraints limiting the production
of certain products; difficulties or delays in the development,
production, testing and marketing of products; difficulties or delays
in receiving required governmental and regulatory approvals; market
acceptance issues, including the failure of products to generate
anticipated sales levels; difficulties in integrating acquired
businesses and in realizing related cost savings and other benefits;
the effects of and change in trade, monetary and fiscal policies, laws
and regulations; foreign exchange rates and fluctuations in those
rates; the costs and effects of legal proceedings, including
environmental and administrative proceedings involving the Company; and
other risk factors reported from time to time in the Company's
Securities and Exchange Commission reports.
Report of Management
Management of IMC Global Inc. is responsible for the preparation,
integrity and fair presentation of the financial information included
in this report. The financial statements have been prepared in
accordance with generally accepted accounting principles and
necessarily include certain amounts that are based on management's
estimates and judgment.
Management is responsible for maintaining a system of internal
accounting controls to provide reasonable assurance as to the integrity
and reliability of the financial statements; the proper safeguarding
and use of assets; and the accurate execution and recording of
transactions. Such controls are based on established policies and
procedures and are implemented by trained personnel. The system of
internal accounting controls is monitored by the Company's internal
auditors to confirm that the system is proper and operating
effectively. The Company's policies and procedures prescribe that the
Company and its subsidiaries are to maintain ethical standards and that
its business practices are to be consistent with those standards.
The Company's financial statements have been audited by Ernst & Young
LLP (Ernst & Young), independent auditors. Their audit was conducted
in accordance with auditing standards generally accepted in the United
States and included consideration of the Company's internal control
system. Management has made available to Ernst & Young all of the
Company's financial records and related data, as well as minutes of the
meetings of the Board of Directors. Management believes that all
representations made to Ernst & Young were valid and appropriate.
The Board of Directors, operating through its Audit Committee composed
entirely of non-employee directors, provides oversight to the financial
reporting process. The Audit Committee meets regularly with
management, the internal auditors and Ernst & Young, jointly and
separately, to review financial reporting matters, internal accounting
controls and audit results to assure that all parties are properly
fulfilling their responsibilities. Both Ernst & Young and the internal
auditors have unrestricted access to the Audit Committee.
/s/ J. Bradford James /s/ Anne M. Scavone
- ---------------------------- -----------------------------
J. Bradford James Anne M. Scavone
Executive Vice President and Vice President and Controller
Chief Financial Officer
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. as of December 31, 1999 and 1998 and the related
consolidated statements of operations, cash flows and stockholders'
equity for each of the three years in the period ended December 31,
1999. 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 audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of IMC Global Inc. as of December 31, 1999 and 1998, and the
consolidated results of its operations and its cash flows for each of
the three years in the period ended December 31, 1999, in conformity
with accounting principles generally accepted in the United States.
As discussed in Note 2 to the financial statements, effective October
1, 1999 the Company changed its method for assessing the recoverability
of goodwill. In addition, as discussed in Note 1 to the financial
statements, the Company changed its method of accounting for start-up
activities in 1999 to conform with SOP 98-5, "Reporting on the Costs of
Start-Up Activities."
/s/ Ernst & Young LLP
---------------------
Ernst & Young LLP
Chicago, Illinois
January 31, 2000
<TABLE>
Consolidated Statement of Operations
In millions, except per share amounts
<CAPTION>
Year ended December 31
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Net sales $2,369.3 $2,383.1 $2,116.0
Cost of goods sold 1,826.6 1,684.3 1,541.1
-------- -------- --------
Gross margins 542.7 698.8 574.9
Selling, general and administrative expenses 164.5 150.6 131.8
Goodwill write-down 521.2 - -
Restructuring charges 175.2 176.1 -
Main Pass write-down - - 183.7
-------- -------- --------
Operating earnings (loss) (318.2) 372.1 259.4
Interest expense 154.5 161.1 40.2
Other (income) expense, net
(6.9) (5.9) (5.4)
-------- -------- --------
Earnings (loss) from continuing operations
before minority interest (465.8) 216.9 224.6
Minority interest (0.1) 24.4 124.4
-------- -------- --------
Earnings (loss) from continuing operations
before income taxes (465.7) 192.5 100.2
Provision for income taxes 145.4 82.7 30.4
-------- -------- --------
Earnings (loss) from continuing operations (611.1) 109.8 69.8
Discontinued operations:
Earnings (loss) from discontinued operations (43.5) 1.1 18.0
Estimated loss on disposal (111.7) (122.9) -
-------- -------- --------
Total earnings (loss) from discontinued
operations (155.2) (121.8) 18.0
-------- -------- --------
Earnings (loss) before extraordinary item and
cumulative effect of a change in accounting
principle (766.3) (12.0) 87.8
Extraordinary item - debt retirement 0.5 3.0 (24.9)
Cumulative effect of a change in accounting
principle (7.5) - -
-------- ------- --------
Net earnings (loss) $ (773.3) $ (9.0) $ 62.9
======== ======== ========
Basic and diluted earnings (loss) per share:
Earnings (loss) from continuing operations $ (5.33) $ 0.96 $ 0.74
Total earnings (loss) from discontinued
operations (1.35) (1.07) 0.19
Extraordinary item - debt retirement - 0.03 (0.26)
Cumulative effect of a change in accounting
principle (0.07) - -
-------- -------- --------
Net earnings (loss) per share $ (6.75) $ (0.08) $ 0.67
======== ======== ========
Basic weighted average number of shares
outstanding 114.5 114.2 94.0
Diluted weighted average number of shares
outstanding 114.5 114.8 94.7
See Notes to Consolidated Financial Statements
</TABLE>
<TABLE>
Consolidated Balance Sheet
In millions, except share amounts
<CAPTION>
December 31
1999 1998
---- ----
<S> <C> <C>
Assets
- ------
Current assets:
Cash and cash equivalents $ 80.8 $ 110.6
Receivables, net 254.2 421.5
Inventories, net 439.6 580.6
Net assets of discontinued operations held for sale - 273.3
Deferred income taxes 135.3 91.1
Other current assets 18.0 5.5
-------- --------
Total current assets 927.9 1,482.6
Property, plant and equipment, net 3,250.7 3,697.4
Net assets of discontinued operations held for sale 301.5 -
Other assets 715.8 1,276.9
-------- --------
Total assets $5,195.9 $6,456.9
======== ========
Liabilities and Stockholders' Equity
- ------------------------------------
Current liabilities:
Accounts payable $ 200.9 $ 255.9
Accrued liabilities 260.1 240.9
Short-term debt and current maturities of long-term
debt 29.9 408.3
-------- --------
Total current liabilities 490.9 905.1
Long-term debt, less current maturities 2,518.7 2,638.7
Deferred income taxes 589.6 566.6
Other noncurrent liabilities 516.6 486.1
Stockholders' equity:
Common stock, $1 par value, authorized 300,000,000
shares; issued 125,163,572 and 125,072,811 shares
in 1999 and 1998, respectively 125.2 125.0
Capital in excess of par value 1,698.1 1,697.3
Retained earnings (deficit) (411.1) 400.6
Accumulated other comprehensive income (37.3) (66.3)
Treasury stock, at cost, 10,676,276 and 10,738,520
shares in 1999 and 1998, respectively (294.8) (296.2)
-------- --------
Total stockholders' equity 1,080.1 1,860.4
-------- --------
Total liabilities and stockholders' equity $5,195.9 $6,456.9
======== ========
See Notes to Consolidated Financial Statements
</TABLE>
<TABLE>
Consolidated Statement of Cash Flows
In millions
<CAPTION>
Year ended December 31
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net earnings (loss) $ (773.3) $ (9.0) $ 62.9
Adjustments to reconcile net earnings
(loss) to net cash provided by operating
activities:
Goodwill write-down 521.2 - -
Depreciation, depletion and amortization 232.5 251.7 183.2
Restructuring charges, net of cash paid 116.5 144.0 -
Estimated losses on disposal of businesses 111.7 122.9 -
Minority interest (2.5) 14.1 124.4
Main Pass write-down - - 112.2
Deferred income taxes 136.4 2.9 58.4
Other charges and credits, net 48.4 (38.4) 2.4
Changes in:
Receivables 88.4 (18.2) (12.3)
Inventories 68.8 (81.4) 3.9
Other current assets (14.2) (9.4) 2.1
Accounts payable (11.3) (64.9) (2.8)
Accrued liabilities (59.3) (79.8) 29.0
Net current assets of discontinued (4.9) 34.6 -
operations -------- --------- --------
Net cash provided by operating activities 458.4 269.1 563.4
-------- --------- --------
Cash Flows from Investing Activities
Capital expenditures (248.4) (367.6) (244.0)
Acquisitions, net of cash acquired (9.1) (393.3) (91.4)
Proceeds from sale of businesses 295.9 44.8 -
Proceeds from sale of investment 12.8 - -
Proceeds from sale of property, plant and 17.9 6.4 8.8
equipment -------- --------- --------
Net cash provided by (used in) investing
activities 69.1 (709.7) (326.6)
-------- --------- --------
Net cash provided (used) before financing
activities 527.5 (440.6) 236.8
-------- --------- --------
Cash Flows from Financing Activities
Cash distributions to unitholders of PLP (21.5) (11.0) -
Cash distributions from IMC-Agrico to PLP - - (146.4)
Payments of long-term debt (189.7) (1,303.1) (515.9)
Proceeds from issuance of long-term debt, net 80.4 2,370.2 805.3
Changes in short-term debt, net (392.3) (522.3) (127.7)
Increase (decrease) in securitization of
accounts receivable, net - (61.5) 6.0
Stock options exercised and restricted
stock awards 2.4 8.9 5.5
Cash dividends paid (36.6) (36.6) (29.7)
Purchase of treasury stock - (3.1) (187.5)
-------- --------- --------
Net cash provided by (used in) financing
activities (557.3) 441.5 (190.4)
-------- --------- --------
Net change in cash and cash equivalents (29.8) 0.9 46.4
Cash and cash equivalents - beginning of
year 110.6 109.7 63.3
-------- --------- --------
Cash and cash equivalents - end of year $ 80.8 $ 110.6 $ 109.7
======== ========= ========
See Notes to Consolidated Financial Statements
</TABLE>
<TABLE>
Consolidated Statement of Stockholders' Equity
In millions, except per share amounts
<CAPTION>
Capital Accumulated
in excess Retained other Total
Outstanding Common of par earnings comprehensive Treasury stockholders' Comprehensive
shares stock value (deficit) income stock equity income(loss)
----------- ------ --------- --------- ------------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996 96.1 $ 101.6 $ 936.1 $ 413.0 $ (17.2) $(107.3) $1,326.2
Net earnings - - - 62.9 - - 62.9 $ 62.9
Foreign currency translation
adjustment - - - - (13.6) - (13.6) (13.6)
Dividends ($0.32 per share) - - - (29.7) - - (29.7)
Stock options exercised 0.3 0.3 5.2 - - - 5.5
Issuance of common stock
pursuant to acquisitions 22.7 22.7 749.0 - - 0.2 771.9
Purchase of treasury shares (5.1) - - - - (187.5) (187.5)
----- ------- -------- ------- ------- ------- -------- -------
Balance at December 31, 1997 114.0 124.6 1,690.3 446.2 (30.8) (294.6) 1,935.7 49.3
=======
Net loss - - - (9.0) - - (9.0) (9.0)
Foreign currency translation
adjustment - - - - (35.5) - (35.5) (35.5)
Dividends ($0.32 per share) - - - (36.6) - - (36.6)
Stock options exercised and
restricted stock awards 0.4 0.4 7.0 - - 1.5 8.9
Purchase of treasury shares (0.1) - - - - (3.1) (3.1)
----- ------- -------- ------- ------- ------- -------- -------
Balance at December 31, 1998 114.3 125.0 1,697.3 400.6 (66.3) (296.2) 1,860.4 (44.5)
=======
Net loss - - - (773.3) - - (773.3) (773.3)
Foreign currency translation
adjustment - - - - 29.0 - 29.0 29.0
Dividends ($0.32 per share) - - - (36.6) - - (36.6)
Stock options exercised and
restricted stock awards 0.2 0.2 0.8 - - 1.4 2.4
Other - - - (1.8) - - (1.8)
----- ------- -------- ------- ------- ------- -------- -------
Balance at December 31, 1999 114.5 $ 125.2 $1,698.1 $(411.1) $ (37.3) $(294.8) $1,080.1 $(744.3)
===== ======= ======== ======= ======= ======= ======== =======
See Notes to Consolidated Financial Statements
</TABLE>
1. 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 50.0 percent owned
and controlled. Prior to its disposition in the fourth quarter of
1999, the Company's interest in a multi-year oil and natural gas
exploration program with MMR (Exploration Program) was
proportionately consolidated by PLP at a rate of 56.4 percent of
the exploration costs and 47.0 percent of the profits derived from
oil and gas producing properties. Additionally, prior to its
disposal in 1997, the Company proportionately consolidated its 25.0
percent interest in the sulphur operations of Main Pass. All
significant intercompany accounts and transactions are eliminated
in consolidation. Certain amounts in the consolidated financial
statements for periods prior to December 31, 1999 have been
reclassified to conform to the current presentation.
As discussed in more detail in Note 4, "Discontinued Operations,"
Chemicals, AgriBusiness and the Company's oil and gas business
have been presented as discontinued operations.
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.
Revenue Recognition
Revenue is recognized by the Company upon the transfer of title to
the customer, which is generally at the time product is shipped.
For certain export shipments, transfer of title occurs outside of
the United States.
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.
Concentration of Credit Risk
Domestically, the Company sells its products to manufacturers,
distributors and retailers primarily in the midwestern and
southeastern United States and to governmental bodies such as
states, provinces, counties and municipalities located in the Great
Lakes region of the United States and Canada. Internationally, the
Company's phosphate and potash products are sold primarily through
two North American export associations. No single customer or group
of affiliated customers accounted for more than ten percent of the
Company's net sales.
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 basis.
Property, Plant and Equipment/Other Assets
Property (including mineral deposits), plant and equipment,
including assets under capital leases, 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 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. Turnarounds are necessary to maintain the operating
capacity and efficiency rates of the production plants. The
deferred portion of Turnaround expenditures is classified in Other
assets.
Depreciation and depletion expenses for mining operations,
including mineral deposits, are determined using the
units-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, ten to 45 years; machinery and
equipment, three to 25 years; and leasehold improvements, over the
lesser of the remaining useful life of the asset or the remaining
term of the lease.
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 40 years. At December 31, 1999
and 1998, goodwill, included in Other assets, totaled $535.9
million and $1,064.2 million, respectively. See Note 2, "Change in
Accounting for Goodwill" and Note 6, "Acquisitions," for further
detail regarding goodwill.
Using the methodology prescribed in SFAS No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of," the Company reviews long-lived assets and the related
intangible assets for impairment whenever events or changes in
circumstances indicate the carrying amounts of such assets may not
be recoverable. Once an indication of a potential impairment
exists, recoverability of the respective assets is determined by
comparing the forecasted undiscounted net cash flows of the
operation to which the assets relate, to the carrying amount,
including associated intangible assets, of such operation. If the
operation is determined to be unable to recover the carrying amount
of its assets, then intangible assets are written down first,
followed by the other long-lived assets of the operation, to fair
value. Fair value is determined based on discounted cash flows or
appraised values, depending upon the nature of the assets.
Accrued Environmental Costs
The Company produces and distributes crop and animal nutrients,
salt and deicing products, boron-based chemicals and sodium-
bicarbonate. These activities subject the Company to an ever-
evolving myriad of international, federal, state, provincial and
local EHS laws, which regulate, or propose to regulate: (i) product
content; (ii) use of products by both the Company and its
customers; (iii) conduct of mining and production operations,
including safety procedures used by employees; (iv) management and
handling of raw materials; (v) air and water quality impacts by the
Company's facilities; (vi) disposal of hazardous and solid wastes;
and (vii) post-mining land reclamation. Compliance with these laws
often requires the Company to incur costs. The Company has
contingent environmental liabilities arising from three sources:
facilities currently or formerly owned by the Company or its
predecessors; facilities adjacent to currently or formerly owned
facilities; and third-party Superfund sites. At facilities
currently or formerly owned by the Company or its corporate
predecessors, including FTX, PLP and their corporate predecessors,
the historical use and handling of regulated chemical substances,
crop and animal nutrients and additives, salt and by-product or
process tailings, have resulted in soil and groundwater
contamination, sometimes requiring the Company to undertake or fund
cleanup efforts.
Of the environmental costs discussed above, the following
environmental costs are charged to operating expense: fines,
penalties and certain remedial action to address violations of the
law; remediation of properties that are currently or were formerly
owned or operated by the Company, or its predecessors, when those
properties do not contribute to current or future revenue
generation; and liability for remediation of facilities adjacent to
currently or formerly owned facilities or for third-party Superfund
sites. Contingent environmental liabilities are recorded for
environmental investigatory and non-capital remediation costs at
identified sites when litigation has commenced or a claim or
assessment has been asserted or is imminent and the likelihood of
an unfavorable outcome is probable. The Company cannot determine
the cost of any remedial action that ultimately may be required at
unknown sites, sites currently under investigation, sites for which
investigations have not been performed, or sites at which
unanticipated conditions are discovered.
Derivatives
The Company is exposed to the impact of interest rate changes on
borrowings, fluctuations in the functional currency of foreign
operations and the impact of fluctuations in the purchase price of
natural gas, ammonia and sulphur consumed in operations, as well as
changes in the market value of its financial instruments. The
Company periodically enters into derivatives in order to minimize
foreign currency risks, but not for trading purposes.
The functional currency of all operations outside the United States
is the respective local currency. Foreign currency translation
effects are included in Accumulated other comprehensive income.
The Company uses foreign currency forward exchange contracts, which
typically expire within one year, to hedge transaction exposure
related to assets and liabilities denominated in currencies other
than the entities' functional currencies, including intercompany
loans. Realized and unrealized gains and losses on foreign
currency forward exchange contracts used to hedge the currency
fluctuations on transactions denominated in foreign currencies and
the offsetting realized and unrealized losses and gains on hedged
transactions are recorded in Other income and expense. The Company
had $93.6 million and $106.2 million of foreign currency forward
exchange contracts outstanding as of December 31, 1999 and 1998,
respectively. As of December 31, 1999 and 1998, the difference
between the contract amounts and fair value was immaterial.
The Company also uses foreign currency forward exchange contracts,
which typically expire within one year, to reduce the exchange rate
risk related to certain forecasted foreign currency transactions.
The carrying amounts of these contracts are adjusted to their
market values at each balance sheet date and recorded in Other
income and expense. The Company had $156.5 million of foreign
currency forward exchange contracts outstanding as of December 31,
1999, which are being used for the purpose described above. As of
December 31, 1999, the difference between the contract amounts and
fair value was immaterial.
Adoption of SOP 98-5
In April 1998, the American Institute of Certified Public
Accountants issued Statement of Position (SOP) 98-5, "Reporting on
the Costs of Start-Up Activities," which mandated that costs
related to start-up activities be expensed as incurred, effective
January 1, 1999. Prior to the adoption of SOP 98-5, the Company
capitalized its start-up costs (i.e., pre-operating costs). The
Company adopted the provisions of SOP 98-5 in its financial
statements beginning January 1, 1999 and, accordingly, recorded a
charge for the cumulative effect of an accounting change of $7.5
million, or $0.07 per share, after tax and minority interest, in
order to expense start-up costs that had been previously
capitalized. The future impact of SOP 98-5 is not expected to be
material to the Company's operating results.
Recently Issued Accounting Guidance
The Company does not believe that SFAS No. 133, which the Company
is required to adopt effective January 1, 2001, will have a
material impact on the Company's financial statements.
2. CHANGE IN ACCOUNTING FOR GOODWILL
Effective October 1, 1999, the Company elected to change its method
for assessing the recoverability of goodwill (not associated with
impaired assets) from one based on undiscounted cash flows to one
based on discounted cash flows. The Company believes that using the
discounted cash flow approach to assess the recoverability of
goodwill is preferable because it is consistent with the
methodology used by the Company to evaluate investment decisions
(acquisitions and capital projects) and takes into account the
specific and detailed operating plans and strategies and the timing
of cash flows of each business. The discount rate used in
determining discounted cash flows was a rate corresponding to the
Company's weighted-average cost of capital. This change represents
a change in accounting principle, which is indistinguishable from a
change in estimate.
As a result of the change to a discounted cash flow methodology,
the Company recorded a non-cash write-down of goodwill of $521.2
million, or $4.55 per share, in the fourth quarter of 1999. This
charge represented the amount required to write-down the carrying
amount of goodwill to the Company's estimate, as of October 1,
1999, of the estimated future discounted cash flows of the
businesses to which the goodwill relates using the methodology
described below.
Effective October 1, 1999, the Company's accounting policy for
assessing the recoverability of goodwill is as follows:
The Company evaluates the recoverability of goodwill by
estimating the future discounted cash flows of the
businesses to which the goodwill relates. This evaluation
is made whenever events or changes in circumstances
indicate the carrying amount may not be recoverable.
Estimated cash flows are determined by disaggregating the
Company's business segments to an operational and
organizational level for which meaningful identifiable
cash flows can be determined. When estimated future
discounted cash flows are less than the carrying amount of
the net long-lived assets (tangible and identifiable
intangible) and related goodwill, impairment losses of
goodwill are charged to operations. Impairment losses,
limited to the carrying amount of goodwill, represent the
excess of the sum of the carrying amount of the net long-
lived assets (tangible and identifiable intangible) and
goodwill in excess of the discounted cash flows of the
business being evaluated. In determining the estimated
future cash flows, the Company considers current and
projected future levels of income as well as business
trends, prospects and market and economic conditions.
Prior to October 1, 1999, the assessment of recoverability
and measurement of impairment of goodwill was based on
undiscounted cash flows.
3. RESTRUCTURING AND OTHER CHARGES
1999 Restructuring Charge
-------------------------
During the fourth quarter of 1999, the Company announced and began
implementing the Rightsizing Program which was designed to simplify
and focus the Company's core businesses. The key components of the
Rightsizing Program are: (i) the shutdown and permanent closure of
the Nichols and Payne Creek facilities at Phosphates resulting from
an optimization program that will reduce rock and concentrate
production costs through higher utilization rates at the lowest-
cost facilities; (ii) an asset rightsizing program at Potash
resulting from a recently revised mine plan; (iii) closure of a
facility at Salt; and (iv) corporate and business unit headcount
reductions. In conjunction with the Rightsizing Program, the
Company recorded a special charge of $179.0 million, $95.6 million
after tax and minority interest, or $0.83 per share, in the fourth
quarter of 1999.
The Rightsizing Program (shown below in tabular format) primarily
relates to the following:
Asset Impairments
The Rightsizing Program included the disposal of property, plant
and equipment, as well as the write-down to fair value of assets as
a result of the decision to close certain facilities and forgo or
abandon certain mineral properties. In order to determine the
write-down of assets affected by the Rightsizing Program, and in
accordance with SFAS No. 121, the Company performed an assessment
of future cash flows and, accordingly, adjusted the assets to their
appropriate fair values.
The majority of the impairment occurred at Phosphates' Florida
production facilities where property, plant and equipment were
written down by approximately $41.1 million to reflect fair value.
The phosphate mine and plant closures resulted from a facilities
optimization program that will reduce rock and concentrate
production costs through higher utilization rates at the lowest-
cost facilities. The write-down of impaired assets primarily
consisted of certain facilities and associated production
equipment. The remaining $1.0 million of the asset impairment
charge was recorded at Salt for the permanent closure of an
evaporation plant.
Additionally, $8.6 million of property, plant and equipment, and
$6.5 million of mineral reserves which were deemed unrecoverable,
were written off at Potash.
Non-Employee Exit Costs
As a result of the decision to permanently close certain Phosphate
facilities described above, the Company recorded a charge of $45.1
million for closure costs. The closure costs included
approximately $40.4 million for incremental environmental land
reclamation of the surrounding mined-out areas with the remainder
for demolition costs. The Company expects the demolition and
closure activities to be essentially completed by the end of 2005.
In addition, demolition and closure costs were necessary for the
plant closure at the Salt location discussed above, in the amount
of $1.9 million. Other various non-employee exit costs totaled
$5.5 million.
Employee Headcount Reductions
As part of the Rightsizing Program, headcount reductions were
implemented throughout the Company. The majority of these
reductions were a result of the closing and/or exiting of
production operations, as discussed above. To facilitate headcount
reductions, certain locations offered a voluntary retirement
program for eligible employees. In addition, certain involuntary
eliminations of positions, which were communicated prior to
December 31, 1999, were necessary in order to achieve desired
staffing levels. A total of 1,128 employees were terminated with
835 having left the Company by the end of December 31, 1999. The
Company recorded a charge of $34.2 million for severance benefits
related to these employee headcount reductions. Virtually all
severance payments will be disbursed subsequent to December 31,
1999.
As a result of the employee terminations necessitated by the
Rightsizing Program, settlement, curtailment and special
termination charges of $15.8 million were recorded in accordance
with SFAS No. 88, "Employers' Accounting for Settlements and
Curtailments of Defined Benefit Pension Plans and for Termination
Benefits." The related liabilities have been classified in Other
noncurrent liabilities. See Note 11, "Pension Plans and Other
Benefits."
Inventories and Spare Parts of Exited Facilities
The Rightsizing Program included a major reduction in production
assets primarily used in the Phosphates business. The reduction
was accomplished through the permanent shutdown of two phosphate
facilities. Given the reduction in facilities and the resulting
decrease in production, historical levels of spare parts inventory
that had been maintained at these facilities were no longer
necessary or warranted. Therefore, Phosphates recorded a charge of
$12.4 million for the write-down of excess spare parts inventory
which will be disposed. In addition, Potash and Salt recorded
similar write-downs of $2.8 million and $0.3 million, respectively.
Phosphates recorded charges of approximately $3.8 million to reduce
the carrying value of finished goods inventories on-hand to net
realizable value at December 31, 1999, as a result of the
facilities closures discussed above.
Details of the 1999 restructuring charge were as follows:
<TABLE>
<CAPTION>
Activity
----------------
1999 Remaining
Restructuring Accrual at
Charge Cash Paid Non-Cash December 31, 1999
------------- --------- -------- -----------------
<S> <C> <C> <C> <C>
Asset impairments:
Facilities closed prior
to December 31, 1999 $ 42.1 $ - $ 42.1 $ -
Other asset write-offs 15.1 - 15.1 -
Non-employee exit costs:
Demolition and closure
costs 47.0 0.4 - 46.6
Other 5.5 - - 5.5
Employee headcount reductions:
Severance benefits 34.2 5.4 - 28.8
Settlement, curtailment
and special termination
benefits 15.8 - 15.8 -
Inventories and spare parts of exited businesses:
Spare parts inventories 15.5 - 15.5 -
Finished goods inventories 3.8 - 3.8 -
------ ------ ------ ------
Total $179.0 $ 5.8 $ 92.3 $ 80.9
====== ====== ====== ======
</TABLE>
All restructuring charges have been recorded as a separate line
item on the Consolidated Statement of Operations, except for the
finished goods inventory write-down of $3.8 million which was
recorded in Cost of goods sold.
1998 Restructuring Charge
-------------------------
During the fourth quarter of 1998, the Company developed and began
execution of Project Profit. Project Profit was comprised of four
major initiatives: (i) the combination of certain activities within
the Potash and Phosphates business units in an effort to realize
certain operating and staff function synergies; (ii) restructuring
of the phosphate rock mining, concentrated phosphate and salt
production/distribution operations and processes in an effort to
reduce costs; (iii) simplification of the current business
activities by eliminating businesses not deemed part of the
Company's core competencies; and (iv) reduction of operational and
corporate headcount. In conjunction with Project Profit, the
Company recorded a special charge of $193.3 million, $113.4 million
after tax and minority interest in the fourth quarter of 1998.
Project Profit (shown below in tabular format) primarily related to
the following:
Asset impairments
Project Profit included the removal of property, plant and
equipment, as well as the write-down to fair value of those assets
rendered unusable due to the decision to close certain facilities
and forgo or abandon certain mineral properties. In order to
determine the write-down of assets affected by Project Profit, and
in accordance with SFAS No. 121, the Company performed an
assessment of future cash flows and, accordingly, adjusted the
assets to their appropriate fair values.
The majority of the impairment occurred at Phosphates' Florida
production facilities where property, plant and equipment was
written down by approximately $64.4 million to fair value.
Phosphates developed a new strategic mine plan (Mine Plan) which
identified asset reductions, lower operating costs and optimal
phosphate rock management as key drivers in the restructuring of
operations. The write-down of impaired assets in connection with
the Mine Plan primarily consisted of facilities, production
equipment, operating supplies, land and mineral reserves.
Salt recorded an $11.2 million write-down of property, plant and
equipment at its Kansas and Canadian locations, as a result of the
decision to consolidate certain facilities and achieve operating
efficiencies. The majority of the write-down related to production
equipment. An additional $0.4 million of asset impairments was
recorded at Feed Ingredients for the permanent closure of a
limestone rock production facility.
The total asset impairment charges of $76.0 million included $31.8
million pertaining to assets which continued to be utilized until
their respective disposal dates, primarily within the first nine
months of 1999. The estimated fair value of these assets, which
was depreciated over their respective remaining periods of service,
reflected estimated operating net cash flows until disposition. As
of December 31, 1999, all of these assets have been sold or
abandoned.
Non-employee exit costs
In accordance with the objective of the Mine Plan, to optimize
phosphate rock management, Phosphates decided to permanently close
a high-cost phosphate rock mine. As a result of this decision, the
Company recorded a charge of $18.4 million for the demolition and
other incremental costs of closure of the mine. These closure
costs included approximately $15.5 million for incremental
environmental land reclamation of the surrounding mined-out areas.
The demolition and closure activities were still in process at the
end of 1999 with an estimate of completion during 2001.
The Company also decided to close certain production operations in
connection with Project Profit, principally the uranium and urea
operations of Phosphates. This decision was based on an analysis
of the future outlook for these products, taking into consideration
whether the operations were part of the Company's core businesses.
These operations were determined to be non-core businesses and the
Company recorded charges of approximately $12.8 million for
demolition and/or closure, including environmental costs, of the
uranium and urea production facilities. Additionally, environmental
and/or closure costs of $2.4 million were recognized for the
closure of one of the Company's evaporated salt production
facilities. The Company estimates the demolition and closure
activities will be completed by the end of 2000.
In connection with Project Profit, the Company decided to
discontinue its transportation of ammonia from Louisiana to its
phosphate operations in Florida. This decision was based on
current market conditions which secured the availability of ammonia
to the Company and which made the high-cost transportation of
ammonia from Louisiana to Florida unnecessary. As a result, the
Company recorded a charge of $13.2 million for the net present
value of costs associated with permanently idling leased equipment
used in the transportation of ammonia from Louisiana. Other various
exit costs totaled $7.3 million.
Employee headcount reductions
As part of Project Profit, headcount reductions were implemented at
the Phosphates, Feed Ingredients, Salt and Potash operations, as
well as at the Company's corporate headquarters. Certain of these
reductions were a result of the closing and/or exiting of
production operations, as discussed above. To facilitate headcount
reductions, the Company offered a voluntary retirement program for
eligible employees. In addition, certain involuntary eliminations
of positions, which were communicated prior to December 31, 1998,
were necessary in order to achieve desired staffing levels. A
total of 185 employees accepted the voluntary retirement plan by
December 31, 1998, with 112 of those employees having left the
Company as of that date. At December 31, 1999, no voluntarily
severed employees were remaining. Additionally, a total of 454
employees were involuntarily terminated and left the Company by the
end of February 1999. Virtually all severance payments were
disbursed prior to December 31, 1999 with the remaining payments to
be disbursed during the first quarter of 2000.
As a result of the employee terminations necessitated by Project
Profit, settlement, curtailment and special termination charges of
$19.7 million were recorded in accordance with SFAS No. 88. The
related liabilities were classified in Other noncurrent
liabilities. See Note 11, "Pension Plans and Other Benefits."
Inventories and spare parts of exited businesses
Phosphates recorded charges of approximately $17.2 million to
reduce the carrying value of finished goods inventories on-hand to
net realizable value at December 31, 1998, as a result of the
decision to exit certain businesses.
Project Profit included a major reduction in production assets
primarily used in the Phosphates business. The reduction was
accomplished through the permanent shutdown of select mining
facilities as well as a cut-back in concentrate facilities. Given
the reduction in facilities and the resulting decrease in
production, historical levels of spare parts inventory that had
been maintained by the Company were no longer necessary or
warranted. Therefore, the Company recorded a charge of $8.7
million for the write-down of spare parts inventory.
Activity related to accruals for Project Profit in 1999 was as
follows:
<TABLE>
<CAPTION>
Accrual at Accrual at
January 1, 1999 Cash Paid December 31, 1999
--------------- --------- -----------------
<S> <C> <C> <C>
Non-employee exit costs:
Demolition and closure costs $ 33.6 $ 6.7 $ 26.9
Idled leased transportation
equipment 13.2 4.4 8.8
Other
5.3 3.3 2.0
Employee headcount reductions:
Severance benefits 17.4 17.0 0.4
------ ------ ------
Total $ 69.5 $ 31.4 $ 38.1
====== ====== ======
</TABLE>
All restructuring charges were recorded as a separate line item on
the Consolidated Statement of Operations, except for the finished
goods inventory write-down of $17.2 million which was recorded in
Cost of goods sold.
Other Charges
During the fourth quarter of 1999, and in connection with the
Rightsizing Program, the Company undertook a detailed review of its
accounting records and valuation of various assets and liabilities.
As a result, the Company recorded a special charge of $58.8
million, $35.0 million after tax and minority interest, or $0.31
per share, related to asset write-offs and environmental accruals.
Of the $58.8 million charge, $38.2 million was included in Cost of
goods sold and $20.6 million was included in Selling, general and
administrative expenses.
4. DISCONTINUED OPERATIONS
IMC Chemicals
In December 1998, the Company signed a definitive agreement to sell
its Chemicals business unit with the Company retaining an ongoing
minority economic interest, and based on the terms of the
agreement, recorded a pre-tax charge of $44.1 million for the
estimated loss on sale. The sale was not completed during 1999 and
in December 1999, the Company received Board of Director approval
for a plan to sell the entire business unit. The Company is in
discussion with potential buyers, and anticipates a sale to be
completed by mid-2000. An adjustment to the estimated loss on
disposal of $138.1 million, $85.6 million after tax, was recorded
in the fourth quarter of 1999. The Consolidated Statement of
Operations has been restated to report the operating results of
Chemicals as discontinued operations in accordance with Accounting
Principles Board (APB) Opinion No. 30, "Reporting the Results of
Operations." Interest expense has been allocated to discontinued
operating results based on the portion of third party debt that is
specifically attributable to Chemicals and amounted to $27.6
million and $14.9 million in 1999 and 1998, respectively. In
addition, $13.7 million of allocated interest expected to be
incurred in 2000 was included in the estimated loss on sale.
The discontinued operations of Chemicals resulted in a tax benefit
of $24.9 million in 1999 and tax expense of $1.3 million in 1998.
For 1999 and 1998, Chemicals' revenues were $402.8 million and
$311.8 million, respectively.
Oil and Gas Operations
In the fourth quarter of 1999, the Company decided to discontinue
its oil and gas business which primarily consisted of PLP's
interest in the Exploration Program. The Company sold its
interest, through PLP, in the Exploration Program for proceeds of
$32.0 million. The loss on disposal of $22.4 million, $6.7 million
after tax and minority interest of $4.6 million and $11.1 million,
respectively, was recorded in the fourth quarter of 1999. The
Consolidated Statement of Operations has been restated to report
the operating results of the oil and gas business as discontinued
operations in accordance with APB No. 30.
The discontinued oil and gas business resulted in tax benefits of
$8.1 million and $4.1 million in 1999 and 1998, respectively. For
1999 and 1998, the revenues from oil and gas operations were $7.0
million and $1.3 million, respectively. In addition, $18.3
million, $10.8 million after tax, of environmental exit costs were
recorded in 1999 as a result of additional information which became
available to the Company in the fourth quarter concerning the
Company's obligations with respect to previously owned oil and gas
properties.
IMC AgriBusiness
In April 1999, the Company sold its AgriBusiness retail and
wholesale distribution business unit and received $263.9 million
of proceeds which were used to reduce the amount of the Company's
outstanding indebtedness. In accordance with APB No. 30, an
estimated loss on disposal of $74.2 million, after tax, was
recorded in the fourth quarter of 1998. The Company recorded an
adjustment to the loss on disposal of $19.4 million, after tax,
in the fourth quarter of 1999. The operating results of
AgriBusiness are included in the Consolidated Statement of
Operations as discontinued operations. Interest expense has been
allocated to discontinued operations based on the portion of the
Company's short-term borrowing program that is specifically
attributable to AgriBusiness and amounted to $13.2 million and
$13.3 million in 1998 and 1997, respectively.
Income taxes associated with the discontinued operations of
AgriBusiness were $2.9 million and $13.1 million for 1998 and
1997, respectively. For 1998 and 1997, AgriBusiness' revenues
were $787.0 million and $872.6 million, respectively.
For financial reporting purposes, the assets and liabilities of
discontinued operations to be sold, net of the estimated loss on
disposal, have been classified as Net assets of discontinued
operations held for sale. See the table below for the detail of
these assets and liabilities.
<TABLE>
<CAPTION>
December 31
1999(a) 1998(b)
------- -------
<S> <C> <C>
Assets:
Receivables, net $ 106.0 $ 63.7
Inventories, net 50.7 157.1
Other current assets 4.0 0.5
Property, plant and equipment, net 231.7 130.4
Other assets 6.5 6.0
------- -------
Total assets 398.9 357.7
Liabilities:
Accounts payable 55.9 69.8
Accrued liabilities 31.9 11.1
Other noncurrent liabilities 9.6 3.5
------- -------
Total liabilities 97.4 84.4
------- -------
Net assets of discontinued operations
held for sale $ 301.5 $ 273.3
======= =======
(a)Represents net assets of Chemicals held for sale.
(b)Represents net assets of AgriBusiness held for sale.
</TABLE>
5. OTHER DIVESTITURES
IMC Vigoro
In June 1998, the Company sold the Vigoro business unit for $44.8
million. In connection with this transaction, the Company recorded
a special charge of approximately $14.0 million, $9.1 million after
tax benefits. Of the $14.0 million charge, $4.1 million was
included in Cost of goods sold and $9.9 million was included in
Selling, general and administrative expenses.
6. ACQUISITIONS
All acquisitions discussed below 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 Operations since the respective
dates of acquisition.
Common stock issued in 1997 for acquisitions was $771.9 million.
Liabilities assumed in acquisitions were $1,628.8 million and
$357.5 million in 1998 and 1997, respectively.
Harris
In April 1998, the Company acquired Harris for approximately $1.4
billion. Under the terms of the acquisition, the Company purchased
all Harris equity for approximately $450.0 million in cash and
assumed approximately $1.0 billion of debt. The purchase price was
allocated to acquired assets and liabilities based on estimated
fair values at the date of acquisition. This allocation resulted
in an excess of purchase price over identifiable net assets
acquired, or goodwill, of $326.0 million being recorded at the time
of acquisition.
FTX
In December 1997, the Company completed the FTX Merger which
resulted in the dissolution of FTX. In connection with the FTX
Merger, each share of common stock of FTX was exchanged for 0.90
share 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 for $44.50 per share. As a result of
the transaction, 22.7 million shares were issued at an average
market price of $32.28 per share. The warrants, which are
publicly traded on the New York Stock Exchange and expire on the
third anniversary of the FTX Merger, were valued at $3.56 per
warrant. As a result of the FTX Merger, goodwill of $747.5 million
was recorded at the time of the merger.
The FTX Merger resulted in the Company relinquishing its 25.0
percent interest in Main Pass to MMR, a newly formed public entity
consisting of the former sulphur business of PLP and Main Pass. In
connection with the FTX Merger in 1997, the Company recorded a
special charge of $183.7 million, $112.2 million after tax, or
$1.19 per share, included in Operating earnings, to write-down the
assets of Main Pass to their fair value.
As a result of the Company's change in methodology for assessing
the recoverability of goodwill, a non-cash write-down of Harris and
FTX goodwill of $89.2 million and $432.0 million, respectively, was
recorded in the fourth quarter of 1999. See Note 2, "Change in
Accounting for Goodwill."
Other Business Acquisitions
In 1997, the Company acquired several smaller businesses, including
a potash mine and processing facility (Western Ag-Minerals);
several retail distribution operations (Frankfort Supply,
Sanderlin, Crop-Maker, So-Green and Hutson Ag Services, Inc.); and
a storage terminal company (Hutson Company, Inc.). Total cash
payments for these acquisitions were $91.4 million, and
approximately 0.2 million shares of common stock of the Company
were issued for $7.9 million. Hutson Company, Inc. and the retail
distribution operations were part of AgriBusiness which was
subsequently sold by the Company in April 1999. See Note 4,
"Discontinued Operations."
7. MINORITY INTEREST
Minority interest included in the Consolidated Statement of
Operations included $28.1 million and $31.6 million in 1999 and
1998, respectively, of benefits related to special charges. See
Note 3, "Restructuring and Other Charges." Prior to the FTX Merger,
minority interest primarily consisted of PLP's 43.5 percent
interest in IMC-Agrico. Subsequent to the FTX Merger, minority
interest was largely comprised of the public unitholders' interest
in PLP (majority-owned and consolidated by the Company since the
FTX Merger), including an effective 21.1 percent minority interest
in IMC-Agrico.
8. EARNINGS PER SHARE
Common shares issuable upon the exercise of options and warrants
are not included in the computation of diluted earnings per share
in 1999 because the Company had a net loss from continuing
operations and, therefore, the effect of their inclusion would be
antidilutive. The difference between the number of basic and
diluted weighted average shares outstanding in 1998 and 1997 was
due to dilutive employee stock options. Stock options to
purchase approximately 4.6 million and 3.1 million shares of
common stock in 1998 and 1997, respectively, and warrants to
purchase approximately 8.4 million shares of common stock in 1998
and 1997, were not included in the computation of diluted
earnings per share, because the exercise price was greater than
the average market price of the Company's common stock and,
therefore, the effect of their inclusion would be antidilutive.
9. DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS
<TABLE>
<CAPTION>
Receivables:
1999 1998
---- ----
<S> <C> <C>
Trade $ 235.1 $ 349.4
Non-trade 25.0 78.5
------- -------
260.1 427.9
Less: Allowances 5.9 6.4
------- -------
Receivables, net $ 254.2 $ 421.5
======= =======
The carrying amount of accounts receivable was equal to the
estimated fair value of such assets due to their short maturity.
Inventories:
1999 1998
---- ----
Products (principally finished) $ 358.7 $ 468.2
Operating materials and supplies 97.8 136.3
------- -------
456.5 604.5
Less: Allowances 16.9 23.9
------- -------
Inventories, net $ 439.6 $ 580.6
======= =======
Property, plant and equipment:
1999 1998
---- ----
Land $ 97.5 $ 104.6
Mineral properties and rights 1,392.5 1,431.7
Buildings and leasehold improvements 503.7 615.9
Machinery and equipment 3,069.0 3,520.8
Construction-in-progress 165.9 244.4
-------- --------
5,228.6 5,917.4
Accumulated depreciation and depletion (1,977.9) (2,220.0)
-------- --------
Property, plant and equipment, net $3,250.7 $3,697.4
======== ========
</TABLE>
As of December 31, 1999, idle facilities of the Company included
two concentrated phosphate plants, which will remain closed subject
to improved market conditions. The net book value of these
facilities totaled $ 57.0 million. In the opinion of management,
the net book value of the Company's idle facilities is not in
excess of the net realizable value.
<TABLE>
<CAPTION>
Other assets:
1999 1998
---- ----
<S> <C> <C>
Goodwill $ 535.9 $1,064.2
Other 179.9 212.7
-------- --------
Other assets $ 715.8 $1,276.9
======== ========
The decrease in Other assets was primarily due to the write-down
of goodwill in the fourth quarter of 1999. See Note 2, "Change
in Accounting for Goodwill."
Accrued liabilities:
1999 1998
---- ----
Restructuring $ 108.7 $ 36.7
Interest 43.9 47.1
Payroll and employee benefits 38.9 62.5
Other 68.6 94.6
-------- -------
Accrued liabilities $ 260.1 $ 240.9
======== =======
Other noncurrent liabilities:
1999 1998
---- ----
Employee and retiree benefits $ 237.6 $ 234.7
Environmental 115.9 114.3
Restructuring 39.8 44.6
Other 123.3 92.5
-------- -------
Other noncurrent liabilities $ 516.6 $ 486.1
======== =======
</TABLE>
10.FINANCING ARRANGEMENTS
Total indebtedness as of December 31, 1999 was $2,548.6 million,
a $498.4 million decrease from total indebtedness as of December
31, 1998 of $3,047.0 million. The reduction in total indebtedness
resulted from payments of debt using cash flows from operations
and proceeds from the divestiture of AgriBusiness.
Short-term borrowings were $10.6 million and $397.0 million as of
December 31, 1999 and 1998, respectively, which primarily
consisted of commercial paper, revolving credit facilities and
vendor financing arrangements. The weighted average interest rate
on short-term borrowings was 5.5 percent and 6.1 percent for 1999
and 1998, respectively.
Long-term debt as of December 31 consisted of the following:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Notes and debentures due 2001-2018, with
interest rates ranging from 6.50% to 10.75% $1,724.1 $1,730.2
Corporate commercial paper 506.0 596.9
Industrial revenue bonds, maturing through 2022,
with interest rates ranging from 3.50% to 7.525% 90.0 92.8
Revolving credit facilities, variable rates 67.9 66.8
Other debt 150.0 163.3
-------- --------
2,538.0 2,650.0
Less: Current maturities 19.3 11.3
-------- --------
Total long-term debt, less current maturities $2,518.7 $2,638.7
======== ========
</TABLE>
Substantially all outstanding commercial paper is classified as
long-term because it is supported by a long-term credit facility.
In December 1999, the Company renewed, amended and restated its
$350.0 million short-term credit facility, extending the maturity
date to December 2000, and amended and restated its $650.0
million long-term credit facility maturing in December 2002
(collectively, Credit Facilities). Commitment fees associated
with the short-term and long-term facilities are 10.0 basis
points and 11.0 basis points, respectively. The amount available
for borrowing under the Credit Facilities is reduced by the
balance of outstanding commercial paper, letters of credit and
guarantees. As of December 31, 1999, the Company had a total of
$506.0 million of commercial paper outstanding and $1.0 billion
of commercial paper back-up facilities. Net available
borrowings, under the Credit Facilities, as of December 31, 1999
were $442.2 million. Outstanding letters of credit as of December
31, 1999 totaled $51.8 million. These Credit Facilities contain
provisions which: (i) restrict the Company's ability to dispose
of a substantial portion of its consolidated assets; (ii) limit
the creation of additional liens on the Company's and its
subsidiaries' assets; and (iii) limit the Company's subsidiaries'
incurrence of debt. These Credit Facilities also contain a
leverage ratio test and other covenants.
The Company, through various subsidiaries, also maintains the
following credit facilities: (i) a $100.0 million, five-year
revolving credit facility maturing in December 2002 (Canadian
Facility); (ii) a 50.0 million Australian Dollar, two-year
revolving credit facility maturing in September 2000 and a 25.0
million Australian Dollar, five-year term loan facility maturing
in September 2003 (Australian Facilities); and (iii) a 45.0
million Pound Sterling, five-year revolving credit facility
maturing in December 2003 (European Facility). In December 1999,
the Company amended the Canadian and European Facilities to
conform their covenants to the amended and restated Credit
Facilities' covenants. As of December 31, 1999, $67.9 million was
outstanding under the European Facility, while there were no
outstanding obligations under the Canadian Facility or the
Australian Facilities. Commitment fees associated with the
Canadian Facility, the Australian Facilities and the European
Facility are 11.0 basis points, 30.0 basis points and 30.0 basis
points, respectively.
The Company currently guarantees the payment of $75.0 million
principal amount of industrial revenue bonds due 2015 issued by
the Florida Polk County Industrial Development Authority (Polk
County Bonds). As a result of the FTX Merger, the Company is not
in technical compliance with one covenant in such guarantee. The
Company has notified the Bank of New York, trustee for holders of
the Polk County Bonds, regarding this issue. The holders of the
Polk County Bonds have not sought to accelerate the Polk County
Bonds or requested that any other action be taken. Because
solicitation of a unanimous waiver of the technical default is
impractical, the Company currently intends to take no action. The
Company does not believe that any acceleration, redemption or
refinancing of the Polk County Bonds would have a material
adverse effect on the Company and its subsidiaries, taken as a
whole, because the Company believes it would be able to repay the
Polk County Bonds from available sources of liquidity.
As of December 31, 1999, the estimated fair value of long-term
debt was approximately $70.0 million less than the carrying amount
of such debt. The fair value was 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.
Extraordinary gains of $0.5 million and $3.0 million in 1999 and
1998, respectively, and extraordinary charges of $24.9 million in
1997, related to the early extinguishment of debt.
Cash interest payments were $186.1 million, $145.4 million and
$56.8 million for 1999, 1998 and 1997, respectively.
Scheduled maturities, excluding commercial paper borrowings and
the revolving credit facilities, are as follows:
<TABLE>
<CAPTION>
<S> <C>
2000 $ 29.9
2001 $ 251.0
2002 $ 307.7
2003 $ 214.1
2004 $ 11.7
Thereafter $1,160.3
</TABLE>
11.PENSION PLANS AND OTHER BENEFITS
The Company has non-contributory pension plans for a majority 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, while contributions to Canadian plans are made in
accordance with Pension Benefits Acts, instituted by the provinces
of Saskatchewan and Ontario. Certain 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.
The plans' assets consist mainly of corporate equity securities,
United States government securities, corporate debt securities and
units of participation in a collective short-term investment fund.
Effective January 1, 1998, the Company transitioned from a defined
benefit pension plan to a defined contribution plan for certain
employees who elected to do so (Transition). The Company accounted
for the Transition in accordance with SFAS No. 88. The impact of
the curtailment as a result of the Transition was not material.
The Company also provides certain health care benefit plans for
certain retired employees (Benefit Plans). The Benefit Plans may
be either contributory or non-contributory and contain certain
other cost-sharing features such as deductibles and coinsurance.
The Benefit Plans are unfunded. Employees are not vested and such
benefits are subject to change.
The following table sets forth pension and postretirement
obligations and plan assets for the Company's defined benefit
plans, based on a September 30 measurement date, as of December 31:
<TABLE>
<CAPTION>
Pension Benefits Other Benefits
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Change in benefit obligation:
Benefit obligation as of January 1 $ 426.4 $ 391.8 $ 197.8 $ 175.3
Service cost 12.4 10.6 2.6 2.6
Interest cost 29.3 27.5 12.9 11.0
Plan amendment (2.0) 6.1 - 4.1
Effect of settlements (8.6) (31.0) - -
Actuarial (gain) loss (36.7) 41.3 (20.3) 17.2
Benefits paid (27.2) (48.1) (10.8) (9.1)
Acquisitions - 36.4 - -
Other 5.9 (1.2) 4.5 (3.3)
Curtailments (12.4) (7.0) (7.3) -
------- ------- ------- -------
Benefit obligation as of
December 31 $ 387.1 $ 426.4 $ 179.4 $ 197.8
======= ======= ======= =======
Change in plan assets:
Fair value as of January 1 $ 350.9 $ 380.8 $ - $ -
Actual return 72.0 0.5 - -
Company contribution 16.6 37.5 10.6 9.1
Effect of settlements (11.6) (57.9) - -
Acquisitions - 38.1 - -
Asset transfer (2.3) - - -
Benefits paid (27.2) (48.1) (10.8) (9.1)
Other 1.7 - 0.2 -
------- ------- ------- -------
Fair value as of December 31 $ 400.1 $ 350.9 $ - $ -
======= ======= ======= =======
Funded status of the plan $ 13.0 $ (75.5) $(179.4) $(197.8)
Unrecognized net (gain) loss (14.7) 74.5 (13.1) 7.4
Unrecognized transition
liability (asset) 0.1 20.7 (1.5) (1.6)
Unrecognized prior service
benefit (cost) 17.9 (0.5) (6.5) (5.3)
------- ------- ------- -------
Prepaid (accrued) benefit cost $ 16.3 $ 19.2 $(200.5) $(197.3)
======= ======= ======= =======
Amounts recognized in the consolidated balance sheet:
Prepaid benefit cost $ 56.9 $ 69.7 $ - $ 17.1
Accrued benefit liability (42.4) (64.8) (200.5) (214.4)
Intangible asset 1.8 14.3 - -
------- ------- ------- -------
Total recognized $ 16.3 $ 19.2 $(200.5) $(197.3)
======= ======= ======= =======
</TABLE>
The acquisition amounts relate to pension liabilities and assets
assumed in conjunction with the Harris Acquisition. The
curtailment and settlement amounts included in the tables above
were primarily recorded as part of the Rightsizing Program and the
sale of AgriBusiness in 1999 and Project Profit in 1998. See Note
3, "Restructuring and Other Charges," Note 4, "Discontinued
Operations" and Note 6, "Acquisitions."
Amounts applicable to the Company's pension plan with accumulated
benefit obligations in excess of plan assets were as follows:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Projected benefit obligation $ 134.0 $ 191.4
Accumulated benefit obligation $ 93.6 $ 147.0
Fair value of plan assets $ 78.9 $ 96.3
</TABLE>
The Company's actuarial assumptions were as follows:
<TABLE>
<CAPTION>
Pension Benefits Other Benefits
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Discount rate 7.75% 7.0% 7.75% 7.0%
Expected return on plan assets 9.5% 9.9% - -
Rate of compensation increase 5.0% 5.0% - -
</TABLE>
For measurement purposes, a 6.8 percent annual rate of increase
in the per capita cost of covered pre-65 health care benefits was
assumed for 1999, decreasing gradually to 4.7 percent in 2004 and
thereafter; and a 7.1 percent annual rate of increase in the per
capita cost of covered post-65 health care benefits was assumed
for 1999, decreasing gradually to 5.0 percent in 2004 and
thereafter.
The components of net pension and other benefits expense were:
<TABLE>
<CAPTION>
Pension Benefits Other Benefits
1999 1998 1997 1999 1998 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Service cost for benefits
earned during the year $ 12.4 $ 10.6 $ 13.0 $ 2.6 $ 2.6 $ 1.9
Interest cost on projected
benefit obligation 29.3 27.5 18.3 12.9 11.0 5.3
Return on plan assets (33.6) (33.5) (18.1) - - -
Net amortization and deferral 5.1 2.8 2.8 (0.9) (1.4) (1.8)
Curtailments and settlements 6.3 19.4 2.8 (0.7) 0.5 -
------ ------ ------ ------ ------ ------
Net pension and other benefits
expense $ 19.5 $ 26.8 $ 18.8 $ 13.9 $ 12.7 $ 5.4
====== ====== ====== ====== ====== ======
</TABLE>
The assumed health care cost trend rate has a significant effect on
the amounts reported. A one-percentage-point change in the assumed
health care cost trend rate would have the following effects:
<TABLE>
One One
Percentage Percentage
Point Point
Increase Decrease
------------- -------------
<S> <C> <C>
Effect on total service and interest cost
components $ 0.9 $ (0.7)
Effect on postretirement benefit obligation $ 10.0 $ (9.5)
</TABLE>
The Company has defined contribution and pre-tax savings plans
(Savings Plans) for certain of its employees in the United States
and Canada. Under each of the Savings Plans, participants are
permitted to defer a portion of their compensation. Company
contributions to the Savings Plans are based on a percentage of
employee contributions. In 1998, the Company added a profit
sharing feature to the Savings Plans for salaried and non-union
hourly employees as a replacement for traditional pension plans.
The Company contribution to the new profit sharing feature is based
on the employee's age and pay and the Company's financial
performance. The expense attributable to these Savings Plans was
$14.5 million, $18.1 million and $8.5 million in 1999, 1998 and
1997, respectively.
In addition, the Company provides benefits such as workers'
compensation and disability to certain former or inactive employees
after employment but before retirement.
12.INCOME TAXES
Two of the Company's three potash operations that are subject to
Canadian taxes, IMC Kalium Canada Ltd. and IMC Central Canada
Potash Inc., 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 December 31 were as follows:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Deferred tax liabilities:
Property, plant and equipment $ 733.7 $ 824.2
Partnership tax basis difference 125.0 -
Other liabilities 209.0 132.1
-------- --------
Total deferred tax liabilities 1,067.7 956.3
Deferred tax assets:
Alternative minimum tax credit carryforwards 149.8 137.4
Net operating loss carryforwards 90.6 96.7
Postretirement and postemployment benefits 51.6 45.8
Foreign tax credit carryforward 25.3 24.6
Reclamation and decommissioning accruals 38.7 22.3
Sale of AgriBusiness - 20.0
Restructuring charges 171.7 58.1
Other assets 146.5 136.0
-------- --------
Subtotal 674.2 540.9
Valuation allowance (60.8) (60.1)
-------- --------
Total deferred tax assets 613.4 480.8
-------- --------
Net deferred tax liabilities $ 454.3 $ 475.5
======== ========
</TABLE>
As of December 31, 1999, the Company had alternative minimum tax
credit carryforwards of approximately $149.8 million, net operating
loss carryforwards in the amount of $226.6 million, foreign tax
credit carryforwards in the amount of $25.3 million, investment tax
credit and other general business credit carryforwards in the
amount of $10.7 million and a carryover of charitable contributions
in the amount of $8.7 million.
The alternative minimum tax credit carryforwards can be carried
forward indefinitely. The net operating loss carryforwards have
expiration dates ranging from 2003 through 2011. The foreign tax
credit carryforwards have expiration dates ranging from 2001
through 2003 . The investment tax credit and other general
business credit carryforwards have expiration dates ranging from
2000 through 2006. The charitable contributions carryover has
expiration dates ranging from 2000 through 2001.
Due to the uncertainty of the realization of certain tax
carryforwards, the Company has established a valuation allowance
against these carryforward benefits in the amount of $60.8 million.
Some of these carryforward benefits may be subject to limitations
imposed by the Internal Revenue Code. Except to the extent that
valuation allowances have been established, the Company believes
these limitations will not prevent the carryforward benefits from
being realized.
A change in the tax law in December 1999 necessitated the recording
of a $125.0 million deferred tax liability for a tax basis
difference related to the Company's investment in PLP.
The provision for income taxes from continuing operations for the
years ended December 31 consisted of the following:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Current:
Federal $ 18.4 $ 25.7 $ 11.9
State and local 8.1 2.3 3.7
Foreign 80.4 43.1 48.3
106.9 71.1 63.9
Deferred:
Federal 41.5 (20.7) (37.0)
State and local 9.9 (2.9) (8.4)
Foreign (12.9) 35.2 11.9
38.5 11.6 (33.5)
Provision for income taxes $ 145.4 $ 82.7 $ 30.4
The components of earnings from continuing operations before income
taxes, and the effects of significant adjustments to tax computed
at the federal statutory rate, were as follows:
1999 1998 1997
---- ---- ----
Domestic earnings (loss) $(581.5) $ 32.9 $ (5.0)
Foreign earnings 115.8 159.6 105.2
------- ------- -------
Earnings (loss) from continuing
operations before income taxes $(465.7) $ 192.5 $ 100.2
======= ======= =======
Computed tax at the federal
statutory rate of 35% $(163.0) $ 67.4 $ 35.1
Foreign income and withholding taxes 47.8 40.9 4.9
Percentage depletion in excess of basis (39.5) (26.1) (9.5)
Partnership tax basis difference 125.0 - -
State income taxes, net of federal
income tax benefit (4.3) (0.3) (3.0)
Benefit of foreign sales corporation (7.9) (4.4) (5.6)
Write-down and amortization of
goodwill 191.1 8.8 -
Other items (none in excess of 5% of
computed tax) (3.8) (3.6) 8.5
------- ------- -------
Provision for income taxes $ 145.4 $ 82.7 $ 30.4
======= ======= =======
Effective tax rate n/m 43.0% 30.3%
======= ======= =======
n/m not meaningful
The following supplemental information presents earnings from
continuing operations before income taxes, excluding special
charges, and the related reconciliation of the effective income
tax rate before the impact of such special charges:
1999 1998 1997
---- ---- ----
Domestic earnings $ 121.6 $ 210.4 $ 178.7
Foreign earnings 143.5 159.6 105.2
-------- ------- -------
Earnings from continuing operations
before income taxes $ 265.1 $ 370.0 $ 283.9
======= ======= =======
Computed tax at the federal
statutory rate of 35% $ 92.8 $ 129.5 $ 99.4
Foreign income and withholding taxes 44.7 41.2 4.9
Percentage depletion in excess of
basis (41.0) (26.1) (9.5)
State income taxes, net of federal
income tax benefit 5.9 6.4 4.0
Benefit of foreign sales corporation (7.9) (4.4) (5.6)
Amortization of goodwill 8.7 8.8 -
Other items (none in excess of 5% of
computed tax) (3.8) (18.5) 8.7
------- ------- -------
Provision for income taxes $ 99.4 $ 136.9 $ 101.9
======= ======= =======
Effective tax rate 37.5% 37.0% 35.9%
======= ======= =======
</TABLE>
The Company has no present intention of remitting undistributed
earnings of foreign subsidiaries aggregating $445.5 million as of
December 31, 1999, 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 $52.1 million would have been required.
Income taxes paid, net of refunds received, were $93.4 million,
$84.9 million and $51.6 million for 1999, 1998 and 1997,
respectively.
13.CAPITAL STOCK
Pursuant to a Stockholder Rights Plan adopted by the Company in May
1999, a dividend of one preferred stock purchase right (Right) for
each outstanding share of common stock of the Company was issued on
June 21, 1999, to stockholders of record on that date. The
Stockholder Rights Plan replaced a prior plan that expired on June
21, 1999. Under certain conditions, each Right may be exercised to
purchase one one-thousandth of a share of Series D Junior
Participating Preferred Stock, par value $1 per share, at a price
of $90, subject to adjustment. Each one one-thousandth share of
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 outstanding common stock or commences a tender offer for 15
percent or more of the outstanding common stock. After the
acquisition by a person or group of 15 percent or more of the
outstanding common stock, or a tender offer for 15 percent or more
of the outstanding common stock, each Right will entitle the holder
(other than the person making the acquisition or tender offer,
whose rights become null and void) 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. If
the Company is acquired in a merger or other business combination
transaction, or 50 percent or more of its consolidated assets or
earnings power are sold after a person or group has become the
owner of 15 percent or more of the Company's outstanding common
stock, each holder of a Right will have the right to receive, upon
exercise of the Right, the number of shares of common stock of the
acquiring company that at the time of the transaction will have a
market value of two times the exercise price of the Right. The
Rights may be redeemed at a price of $0.01 per Right under certain
circumstances prior to their expiration on June 21, 2009. No event
during 1999 made the Rights exercisable.
14.STOCK PLANS
The Company has various stock option plans (Stock Plans) under
which it may grant non-qualified stock options, stock appreciation
rights (SARs) and restricted stock awards to officers and key
managers of the Company, accounted for under APB Opinion No. 25,
"Accounting for Stock Issued to Employees." The Company also has a
non-qualified stock option plan for non-employee directors. The
Stock Plans, as amended, provide for the issuance of a maximum of
16.3 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.
In conjunction with the FTX Merger, outstanding FTX stock options
for officers and key managers were converted into options of the
Company to acquire approximately 1.4 million Company shares at a
weighted average exercise price of $25.02 per share. Outstanding
FTX stock options for non-employee directors of FTX were converted
into options of the Company to acquire approximately 0.1 million
Company shares at a weighted average exercise price of $18.50 per
share. Additionally, FTX SARs and stock incentive units (SIUs)
were converted into approximately 0.1 million Company SARs and
approximately 0.2 million Company SIUs based on the Company's
common stock at weighted average exercise prices of $15.63 and
$24.44 per share, respectively. Due to change of control
provisions, all converted FTX options, SARs and SIUs were
considered fully vested at the date of the FTX Merger. See Note 6,
"Acquisitions."
Officers and key managers also may be awarded stock and/or cash
upon achievement of specified objectives, generally over three-year
periods, under a 1996 long-term incentive plan. Final payouts are
made at the discretion of the Compensation Committee of the
Company's Board of Directors whose members are not participants in
this plan. Approximately $4.9 million, $7.5 million and $8.6
million was charged to earnings in 1999, 1998 and 1997,
respectively, for performance awards earned for the relevant
three-year period under the 1996 long-term incentive plan.
Excluding the SARs and SIUs converted in conjunction with the FTX
Merger discussed above, there were no SARs granted in 1999, 1998 or
1997. For the SARs, a total of 26,586 shares, 69,357 shares and
8,525 shares were exercised in 1999, 1998 and 1997, respectively.
For the SIUs, a total of 286 shares and 49,663 shares were
exercised in 1999 and 1998, respectively. There were no exercises
during 1997, as SIUs did not exist at the Company prior to the FTX
Merger. When exercised, all SARs and SIUs are settled with cash
payments to employees.
The following table summarizes stock option activity:
<TABLE>
<CAPTION>
1999 1998 1997
--------------------------------------------------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at January 1 7,354,816 $ 29.30 5,972,350 $ 29.05 3,805,519 $ 27.33
Granted 1,964,164 20.88 2,008,245 28.61 1,222,219 37.63
Exercised 84,143 16.37 350,966 18.12 297,162 18.88
Cancelled 776,957 31.37 274,813 32.28 161,419 36.68
Converted FTX options - - - - 1,403,193 25.02
--------- ------- --------- ------- --------- -------
Outstanding at
December 31 8,457,880 $ 27.30 7,354,816 $ 29.30 5,972,350 $ 29.05
========= ======= ========= ======= ========= =======
Exercisable at
December 31 4,971,217 $ 29.03 4,530,065 $ 27.91 4,216,057 $ 25.26
========= ======= ========= ======= ========= =======
Available for future grant
at December 31 5,088,699 574,338 2,307,770
</TABLE>
Data related to significant option ranges, weighted average
exercise prices and contract lives as of December 31, 1999
follows:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
-------------------------------- --------------------
Average Weighted Weighted
Number Remaining Average Average
of Contractual Exercise Number of Exercise
Range of Exercise Options Life Price Options Price
- ----------------- --------- ----------- -------- --------- -------
<S> <C> <C> <C> <C> <C>
$12.65 to $16.50 644,627 2 years $ 15.13 301,427 $ 16.05
$16.51 to $25.00 3,768,627 3 years 21.17 1,810,825 20.99
$25.01 to $37.50 1,918,851 7 years 30.77 1,170,073 30.51
$37.51 to $40.88 2,125,775 7 years 38.72 1,688,892 38.94
--------- ---------
8,457,880 5 years $ 27.30 4,971,217 $ 29.03
========= =========
</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.
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 1995, consistent with the provisions of SFAS No.
123, "Accounting for Stock-Based Compensation," the Company's net
earnings and earnings per share would have been reduced to the
following pro forma amounts:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Net earnings (loss):
As reported $(773.3) $ (9.0) $ 62.9
Pro forma $(783.5) $ (16.5) $ 51.4
Net earnings (loss) per share:
Basic $ (6.75) $ (0.08) $ 0.67
Pro forma-basic $ (6.84) $ (0.14) $ 0.55
Diluted $ (6.75) $ (0.08) $ 0.67
Pro forma - diluted $ (6.84) $ (0.14) $ 0.54
</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
1995. Weighted average fair values of options as of their grant
date during 1999, 1998 and 1997 were $7.91, $9.82 and $12.74,
respectively. 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. 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:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Expected dividend yield 0.95% 0.90% 0.85%
Expected stock price volatility 29.0% 29.1% 25.0%
Risk-free interest rate (7 year
government) 6.6% 4.7% 5.8%
Expected life of options 6 years 6 years 6 years
</TABLE>
15.COMMITMENTS
The Company purchases natural gas, ammonia, electricity and coal
from third parties under contracts extending, in some cases, for
multiple years. Purchases under these contracts are generally
based on prevailing market prices. These contracts generally
range from one to four years. The Company has entered into a
third-party sulphur purchase commitment, the term of which is
indefinite. Therefore, the dollar value of the sulphur
commitments has been excluded from the schedule below after the
year 2004.
The Company leases plants, warehouses, terminals, office
facilities, railcars and various types of equipment under operating
and capital leases. Lease terms generally range from three to five
years, although some leases have longer terms.
A schedule of future minimum long-term purchase commitments and
minimum lease payments under non-cancelable operating and capital
leases as of December 31, 1999 follows:
<TABLE>
<CAPTION>
Purchase Operating Capital
Commitments Leases Leases
----------- --------- -------
<S> <C> <C> <C>
2000 $ 329.4 $ 23.2 $ 2.4
2001 169.3 21.1 1.9
2002 162.4 16.9 0.6
2003 159.6 12.6 -
2004 157.2 9.4 -
Subsequent years 112.5 34.3 -
-------- ------- ------
$1,090.4 $ 117.5 4.9
Less: Amount representing
interest 0.1
------
Present value of minimum
capital lease payments $ 4.8
======
</TABLE>
Assets recorded under capital leases were $11.5 million and $21.6
million at December 31, 1999 and 1998, respectively, and are
classified as machinery and equipment. Rental expense for 1999,
1998 and 1997 amounted to $42.9 million, $54.5 million and $35.0
million, respectively.
International Minerals & Chemical (Canada) Global Limited, a wholly-
owned subsidiary of the Company, 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 at Esterhazy,
Saskatchewan. This agreement extends through June 30, 2001 and is
renewable at the option of PCS for five additional five-year
periods. Potash produced for PCS amounts to an annual minimum of
approximately 0.5 million tons, but not more than approximately 1.1
million tons. During 1999, production of potash for PCS amounted
to approximately 0.8 million tons, or 24 percent of the Esterhazy
mines' total tons produced.
In November 1998, Phosphate Chemicals Export Association, Inc.
(PhosChem), of which the Company is a member, reached a two-year
agreement through the year 2000 to supply DAP to the China National
Chemicals Import and Export Corporation (Sinochem). This agreement
provides Sinochem with an option to extend the agreement to
December 31, 2002. Sinochem is a state company with government
authority for the import of fertilizers into China. Under the
contract's terms, Sinochem will receive monthly shipments at prices
reflecting the market at the time of shipment.
In November 1999, the Company amended its phosphate rock sales
agreement with U.S. Agri-Chemicals Corp., a wholly-owned subsidiary
of Sinochem. The new agreement provides for the sale of phosphate
rock until 2024.
In December 1999, Canpotex Limited (Canpotex), an exclusive
offshore marketing company for Saskatchewan potash producers that
receives 35 percent of its potash product from the Company, entered
into contracts with major Chinese customers. These contracts will
result in shipments to China during the first half of 2000 equal to
or slightly higher than the amount sold to China in all of 1999.
These contracts were completed at prices unchanged from the
previous year.
16.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 have been
capitalized while others have been 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 alternatives to the operational
methods employed at Esterhazy. However, 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 measures, there can be no
assurance that the amounts required for remedial efforts will not
increase in future years or that the water inflow, risk to
employees or remediation costs will not increase to a level which
would cause the Company to change its mining process or abandon the
mines.
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 was appealed by the plaintiffs to the
United States Court of Appeals for the Eighth Circuit (Court of
Appeals). The Court of Appeals in a divided opinion (2 to 1)
rendered its decision reversing the grant of summary judgment as to
certain defendants, including the Company, and affirming as to
certain other defendants. The dissent strongly disagreed with the
majority opinion, stating that the majority had erred in not
affirming the dismissal of the case as to all defendants.
According to the dissent, all of the defendants were entitled to
summary judgment. The Company, along with the other defendants
remaining in the case, obtained a rehearing of the case from the
entire Court of Appeals and the decision of the Court of Appeals
was vacated. The case was reargued before the entire Court of
Appeals on September 13, 1999, and the Court of Appeals found that
the class had failed to present evidence of collusion sufficient to
create a genuine issue of material fact and affirmed the dismissal
of the complaint by summary judgment.
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
litigation, all proceedings have been stayed pending the decision
of the Court of Appeals.
FTX Merger Litigation
In August 1997, five identical class action lawsuits were filed in
Chancery Court in Delaware by unitholders of PLP. Each case named
the same defendants and broadly alleged that FTX and FMRP Inc.
(FMRP) had breached fiduciary duties owed to the public unitholders
of PLP. The Company was alleged to have aided and abetted these
breaches of fiduciary duty. In November 1997, an amended class
action complaint was filed with respect to all cases. The amended
complaint named the same defendants and raised the same broad
allegations. The defendants moved the Court to dismiss the
amended complaint in November 1998, and the cases were dismissed in
May 1999.
In May 1998, the Company and PLP (collectively, Plaintiffs) filed a
lawsuit (IMC Action) in Delaware Chancery Court against certain
former directors of FTX (Director Defendants) and MMR. The
Plaintiffs alleged that the Director Defendants, as the directors
of PLP's administrative managing general partner FTX, owed duties
of loyalty to PLP and its limited partnership unitholders. The
Plaintiffs further alleged that the Director Defendants breached
their duties by causing PLP to enter into a series of interrelated
non-arm's-length transactions with MMR. The Plaintiffs also
alleged that MMR knowingly aided and abetted and conspired with the
Director Defendants to breach their fiduciary duties. On behalf of
the PLP public unitholders, the Plaintiffs sought to reform or
rescind the contracts that PLP entered into with MMR and to recoup
the monies expended as a result of PLP's participation in those
agreements. On November 10, 1999, the Plaintiffs and MMR announced
a settlement of the IMC Action pursuant to which MMR agreed to
purchase PLP's 47.0 percent interest in the Exploration Program,
which includes three producing oil and gas fields plus an inventory
of exploration prospects and leases, for a total of $32.0 million.
In May 1998, Jacob Gottlieb filed an action (Gottlieb Action) on
behalf of himself and all other PLP unitholders against the
Director Defendants, MMR and IMC asserting the same claims that IMC
asserted in the IMC Action. Because IMC and PLP had already
asserted these claims, in July 1998 IMC filed a motion to dismiss
the Gottlieb Action. The court has not set a briefing schedule for
IMC's motion to dismiss, and the plaintiff has made no substantial
activity in this case within the past year. IMC has recently been
advised that the plaintiff intends to withdraw the complaint
without prejudice.
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 100.0 million tons of phosphate rock
reserves. In connection with the purchase, Phosphates 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, Phosphates is
required to provide notice to CMI regarding one of the following:
(i) whether Phosphates has obtained the permits necessary to
commence mining any part of the property; (ii) whether Phosphates
wishes to extend the permitting period for an additional three
years (Extension Option); or (iii) whether Phosphates wishes to
decline to extend the permitting period when the permits necessary
to commence mining the property have been obtained, Phosphates is
obligated to pay CMI an initial royalty payment of $28.9 million
(Initial Royalty). In addition to the Initial Royalty, Phosphates
is required to pay CMI a mining royalty on phosphate rock mined
from the property to the extent the permits are obtained.
The Company anticipates submitting permit applications by mid-2001.
In the event that the permits are not obtained by October 2001, the
Company presently intends to exercise the Extension Option, at a
cost of $7.2 million (Extension Fee). This Extension Fee would be
applied toward the Initial Royalty.
Environmental Matters
The Company's contingent environmental liability arises from three
sources: facilities currently or formerly owned by the Company or
its predecessors; facilities adjacent to currently or formerly
owned facilities; and third-party Superfund sites.
At facilities currently or formerly owned by the Company or its
corporate predecessors, including FTX, PLP and their corporate
predecessors, the historical use and handling of regulated chemical
substances, crop and animal nutrients and additives, salt and by-
products or process tailings have resulted in soil and groundwater
contamination. Spills or other unintended releases of regulated
substances have occurred previously at these facilities, and
potentially could occur in the future, possibly requiring the
Company to undertake or fund cleanup efforts. At some locations,
the Company has agreed, pursuant to consent orders with the
appropriate governmental agencies, to undertake certain
investigations to determine whether remedial action may be required
to address contamination. At other locations, the Company has
entered into consent orders with appropriate governmental agencies
to perform required remedial activities that will address
identified site conditions.
During 1999, under a consent order with the state of South
Carolina, the Company successfully deconstructed its former
fertilizer production facility in Spartanburg, South Carolina.
Subsequently, the EPA performed an ESI at this facility to
determine whether the Company will be required to conduct any
additional remedial activities. Because the results of that ESI
have not been finalized, the Company cannot determine the cost of
any remedial action that ultimately may be required. Recently,
several attorneys purportedly representing 600 neighbors of the
Spartanburg facility have expressed their intention to file suit
against the Company for alleged personal injury and property
damage. Until these suits are filed, the Company is unable to
determine the magnitude of potential exposure; however, the Company
intends to vigorously contest any actions that may be brought.
In a limited number of cases, the Company's current or former
operations also allegedly resulted in soil or groundwater
contamination to neighboring off-site areas or third-party
facilities. In some instances, the Company has agreed, pursuant to
consent orders with appropriate governmental agencies, to undertake
investigations, which currently are in progress, to determine
whether remedial action may be required to address contamination.
Four plaintiffs filed a class action lawsuit, Moore et al. vs.
Agrico Chemical Company et al., which names Agrico Chemical
Company, FTX, PLP and a number of unrelated defendants. The suit
seeks unspecified compensation for alleged property damage, medical
monitoring, remediation of an alleged public health hazard and
other appropriate damages purportedly arising from operation of the
neighboring fertilizer and crop protection chemical facilities in
Lakeland, Florida. Agrico Chemical Company owned the Landia
portion of these facilities for approximately 18 months during the
mid-1970s. Because the litigation is in its early stages, it is
difficult to determine the magnitude of any exposure to the
Company; however, the Company intends to vigorously contest this
action and to seek any indemnification to which it may be entitled.
Concurrent with this litigation, the EPA has undertaken on-site and
off-site investigations of these facilities to determine whether
any remediation of existing contamination may be necessary.
Pursuant to an indemnification agreement with the Company, The
Williams Companies have assumed responsibility for any costs that
Agrico Chemical Company might incur for remediation as a result of
the EPA's actions.
Superfund, and equivalent state statutes, impose 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 or concluding involvement at
less than 20 Superfund or equivalent state sites.
Finally, through the FTX Merger, the Company assumed responsibility
for contamination and environmental impacts at a significant number
of oil and gas facilities that were operated by FTX, PLP or their
predecessors. The Company is currently involved in eight such
claims, which allege destruction of marshland by oil and gas
operations or contamination resulting from disposal of oil and gas
residual materials. The Company intends to vigorously contest
these claims and to seek any indemnification to which it may be
entitled.
The Company believes that, pursuant to several indemnification
agreements, it is entitled to at least partial, and in many
instances complete, indemnification for the costs that may be
expended by the Company to remedy environmental issues at certain
facilities. These agreements address issues that resulted from
activities occurring prior to the Company's acquisition of
facilities or businesses from parties including PPG Industries,
Inc.; Kaiser Aluminum & Chemical Corporation; Beatrice Companies,
Inc.; Estech, Inc.; ARCO; Conoco; The Williams Companies; Kerr-
McGee Inc.; and certain other private parties. The Company has
already received and anticipates receiving amounts pursuant to the
indemnification agreements for certain of its expenses incurred to
date as well as any future anticipated expenditures.
Other
Most of the Company's export sales of phosphate and potash crop
nutrients are marketed through two North American export
associations, PhosChem and Canpotex, respectively. As a member, the
Company is, subject to certain conditions, contractually obligated
to reimburse the export association for its pro rata share of any
losses or other liabilities incurred. There were no such operating
losses or other liabilities in 1999, 1998 and 1997.
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, results of operations or liquidity.
17.OPERATING SEGMENTS
The Company's reportable segments are strategic business units that
offer different products and services. They are managed separately
because each business requires different technology and marketing
strategies.
As of December 31, 1999, the Company had three reportable segments:
Phosphates, Potash and Salt. The Company produces and markets
phosphate crop nutrients through the Phosphates business unit.
Potash crop nutrients and industrial grade potash are produced and
marketed through the Potash business unit. Salt produces salt for
use in road deicing, food processing, water softeners and
industrial applications.
The accounting policies of the segments are the same as those
described in the summary of significant accounting policies. All
intersegment sales prices are market-based. The Company evaluates
performance based on operating earnings of the respective business
units.
The Notes to the Consolidated Financial Statements include detail
related to acquisitions, discontinued operations, divestitures and
special charges and should be referred to when viewing the segment
information herein.
Segment information for the years 1999, 1998 and 1997 was as
follows(a):
<TABLE>
<CAPTION>
IMC IMC IMC
Phosphates Potash(b) Salt(b) Other(c) Total
---------- --------- ------- -------- -----
<S> <C> <C> <C> <C> <C>
1999
Net sales from external
customers $1,237.9 $ 639.2 $ 319.4 $ 172.8 $2,369.3
Intersegment net sales 94.5 52.9 2.3 - 149.7
Gross margins(d) 213.8 235.0 98.1 (4.2) 542.7
Operating earnings(loss)(e) 53.9 106.1 51.7 (529.9) (318.2)
Depreciation, depletion
and amortization 72.8 69.6 40.3 49.8 232.5
Total assets 1,620.7 1,341.6 986.8 1,246.8 5,195.9
Capital expenditures 85.2 88.2 40.2 34.8 248.4
1998
Net sales from external
customers $1,393.9 $ 604.2 $ 176.1 $ 208.9 $2,383.1
Intersegment net sales 178.9 95.9 1.3 3.1 279.2
Gross margins(f) 358.4 283.3 57.1 - 698.8
Operating earnings(loss)(g) 189.4 253.4 18.8 (89.5) 372.1
Depreciation, depletion
and amortization 84.5 54.0 26.5 48.7 213.7
Total assets 1,792.2 1,364.9 1,119.3 2,180.5 6,456.9
Capital expenditures 76.2 159.7 28.1 41.6 305.6
1997
Net sales from external
customers $1,312.5 $ 537.7 $ - $ 265.8 $2,116.0
Intersegment net sales 172.3 79.7 - 32.3 284.3
Gross margins 298.7 237.7 - 38.5 574.9
Operating earnings(loss)(h) 257.4 214.8 - (212.8) 259.4
Depreciation, depletion
and amortization 100.5 35.9 - 26.0 162.4
Total assets 1,752.2 891.1 - 2,030.6 4,673.9
Capital expenditures 82.3 123.3 - 8.4 214.0
(a) The operating results and assets of entities acquired during
the three year period are included in the segment information
since their respective dates of acquisition. The operating
results of Chemicals, AgriBusiness and the oil and gas business
have not been included in the segment information above as these
businesses have been classified as discontinued operations.
However, the assets of Chemicals, AgriBusiness and the oil and
gas business have been included as part of total assets in the
Other column.
(b) In early 2000, the Company decided to explore strategic
options, including divestiture or a joint venture, for the Salt
business unit and a production facility located in Ogden, Utah.
(c) Segment information below the quantitative thresholds are
attributable to two business units (Feed Ingredients and Vigoro)
and corporate headquarters. Vigoro was sold in June 1998.
Corporate headquarters includes the elimination of
inter-business unit transactions and the goodwill recorded as a
result of the FTX Merger in 1997.
(d) Includes special charges of $41.9 million related to the
Rightsizing Program, additional asset write-offs and
environmental accruals.
(e) Includes special charges of $758.9 million related to the
Rightsizing Program, additional asset write-offs and
environmental accruals and the goodwill write-down.
(f) Includes special charges of $19.0 million primarily related to
Project Profit and $4.1 million related to the Vigoro Sale.
(g) Includes special charges of $195.1 million primarily related to
Project Profit and $14.0 million related to the Vigoro Sale.
(h) Includes a special charge of $183.7 million related to the
write-down of Main Pass.
</TABLE>
Financial information relating to the Company's operations by
geographic area was as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Net Sales(a)
United States $1,257.4 $1,196.1 $1,044.2
China 363.6 405.6 459.6
Other 748.3 781.4 612.2
-------- -------- --------
Consolidated $2,369.3 $2,383.1 $2,116.0
======== ======== ========
(a) Revenues are attributed to countries based on location of
customer. Sales through Canpotex, one of the Company's export
associations, have been allocated based on the Company's share
of total Canpotex sales. Amounts reflect continuing operations
only.
1999(a) 1998 1997
------- ---- ----
Long-Lived Assets
United States $3,063.0 $3,944.0 $3,233.2
Canada 638.9 634.7 378.5
Other 264.6 395.6 -
-------- -------- --------
Consolidated $3,966.5 $4,974.3 $3,611.7
======== ======== ========
(a) Excludes net assets of discontinued operations held for sale.
</TABLE>
18.SUBSEQUENT EVENTS
In early 2000, the Company decided to explore strategic options,
including divestiture or a joint venture, for the Salt business
unit and a production facility located in Ogden, Utah. Any sale
would be subject to certain conditions including the execution of a
definitive agreement and the receipt of certain approvals.
Also in early 2000, the Company announced Board of Directors'
authorization to repurchase up to 5.4 million shares of its
common stock through a forward stock purchase program executed by
a financial institution.
<TABLE>
Quarterly Results (Unaudited)(a)
Dollars millions, except per share amounts
<CAPTION>
Quarter(b) First Second Third Fourth(c) Year(c)
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1999
Net sales $ 667.3 $ 660.3 $ 521.5 $ 520.2 $2,369.3
Gross margins 198.4 167.6 97.2 79.5 542.7
Operating earnings (loss) 163.4 131.0 64.6 (677.2) (318.2)
Earnings (loss) from continuing
operations 71.0 53.1 14.6 (749.8) (611.1)
Total loss from discontinued
operations (2.8) (0.9) (1.4) (150.1) (155.2)
Extraordinary item - debt retirement - - - 0.5 0.5
Cumulative effect of a change in
accounting principle (7.5) - - - (7.5)
------- ------- ------- ------- --------
Net earnings (loss) $ 60.7 $ 52.2 $ 13.2 $(899.4) $ (773.3)
======= ======= ======= ======= ========
Basic and diluted earnings (loss) per share(d):
Earnings (loss) from continuing
operations $ 0.62 $ 0.47 $ 0.13 $ (6.54) $ (5.33)
Total loss from discontinued
operations (0.02) (0.01) (0.01) (1.31) (1.35)
Extraordinary item - debt retirement - - - - -
Cumulative effect of a change in
accounting principle (0.07) - - - (0.07)
------- ------- ------- ------- --------
Net earnings (loss) per share $ 0.53 $ 0.46 $ 0.12 $ (7.85) $ (6.75)
======= ======= ======= ======= ========
Quarter(b) First Second(e) Third Fourth(f) Year(e,f)
- ------------------------------------------------------------------------------
1998
Net sales $ 536.0 $ 690.3 $ 556.1 $ 600.7 $2,383.1
Gross margins 153.6 202.2 163.9 179.1 698.8
Operating earnings (loss) 116.2 154.4 131.7 (30.2) 372.1
Earnings (loss) from continuing
operations 57.2 59.0 47.0 (53.4) 109.8
Total earnings (loss) from
discontinued operations (9.2) 28.0 (9.2) (131.4) (121.8)
Extraordinary item - debt retirement (2.7) - (0.9) 6.6 3.0
------- ------- ------- ------- --------
Net earnings (loss) $ 45.3 $ 87.0 $ 36.9 $(178.2) $ (9.0)
======= ======= ======= ======= ========
Basic and diluted earnings (loss) per share(d):
Earnings (loss) from continuing
operations $ 0.50 $ 0.52 $ 0.41 $ (0.46) $ 0.96
Total earnings (loss) from
discontinued operations (0.08) 0.24 (0.08) (1.15) (1.07)
Extraordinary item - debt retirement(0.02) - (0.01) 0.06 0.03
------- ------- ------- ------- --------
Net earnings (loss) per share $ 0.40 $ 0.76 $ 0.32 $ (1.55) $ (0.08)
======= ======= ======= ======= ========
(a)See Notes to Consolidated Financial Statements for detail
related to acquisitions, discontinued operations, divestitures, and
special charges.
(b)The operating results and assets of entities acquired during
the period are included in the quarterly financial information
since their respective dates of acquisitions. All quarterly
amounts have been restated to reflect Chemicals and the oil and gas
business as discontinued operations.
(c)Fourth quarter operating results from continuing operations
includes special charges of $758.9 million, $776.8 million after
tax and minority interest, or $6.78 per share, related to the
Rightsizing Program, additional asset write-offs and environmental
accruals, the goodwill write-down and a change in tax law.
(d)Due to weighted average share differences, when stated on a
quarter and year-to-date basis, the earnings per share for the
years ended December 31, 1999 and 1998 do not equal the sum of the
respective earnings per share for the four quarters then ended.
(e)Second quarter operating results from continuing operations
includes special charges of $14.0 million, $9.1 million after tax,
or $0.08 per share, related to the Vigoro Sale.
(f)Fourth quarter operating results from continuing operations include
special charges of $195.1 million, $114.2 million after tax and
minority interest, or $1.00 per share primarily related to Project
Profit.
</TABLE>
<TABLE>
Five Year Comparison(a)
Dollars millions, except per share amounts
<CAPTION>
Year ended December 31
1999(b,c) 1998(c,d) 1997(e) 1996(f,g) 1995(f)
--------- --------- ------- --------- -------
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Net sales $2,369.3 $2,383.1 $2,116.0 $2,143.3 $2,132.7
Gross margins 542.7 698.8 574.9 596.3 632.9
Operating earnings (loss) (318.2) 372.1 259.4 426.4 514.6
Earnings (loss) from continuing
operations (611.1) 109.8 69.8 121.7 195.2
Total earnings (loss) from
discontinued operations (155.2) (121.8) 18.0 13.5 23.8
Extraordinary item - debt retirement 0.5 3.0 (24.9) (8.1) (3.5)
Cumulative effect of a change in
accounting principle (7.5) - - - -
-------- ------- -------- -------- --------
Net earnings (loss) $ (773.3) $ (9.0) $ 62.9 $ 127.1 $ 215.5
======== ======= ======== ======== ========
Diluted earnings (loss) per share:
Earnings (loss) from continuing
operations $ (5.33) $ 0.96 $ 0.74 $ 1.25 $ 2.09
Total earnings (loss) from
discontinued operations (1.35) (1.07) 0.19 0.14 0.25
Extraordinary item - debt retirement - 0.03 (0.26) (0.08) (0.04)
Cumulative effect of a change in
accounting principle (0.07) - - - -
-------- -------- -------- -------- --------
Net earnings (loss) per share $ (6.75) $ (0.08)$ 0.67 $ 1.31 $ 2.30
======== ======== ======== ======== ========
Balance Sheet Data (at end of period):
Total assets $5,195.9 $6,456.9 $4,673.9 $3,485.2 $3,521.8
Working capital 437.0 577.5 389.1 582.6 507.6
Working capital ratio 1.9:1 1.6:1 1.6:1 2.7:1 2.0:1
Long-term debt, less current
maturities 2,518.7 2,638.7 1,235.2 656.8 741.7
Total debt 2,548.6 3,047.0 1,424.1 711.9 889.5
Stockholders' equity 1,080.1 1,860.4 1,935.7 1,326.2 1,090.4
Total capitalization 3,628.7 4,907.4 3,359.8 2,038.1 1,979.9
Net debt/total capitalization 70.2% 62.1% 42.4% 34.9% 44.9%
Other Financial Data:
Cash provided by operating
activities $ 458.4 $ 269.1 $ 563.4 $ 486.7 $ 513.8
Capital expenditures 248.4 367.6 244.0 209.0 146.0
Cash dividends paid 36.6 36.6 29.7 34.5 33.2
Dividends declared per share 0.32 0.32 0.32 0.32 0.31
Book value per share 9.43 16.28 16.98 13.80 11.25
(a)See Notes to Consolidated Financial Statements for detail
related to acquisitions, discontinued operations, divestitures, and
special charges.
(b)Operating results from continuing operations includes special
charges of $758.9 million, $776.8 million after tax and minority
interest, or $6.78 per share, related to the Rightsizing Program,
additional asset write-offs and environmental accruals, the
goodwill write-down and a change in tax law.
(c)Restated to reflect Chemicals and the oil and gas business as
discontinued operations.
(d)Operating results from continuing operations includes special
charges of $209.1 million, $123.3 million after tax and minority
interest, or $1.07 per share primarily related to Project Profit
and the Vigoro Sale.
(e)Operating results from continuing operations includes a
special charge of $183.7 million, $112.2 million after tax, or
$1.19 per share related to the write-down of Main Pass.
(f)Restated to reflect the merger with The Vigoro Corporation
which was accounted for as a pooling of interests.
(g)Operating results from continuing operations includes a
special charge of $84.9 million, $59.9 million after tax, or $0.62
per share, related to a restructuring of the Company immediately
after the merger with The Vigoro Corporation.
</TABLE>
- ---------------------------
(a)Earnings from continuing operations before special charges,
minority interest, interest charges, taxes, depreciation, depletion
and amortization and after PLP distribution.
EXHIBIT 21
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 from
continuing operations before income taxes.
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%
KCL Holdings, Inc. Delaware 100%
IMC Kalium Ltd. Delaware 100%
IMC Central Canada Potash Inc. Delaware 100%
IMC Kalium Carlsbad Potash
Company Delaware 100%
IMC Kalium Canada Ltd. Canada 100%
Western Ag-Minerals Company Nevada 100%
Phosphate Resource Partners
Limited Partnership Delaware 51.6%
IMC Inorganic Chemicals Inc. Delaware 100%
IMC Global Australia Pty. Ltd. Australia 100%
(Australia)
A number of subsidiaries are not shown, but even as a whole they
do not constitute a significant subsidiary.
Exhibit 18
Mr. J. Bradford James
Executive Vice President and
Chief Financial Officer
IMC Global Inc.
2100 Sanders Road
Northbrook, IL 60062
Dear Mr. James:
Note 2 of the notes to consolidated financial statements of IMC Global
Inc. incorporated by reference in its Form 10-K for the year ended
December 31, 1999 describes a change in the method of accounting for
determining goodwill impairment from the undiscounted cash flow method
to the discounted cash flow method.
We conclude that such change in the method of accounting is to an
acceptable alternative method which, based on your business judgment to
make this change for the stated reason, is preferable in your
circumstances.
Sincerely,
/s/ Ernst & Young LLP
---------------------------
Ernst & Young
Chicago, Illinois
January 31, 2000
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the following
Registration Statements of IMC Global Inc. and in the related
prospectuses of our report dated January 31, 2000 with respect to the
consolidated financial statements of IMC Global Inc. incorporated by
reference in this Annual Report (Form 10-K) for the year ended December
31, 1999.
Commission File No.
--------------------------
Form S-3 Form S-8
--------------------------
333-27287 333-00189
333-40377 333-00439
333-70797 333-22079
333-22080
333-38423
333-40377
333-40781
333-40783
333-56911
333-59685
333-59687
333-70039
333-70041
ERNST & YOUNG LLP
Chicago, Illinois
March 23, 2000
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 Douglas A. Pertz, J. Bradford James 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 December 31, 1999 (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 and of any state or other political subdivision
thereof. 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 ____ day of March, 2000
/s/ Richard L. Thomas
- -----------------------------
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 Douglas A. Pertz, J. Bradford James 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 December 31, 1999 (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 and of any state or other political subdivision
thereof. 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 ____ day of March, 2000
/s/ Joseph P. Sullivan
- -----------------------------
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 Douglas A. Pertz, J. Bradford James 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 December 31, 1999 (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 and of any state or other political subdivision
thereof. 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 ____ day of March, 2000
/s/ Douglas A. Pertz
- -----------------------------
Douglas A. Pertz
POWER OF ATTORNEY
The undersigned, being a Director and/or Officer of IMC
Global Inc., a Delaware corporation (the "Company"), hereby constitutes
and appoints Douglas A. Pertz, J. Bradford James 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 December 31, 1999 (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 and of any state or other political subdivision
thereof. 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 ____ day of March, 2000
/s/ Donald F. Mazankowski
- -----------------------------
Donald F. Mazankowski
POWER OF ATTORNEY
The undersigned, being a Director and/or Officer of IMC
Global Inc., a Delaware corporation (the "Company"), hereby constitutes
and appoints Douglas A. Pertz, J. Bradford James 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 December 31, 1999 (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 and of any state or other political subdivision
thereof. 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 ____ day of March, 2000
/s/ David B. Mathis
- -----------------------------
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 Douglas A. Pertz, J. Bradford James 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 December 31, 1999 (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 and of any state or other political subdivision
thereof. 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 ____ day of March, 2000
/s/ Harold H. MacKay
- -----------------------------
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 Douglas A. Pertz, J. Bradford James 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 December 31, 1999 (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 and of any state or other political subdivision
thereof. 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 ____ day of March, 2000
/s/ James M. Davidson
- -----------------------------
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 Douglas A. Pertz, J. Bradford James 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 December 31, 1999 (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 and of any state or other political subdivision
thereof. 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 ____ day of March, 2000
/s/ Rod F. Dammeyer
- -----------------------------
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 Douglas A. Pertz, J. Bradford James 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 December 31, 1999 (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 and of any state or other political subdivision
thereof. 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 ____ day of March, 2000
/s/ Raymond F. Bentele
- -----------------------------
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 Douglas A. Pertz, J. Bradford James 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 December 31, 1999 (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 and of any state or other political subdivision
thereof. 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 ____ day of March, 2000
/s/ Pamela B. Strobel
- -----------------------------
Pamela B. Strobel
<TABLE> <S> <C>
<CAPTION>
<S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> (72,100)
<SECURITIES> 152,900
<RECEIVABLES> 260,100
<ALLOWANCES> 5,900
<INVENTORY> 439,600
<CURRENT-ASSETS> 927,900
<PP&E> 5,228,600
<DEPRECIATION> 1,977,900
<TOTAL-ASSETS> 5,195,900
<CURRENT-LIABILITIES> 490,900
<BONDS> 2,518,700
<COMMON> 125,200
0
0
<OTHER-SE> 954,900
<TOTAL-LIABILITY-AND-EQUITY> 5,195,900
<SALES> 2,369,300
<TOTAL-REVENUES> 2,369,300
<CGS> 1,826,600
<TOTAL-COSTS> 1,991,100
<OTHER-EXPENSES> 689,400
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 154,500
<INCOME-PRETAX> (465,700)
<INCOME-TAX> 145,400
<INCOME-CONTINUING> (611,100)
<DISCONTINUED> (155,200)
<EXTRAORDINARY> 500
<CHANGES> (7,500)
<NET-INCOME> (773,300)
<EPS-BASIC><F1> (6.75)
<EPS-DILUTED><F1> (6.75)
<FN>
<F1>
Earnings per share has been calculated in accordance with Statement of
Financial Accounting Standard No. 128, "Earnings Per Share," and is,
therefore, stated on a basic and diluted basis.
</FN>
</TABLE>
