-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KOp8bBvJr0oVxjkcMdSXLht9fsqRSWigofVA0vCK4kXT7fOkKaw20sPQbFdnJMt8 enDu+wOSnTRWlHtAeKNZ5Q== 0000066895-95-000014.txt : 19951020 0000066895-95-000014.hdr.sgml : 19951020 ACCESSION NUMBER: 0000066895-95-000014 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 15 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950928 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MISSISSIPPI CHEMICAL CORP /MS/ CENTRAL INDEX KEY: 0000066895 STANDARD INDUSTRIAL CLASSIFICATION: 2870 IRS NUMBER: 640292638 STATE OF INCORPORATION: MS FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-20411 FILM NUMBER: 95576866 BUSINESS ADDRESS: STREET 1: HIGHWAY 49 EAST CITY: YAZOO CITY STATE: MS ZIP: 39194 BUSINESS PHONE: 6017464131 MAIL ADDRESS: STREET 1: P O BOX 388 CITY: YAZOO CITY STATE: MS ZIP: 39194 FORMER COMPANY: FORMER CONFORMED NAME: MISSISSIPPI CHEMICAL CORP DATE OF NAME CHANGE: 19920703 10-K 1 ANNUAL REPORT TO SEC SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K [x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended June 30, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] Commission File Number 2-7803 MISSISSIPPI CHEMICAL CORPORATION (Exact name of registrant as specified in its charter) MISSISSIPPI 64-0292638 (State or other jurisdiction of incorporation or (IRS Employer Identification organization) Number) Highway 49 East, P.O. Box 388, Yazoo City, MS 39194 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area (601) 746-4131 code: 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 $.01 The Nasdaq Stock Market's National Market Preferred Stock Purchase Rights The Nasdaq Stock Market's National Market 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 or 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. [ ] At, September 11, 1995, Mississippi Chemical Corporation had 22,902,672 shares of common stock, par value $.01, outstanding. The Company estimates that the aggregate market value of the common stock on September 11,1995 (based upon the closing price of these shares on Nasdaq) held by non-affiliates was approximately $491,033,288. DOCUMENTS INCORPORATED BY REFERENCE Annual Report to Shareholders for fiscal year ended June 30, 1995 (Items 5, 6, 7 and 8 in Part II, and Item 14 in Part IV). Proxy Statement for annual meeting of shareholders to be held on November 14, 1995 (Items 10, 11, 12 and 13 in Part III). PART I ITEM 1. BUSINESS Mississippi Chemical Corporation (the "Company") was incorporated in Mississippi on May 23, 1994, and is the successor by merger, effective July 1, 1994, to a business which was formed in 1948 as the first fertilizer cooperative in the United States (the "Cooperative"). The address of the Company's principal executive office is Owen Cooper Administration Building, Highway 49 East, Yazoo City, Mississippi 39194, and its telephone number is (601) 746-4131. The term "Company" includes Mississippi Chemical Corporation and its wholly owned subsidiaries, Mississippi Phosphates Corporation and Mississippi Potash, Inc. References to the Company's operations prior to July 1, 1994, refer to the Cooperative's operations. The Cooperative was incorporated in Mississippi in September 1948 and operated as a cooperative in accordance with the applicable provisions of the Internal Revenue Code. The principal business of the Cooperative was to provide fertilizer products to its shareholders pursuant to preferred patronage rights which gave the shareholders the right to purchase fertilizer products and receive a patronage refund on fertilizer purchases. On June 28, 1994, the shareholders of the Cooperative approved a plan of reorganization (the "Reorganization"), pursuant to which the Cooperative was merged into the Company. Pursuant to the Reorganization, the capital stock of the Cooperative was converted into common stock and/or cash. As a result of the Reorganization, the Company no longer operates as a cooperative, but as a regular business corporation. In June 1994, the Cooperative divested a majority of its interest in Newsprint South, Inc., its newsprint manufacturing subsidiary. In fiscal 1995, the Company paid approximately $9 million to a third party as the final portion of the divestiture costs. NITROGEN FERTILIZER Products The Company produces nitrogen fertilizers at its Yazoo City, Mississippi, production facility in Yazoo City, Mississippi, and through a 50%-owned production facility at Donaldsonville, Louisiana. The Louisiana facility ("Triad") is operated as a joint venture by the Company and First Mississippi Corporation. In fiscal 1995, the Company sold over 1.7 million tons of nitrogen fertilizers to farmers, fertilizer dealers and distributors located primarily in the southern United States. Sales of nitrogen fertilizer products by the Company in fiscal 1995 were $240.7 million, which represented approximately 62% of net sales. The Company's principal nitrogen products include ammonia; fertilizer-grade ammonium nitrate, which is sold under the Company's trade name Amtrate(R); UAN solutions, which are sold under the Company's trade name N-Sol; and urea. Although, to some extent, the various nitrogen fertilizers are interchangeable, each has its own distinct characteristics which produce agronomic preferences among end-users. Farmers decide which type of nitrogen fertilizer to apply based on the crop planted, soil and weather conditions, regional farming practices and relative nitrogen fertilizer prices. Ammonia. The basic nitrogen product is anhydrous ammonia, which is the simplest form of nitrogen fertilizer. Anhydrous ammonia, which is 82% nitrogen, is the most concentrated form of nitrogen fertilizer available. It is synthesized as a gas under high temperature and pressure. The raw materials used to produce anhydrous ammonia are natural gas, atmospheric nitrogen and steam. In fiscal 1995, the Company produced approximately 728,000 tons of anhydrous ammonia at its Yazoo City and Triad facilities and purchased approximately 50,000 tons. The Company sold approximately 35,000 tons of anhydrous ammonia for direct-application fertilizer and industrial sales and used the balance as a raw material to manufacture its other nitrogen fertilizer products. The Company's subsidiary Mississippi Phosphates Corporation also purchased 171,000 tons of ammonia for use in its phosphate operations. See "Phosphate Fertilizer." In the Company's markets, ammonia is used primarily as a pre-emergent fertilizer for most row crops. Although anhydrous ammonia is the least expensive form of nitrogen, its use as a primary fertilizer has gradually declined because of the difficulties of application and the high cost of application equipment. Ammonium Nitrate. The Company is the largest manufacturer and marketer of ammonium nitrate fertilizer in the United States. Ammonium nitrate, which is 34% nitrogen, is produced by reacting anhydrous ammonia and nitric acid. Ammonium nitrate is less subject to volatilization (evaporation) losses than other nitrogen fertilizer forms. Due to its stable nature, ammonium nitrate is the product of choice for such uses as pastures and no-till row crops where fertilizer is spread upon the surface and is subject to volatilization losses. Although the consumption of ammonium nitrate in the U.S. has been stable in recent years, the use of conservation tillage, which reduces soil erosion, is increasing in the U.S. and should have a positive impact on ammonium nitrate demand. In fiscal 1995, the Company sold approximately 857,000 tons of solid ammonium nitrate fertilizer, the majority of which was produced at the Company's Yazoo City facility, and the balance of which was purchased from third parties, primarily Air Products and Chemicals, Inc. ("Air Products"). The ammonium nitrate produced at the Company's Yazoo City facility is sold under the registered trade name Amtrate(R). Due to its superior shipping and storage characteristics, Amtrate(R) has established excellent brand name recognition and a reputation as a high-quality product. In September 1994, the Company and Air Products concluded arrangements whereby the Company agreed to purchase all of the ammonium nitrate fertilizer produced at Air Products' Pace, Florida, facility (up to 240,000 tons per year) during the 15-year term of the agreement. Approximately 144,000 tons of ammonium nitrate were purchased in fiscal 1995 pursuant to this agreement. Air Products recently announced its intention to suspend ammonium nitrate production at its Pace facility until October 1996 due to sustained high ammonia costs. N-Sol. In fiscal 1995, the Company sold approximately 609,000 tons of N-Sol, the vast majority of which it produces at its Yazoo City facility. N-Sol is a 32% nitrogen product that is made by mixing urea liquor and ammonium nitrate liquor. N-Sol is used in direct application to cotton, corn, grains and pastures as well as for use in liquid fertilizer blends. Over the past 20 years, there has been a substantial shift in product preference from directly applied ammonia to UAN solutions because of the difficulties of applying and the high cost of application equipment for ammonia. Urea. In fiscal 1995, the Company sold approximately 171,000 tons of prilled urea and approximately 77,000 tons of urea melt which it produces at its Triad facility. Under a long-term contract with Melamine Chemicals, Inc. ("Melamine"), the Company is obligated to sell up to 75,000 tons per year of urea melt at prevailing market prices to Melamine's facility located adjacent to the Triad facility. Urea is synthesized by the reaction of ammonia and carbon dioxide and then solidified in prill form. At 46% nitrogen by weight, urea is the most concentrated form of dry nitrogen. Because urea undergoes a complex series of changes within the soil before the nitrogen it contains is ultimately converted into a form which can be used by plants, it is considered a long-lasting form of nitrogen. As a fertilizer product, urea is acceptable as both a direct-application material and as an ingredient in fertilizer blends. Urea consumption has increased modestly in recent years. In the Company's trade area, prilled urea is used primarily for topdressing rice. Most of the Company's prilled urea is aerially broadcast on rice crops in Arkansas, Louisiana, Mississippi and Texas. Production and Properties Yazoo City, Mississippi. The Yazoo City facility is a closely integrated, multi-plant nitrogen fertilizer production complex located on approximately 1,180 acres. The complex includes an anhydrous ammonia plant, four nitric acid plants, an ammonium nitrate plant and a UAN solutions plant. In 1993, the Company spent $32 million to expand its nitrogen production capacity at its Yazoo City facility, which increased nitric acid production capacity by approximately 300 tons per day and ammonium nitrate capacity by approximately 375 tons per day. The Yazoo City ammonia plant has been continuously retrofitted to incorporate energy-saving technology and improve efficiencies. The Yazoo City facility includes a 20.5 megawatt cogeneration facility which produces significant savings by the sequential generation of electricity and process steam. The Yazoo City plant has direct access to water, rail and truck transportation and is strategically located for the purchase of competitively priced natural gas. See "-Raw Materials-Natural Gas." Donaldsonville, Louisiana. The Triad facility is a closely integrated, multi-plant nitrogen fertilizer complex located on approximately 46 acres fronting the Mississippi River. At the Triad plant, the Company produces anhydrous ammonia and urea. The Company is entitled to one-half of the production from the Donaldsonville facility as the co-owner of Triad with First Mississippi Corporation. The Triad ammonia plant has been retrofitted on several occasions to increase production and enhance operating efficiency. Triad has ready access to rail and truck transportation. The plant is also equipped with a deep-water port facility on the Mississippi River, allowing access to economical barge and ship transport for its urea and ammonia products. The Triad facility is well positioned for the purchase of natural gas. See "- Raw Materials-Natural Gas." Trinidad. In December 1994, the Company signed a letter of intent with Farmland Industries, Inc., to enter into a 50-50 joint venture, known as Farmland MissChem Limited, to construct and operate a 1,900-short-ton-per-day ammonia plant to be located on the island of Trinidad. The project is expected to cost approximately $330 million. The joint venture is in the process of finalizing its plant site, negotiating a construction contract, and completing financing arrangements. Start-up of the facility is scheduled for 1998. The Company intends to use the majority of its portion of the production from the new facility, expected to be in excess of 300,000 tons per year, primarily as a raw material for upgrading into finished fertilizer products at its existing facilities. Marketing and Distribution The Company sells its nitrogen fertilizer products to farmers, dealers and distributors located primarily in the southern farming regions of the United States where its facilities are located. In the three-tiered fertilizer distribution chain, distributors operate as wholesalers supplying dealers who, in turn, sell directly to farmers. Larger customers (distributors and large multi-location dealers) arrange for distribution, storage and financing of nitrogen fertilizer. The majority of the Company's sales are made to distributors and large dealers. The ten states which make up the Company's primary trade area are Mississippi, Alabama, Arkansas, Texas, Louisiana, Oklahoma, Georgia, Florida, Tennessee and Kentucky. The Company maintains a large and experienced field sales force strategically located throughout the southern United States. This sales force maintains close communications with the customer base and plays an important role in the marketing and distribution of the Company's products. Through regular, personal contact with its customers, the Company is able to ascertain local demand for fertilizer products and arrange to have those products available from the most cost-effective source. The Company's field sales force is also able to identify specific customer service needs which the Company can meet. Customer service helps differentiate the Company's products and enhance its position as a preferred supplier. The Company transports its nitrogen products by barge, rail and truck. The Company's distribution network is complemented by owned or leased warehouses and terminals strategically placed in high-consumption areas. PHOSPHATE FERTILIZER Products The Company produces diammonium phosphate fertilizer ("DAP") at its facility in Pascagoula, Mississippi. In fiscal 1995, the Company sold approximately 713,000 tons of DAP, primarily into international markets. Sales of DAP by the Company in fiscal 1995 were $117.5 million, which represented approximately 30% of net sales. DAP is the most common form of phosphate fertilizer. DAP is produced by reacting phosphate rock with sulfuric acid to produce phosphoric acid, which is then combined with ammonia. DAP contains 18% nitrogen and 46% phosphate (P205) by weight. DAP is an important fertilizer product for both direct application and for use in blended fertilizers applied to all major types of row crops. Production and Properties The Company's phosphate production complex in Pascagoula, Mississippi, is located on approximately 1,500 acres. The Pascagoula facility is a closely integrated, multi-plant phosphatic fertilizer complex where the primary facilities are a phosphoric acid plant, two sulfuric acid plants and a DAP granulation plant. The plant has storage facilities for finished product (45,000 tons), as well as for the primary raw materials, phosphate rock (100,000 tons), sulfur (10,000 tons) and ammonia (25,000 tons). All of the phosphate rock used by the Company is purchased pursuant to a single supply contract with Office Cherifien des Phosphates ("OCP"), the national phosphate company of Morocco. See "-Raw Materials-Phosphate Rock." The plant site fronts a deep-water channel that provides direct access to the Gulf of Mexico. The complex contains docks and off-loading facilities for receiving shipload quantities of phosphate rock, sulfur and ammonia, and for outloading DAP. The plant's location on deep water provides the Company with an outbound freight cost advantage over central Florida DAP producers with respect to international shipments and domestic shipments along the Mississippi River system. Marketing and Distribution The Company sells substantially all of its DAP to Atlantic Fertilizer & Chemical Corporation ("Atlantic"), the exclusive distributor of its DAP products. Atlantic maintains a network of sales agents in the major phosphate fertilizer-consuming nations around the world. Sales to Atlantic are made on an FOB Pascagoula basis at a price which reflects the price Atlantic charges its customers, adjusted to reflect Atlantic's commission. Sales to Atlantic for the export market are backed by standby letters of credit. In fiscal 1995, approximately two-thirds of the Company's DAP was sold into international markets. The largest export markets in fiscal 1995 were India, China and countries within Central and South America. Most domestic sales are made in barge-lot quantities to major fertilizer distributors and dealers located on the Mississippi River system. The vast majority of the Company's DAP is transported by ship and barge, although truck and rail access is also available. POTASH FERTILIZER Products The Company produces potash at its mine and related facilities near Carlsbad, New Mexico. In fiscal 1995, the Company sold approximately 357,000 tons of potash primarily in granular form. These sales were primarily to customers located west of the Mississippi River. In May 1994, the Company completed an expansion of its Carlsbad facility for $1.6 million, bringing its capacity for granular product to approximately 420,000 tons per year. Sales of potash fertilizer by the Company in fiscal 1995 were $27.4 million, which represented approximately 7% of net sales. The Company's potash is mined from subterranean salt deposits containing a mixture of potassium chloride and sodium chloride. The Carlsbad, New Mexico, potash deposits are located from 800 to 1,200 feet below the surface. Potash is produced in a refining process whereby the potassium chloride is separated from the sodium chloride. The Company produces red granular potash. The three principal grades of potash fertilizer are granular, coarse and standard, with granular being the largest particle size. Granular potash is used as a direct-application fertilizer and, among the various grades, is particularly well suited for use in fertilizer blends. Potash is an important fertilizer product for both direct application and for use in blended fertilizer applied to all major types of row crops. Production and Properties The Company's potash mine and refinery are located approximately 25 miles east of Carlsbad, New Mexico. In fiscal 1994, the Company completed a $5 million project to modernize its mining equipment, enabling it to extract a higher grade of ore which improved overall facility efficiencies. The mine supplies ore to an above-ground refinery which separates the potassium chloride from the ore. The run-of-mine refined product is then transported to the Company's nearby compaction plant for conversion to granular form. Located contiguous to the compaction facility are storage and shipping facilities from which the finished product is transported by rail and truck into domestic and export markets. The Company's potash reserves are controlled under long-term federal and state potassium leases on approximately 60,000 acres. In addition, the Company holds mineral title to approximately 4,400 acres and fee title to approximately 10,000 acres. Revised estimates of potash ore reserves underlying the Carlsbad properties were compiled in 1981 and 1983. According to these estimates, the Company's reserves were estimated to contain 346.2 million tons of in situ ore with an average grade of 15.25% K20 or 297.9 million tons of recoverable ore with an average grade of 14.88% K20. Since these estimates were made, ore extracted would indicate remaining reserves of 332 million tons of in situ ore with an average grade of 15.27% K2O or 284 million tons of recoverable ore with an average grade of 14.88% K2O. This reserve base is estimated to be equivalent to 56 million tons of muriate of potash. At current production rates, the Company's reserves have a remaining life in excess of 100 years. Marketing and Distribution The substantial majority of the Company's potash sales are in domestic markets in the southern states west of the Mississippi River where it and other Carlsbad potash producers enjoy freight cost advantages over Canadian and overseas potash producers. Consistent with the Company's strategy to maximize "net backs" (sales less distribution and delivery expense) and increase profit margins, domestic sales are targeted for locations along the freight route of the Santa Fe Railroad. Domestic potash marketing is performed by the Company's sales staff. The Company's export sales are made through Potash Corporation of Saskatchewan Sales Limited. While the typical primary export market for the Company's potash is Latin America, the majority of fiscal 1995 export sales were to France and Japan. Potash for export is transported by rail to terminal facilities in Houston, Texas, where it is loaded onto ocean-going vessels for shipment to export markets. RAW MATERIALS Natural Gas Natural gas is the primary raw material used by the Company in the manufacture of nitrogen fertilizer products. Natural gas is used both as a chemical feedstock and as a fuel to produce anhydrous ammonia which is then upgraded into other nitrogen fertilizer products. During fiscal 1995, the cost of natural gas represented approximately 73% of the Company's cost of producing ammonia. Because there are no commercially feasible alternatives for natural gas in the production of ammonia, the economic viability of the Company's nitrogen business depends upon the availability of competitively priced natural gas. In today's natural gas market, the Company's total natural gas cost generally consists of two components-the market price of the natural gas in the producing area at the point of delivery into a pipeline and the fee charged by the pipeline for transporting the natural gas to the Company's plants. The cost of the transportation component can vary substantially depending on whether or not the pipeline has to compete for the business. Therefore, it is extremely important to the Company's competitiveness that it have access to multiple natural gas transportation services. In addition to the impact on transmission costs, access alternatives enable the Company to benefit from natural gas price differences that may exist from time to time in the various natural gas-producing areas. In recent years, the Company has improved the natural gas purchasing logistics of its nitrogen facilities. The majority of the 54,000 Mcf per day natural gas requirements of the Yazoo City facility is currently being furnished by various producers and marketers who sell gas to the Company at various points along the pipeline system of Southern Natural Gas Company ("Southern"). The Company continues to utilize a long-term, interruptible transportation agreement with Southern. Although the Southern contract provides for interruptible service, the Company believes and experience dictates that curtailment of supply is unlikely because of the plant's location on Southern's system. In 1995, the Company entered into a long-term natural gas purchase agreement with Sonat Marketing Company ("Sonat"), an affiliate of Southern. Deliveries under the Sonat agreement are scheduled to begin on January 1, 1996. The Sonat agreement provides for market-sensitive pricing and a firm-delivery supply commitment. In addition to being connected to Southern, the Company has also secured long-term transportation capacity in the Thomasville Line (described below), which provides the plant with access to an additional interstate pipeline and a large intrastate gathering and transmission system in southern Mississippi. As a result of this multiple source access, the Company benefits from competition for the transportation and supply of natural gas. The balance of the natural gas requirements of the Yazoo City facility is supplied by Shell Western E&P Inc. ("SWEPI"), a subsidiary of Shell Oil Company ("Shell"). In 1972, the Company and Shell entered into a gas purchase and sale agreement whereby Shell agreed to supply natural gas to the Yazoo City plant from its natural gas reserves located in Rankin County, Mississippi. Pursuant to its agreement with the Company, Shell constructed a 60-mile pipeline (the "Thomasville Line") from its reserves directly to the Yazoo City facility. The primary term of the SWEPI contract expired on March 31, 1994; however, since that date, the Company has continued purchasing the output of the Rankin County reserves (which is currently approximately 20,000 Mcf per day) at market-sensitive prices. It is anticipated that this purchase arrangement will continue for the foreseeable future. The natural gas requirements of the Triad facility are approximately 50,000 Mcf per day. The Triad facility is located in one of the primary gas-producing regions of the United States. The facility is currently connected to five intrastate pipeline systems and benefits from intense competition among those suppliers. Currently, the plant's requirements are being supplied by three of the intrastate lines under various pricing arrangements. Generally, these contracts impose firm delivery obligations at market-sensitive prices. In addition, the Company purchases gas for Triad on the spot market pursuant to 30- to 90-day fixed-price contracts. As a result of Triad's favorable access to natural gas supplies, the Company believes that the loss of any particular supplier would not have a material impact on plant operations. There have been no significant supply interruptions at the Triad facility. Natural gas is currently available in ample quantities. Technical advancements in exploration, development and production are keeping supplies in a strong position. Efficient operation of gas storage should continue to dampen seasonal price variations, but shorter-term volatility related to minor system disturbances is expected to continue. The Company uses natural gas futures contracts to hedge against the risk of short-term market fluctuations in the cost of natural gas. Phosphate Rock Phosphate rock is one of the primary raw materials for the manufacture of DAP. The Pascagoula facility's requirements for phosphate rock are approximately 1.2 million tons per year. As of September 15, 1991, the Company entered into a ten-year contract with Office Cherifien des Phosphates ("OCP") to supply all of the phosphate rock requirements of the Pascagoula facility. This contract has been amended and its term extended to June 30, 2003. OCP, the national phosphate company of Morocco, is the world's largest producer and exporter of phosphate rock and upgraded phosphates as a company. The contract price for phosphate rock is based on phosphate rock costs incurred by certain domestic competitors of the Company and on the long-term financial performance of the Company's phosphate operations. Under this formula, the Company realizes favorable phosphate rock prices and is afforded significant protection during periods when market conditions are depressed and its DAP operations are not profitable. As a result, the Company has been able to sustain its operations since reopening the Pascagoula facility in December 1991, despite a sustained period of low prices for phosphate products during fiscal 1993 and 1992. Conversely, in favorable markets, when the Company's DAP operations are profitable, the contract price of phosphate rock will escalate based on the profitability of its DAP operations. Pursuant to this contract, the Company and OCP are required to negotiate further adjustments as needed to maintain the viability and economic competitiveness of the Pascagoula plant. The strategic alliance with OCP has functioned effectively since inception, and the Company considers its relations with OCP to be good. Sulfur Sulfur is used in the manufacture of sulfuric acid at the Pascagoula plant. Sulfur is in adequate supply and is available on the open market in quantities sufficient to satisfy the Company's current requirements of 290,000 tons per year. The location of the Company's plant at Pascagoula, Mississippi, near major oil and gas fields which supply substantial amounts of sulfur, provides the Company with a strategic advantage in the purchase of sulfur over its Florida competitors. Ammonia Until recently, ammonia has been in adequate supply at depressed prices. In early 1994, intermittent shortages of ammonia, which caused a surge in ammonia prices, developed as a result of increased consumption in agricultural and industrial markets, several unplanned plant outages and reduced imports from the former Soviet Union ("FSU"). Heavy demand from industrial and agricultural markets continued into 1995. Ammonia prices have declined from the level reached during spring 1995 but remain at relatively high levels. COMPETITION Since fertilizers are global commodities which are available from multiple sources, the primary competitive factor is price. Other competitive factors include product quality, customer service and availability of product. In each product category, the Company competes with a broad range of domestic producers, including farmer cooperatives, subsidiaries of larger companies, integrated energy companies and independent fertilizer companies. Many of the Company's domestic competitors have larger financial resources and sales than the Company. The Company also competes with foreign producers. Foreign competitors are often owned or subsidized by their governments and, as a result, may have cost advantages over domestic companies. Additionally, foreign competitors are frequently motivated by non-market factors such as the need for hard currency. The Company produces and sells nitrogen fertilizer products primarily in the southern United States. Because competition is based largely on price, maintaining low production costs is critical to competitiveness. The Company believes it is one of the lowest-cost producers of nitrogen fertilizers in the United States. Natural gas comprises the majority of the raw materials cost of nitrogen fertilizers. Competitive natural gas purchasing is essential to maintaining the Company's low-cost position. Equally important is efficient use of this gas because of the energy-intensive nature of the nitrogen fertilizer business. Therefore, cost-competitive production facilities that allow flexible upgrading of ammonia to other finished products are critical to a low-cost competitive position. In the highly fragmented nitrogen fertilizer market, product quality and customer service can also be sources of product differentiation. Through Atlantic, the Company sells approximately two-thirds of its DAP in international markets. The United States phosphate industry has become more concentrated as a result of recent consolidations and joint ventures, and the Company is significantly smaller than most of its competitors in terms of resources and sales. Most of the Company's principal competitors have captive sources of some or all of the raw materials, and this may provide them with cost advantages. The Company's long-term phosphate rock contract with its flexible pricing mechanism is a key element to the Company's ability to compete. Most potash consumed in the United States is provided by large Canadian producers who have economies of scale and lower variable costs than their U.S. counterparts. Over 80% of United States potash production capacity is located in the Carlsbad, New Mexico, area. While the Carlsbad producers have higher mining costs than the Canadian producers, this disadvantage is offset by logistical and freight advantages in certain markets in the southwestern United States and the lower United States corn belt. The Company competes in these markets primarily with three other Carlsbad potash producers. ITEM 2. OTHER PROPERTIES The Company owns an administration building in Yazoo City which contains approximately 65,000 square feet of office space. The Company's plants are complete with necessary support facilities, such as roads, railroad tracks, storage, offices, laboratories, warehouses, machine shops and loading facilities. Adequate supplies of water and electric power are available at all locations. In addition to the fertilizer storage facilities at Yazoo City and Pascagoula, Mississippi; Carlsbad, New Mexico; and Donaldsonville, Louisiana, the Company also owns or leases 19 major fertilizer storage and distribution facilities at other locations in Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, Tennessee and Texas, with a total system-wide storage capacity of approximately 256,000 tons. In 1980, the Company completed the purchase of phosphate rock property in Hardee County, Florida. This property, containing approximately 12,000 acres, is estimated by the Company to contain approximately 62,000,000 recoverable tons of phosphate rock of commercial quality. During 1990, the Company entered into an agreement granting a third party the exclusive option, for a period of four years, to purchase this undeveloped phosphate rock property. The Company received an aggregate of $14 million in option payments during this four-year period. As of July 12, 1994, the Company and the option holder entered into new agreements with respect to this property whereby (i) the Company conveyed approximately 2,500 acres of this property to the third party; (ii) for aggregate additional option payments of $7 million to be paid during the option period, the Company granted to the third party the exclusive option, for a period of three and one-half years, to purchase the remaining 9,500 acres; (iii) the Company was granted a put option pursuant to which the Company has the right to sell the 9,500 acres to the third party if the third party does not exercise its prior option to purchase the property; and (iv) the Company was granted an exclusive option to repurchase the previously conveyed 2,500 acres in the event the third party does not exercise its option to purchase the 9,500 acres and the Company does not exercise its put option on the 9,500 acres. RESEARCH AND DEVELOPMENT The Company has a research and development staff of 13 full-time professional employees whose activities relate primarily to the improvement of existing products. The expenditures on research activities sponsored by the Company during fiscal 1995, 1994 and 1993 were approximately $1.3 million, $1.4 million, and $1.4 million, respectively. EMPLOYEES As of June 30, 1995, the Company employed approximately 1,000 persons at all locations. The Company considers its employee relations to be satisfactory. COMPLIANCE WITH ENVIRONMENTAL REGULATIONS The Company's operations are subject to federal, state and local laws and regulations pertaining to the environment, among which are the Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act, the Comprehensive Emergency Response Compensation and Liability Act, the Toxic Substances Control Act and the Mississippi State Pollution Prevention Act. The Company's facilities require operating permits that are subject to review by governmental agencies. The Company believes that its policies and procedures now in effect are generally in compliance with applicable laws and with the permits relating to the facilities. In the past, significant capital and operating costs related to environmental laws have been incurred. The majority of the Company's environmental capital expenditures have been in response to the requirements of the Clean Air Act and the Clean Water Act. Since 1967, the Company has spent in excess of $50 million on its fertilizer production facilities in order to meet applicable federal and state pollution standards. The Company has been involved in certain litigation involving a Louisiana waste disposal site. See "-Legal Proceedings-Combustion, Inc. Litigation." Capital expenditures related to environmental obligations for the past three fiscal years were approximately as follows: 1995-$7,750,000; 1994-$619,000; and 1993-$7,000,000. A portion of the expenditures for fiscal 1995 relate to the installation of a new scrubber system in two ammonium nitrate prill towers at the Yazoo City facility. These systems will allow operators to reduce the amount of particulate discharged from the facility. Also included in the 1995 expenditure is a portion of the cost of a project which relocates the discharge point of the Yazoo City facility's process waste water from an intermittent stream to the Yazoo River. Included in the foregoing expenditures for fiscal 1993 is a portion of the cost of a new nitric acid plant and related facilities in Yazoo City which was completed in early 1993. This facility increased capacity and also replaced existing production from other plants that were closed. Enhanced environmental protection under the Clean Air Act was a primary factor in the Company's decision to construct the plant. Environmental capital expenditures are expected to be approximately $11.2 million for fiscal 1996. A portion of these funds relate to the development of a new gypsum disposal facility at Pascagoula. The estimated cost of this facility is expected to be $16.3 million, which amount will be expended over an estimated 16 months. The Company is currently negotiating for the purchase of additional lands for this facility and is seeking the necessary permits for its development. During fiscal 1994, the Company charged to its earnings approximately $6.1 million relating to the estimated cost of the future closure of the existing gypsum disposal facility located at Pascagoula. In fiscal 1995, the Company charged an additional $562,000 toward this estimated cost of closure. The total accrual of approximately $6.7 million relates to the portion of the disposal facility utilized to date. In future years, the Company expects to record additional charges of approximately $2.4 million related to the anticipated closure costs of the gypsum disposal facility. These charges will be recorded over the estimated five-year remaining life of the facility. In the normal course of its business, the Company is exposed to risks relating to possible releases of hazardous substances into the environment. Such releases could cause substantial damage or injuries. Environmental expenditures have been and will continue to be significant. It is impossible to predict or quantify the impact of future environmental laws and regulations. ITEM 3. LEGAL PROCEEDINGS Combustion, Inc., Litigation. On July 15, 1986, the first of 17 lawsuits was filed in the Twenty-first Judicial District Court, Parish of Livingston, state of Louisiana, against Triad Chemical (a 50%-owned, joint venture) and approximately 90 other named defendants by numerous plaintiffs. The plaintiffs' claims are based on alleged personal injuries and property damages as a result of exposure to hazardous waste allegedly contributed by the defendants to the Combustion, Inc., site in Livingston Parish, Louisiana. Triad Chemical recently agreed with the Plaintiffs' Steering Committee in the case to settle the tort claims against it as part of a group settlement by certain defendant companies. Triad Chemical's share of the group settlement is $600,000. Preliminary settlement documents have been filed with the court and procedures are currently underway to obtain the necessary court approval of the settlement as required in class action suits. Cleve Reber CERCLA Site. Triad has received and responded to letters issued by the United States Environmental Protection Agency ("EPA") under Section 104 of the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") relative to the possible disposition of Triad waste at the disposal site identified as the Cleve Reber site in Ascension Parish, Louisiana. It is Triad's position that, based upon available information and records, Triad did not utilize the Cleve Reber site for the disposition of hazardous material, and it does not appear that Triad has any responsibility for investigation and clean-up on this site. It should be noted that the EPA is contemplating an action under the Resource Conservation and Recovery Act, Section 7003, as well as the CERCLA action mentioned above. The EPA has issued Section 106 orders against the major contributors at the site for clean-up. They are now engaged in negotiations for clean-up. In 1994, Triad received a supplemental 104(e) request for information from the EPA, indicating the EPA's renewed interest in pursuing Potential Responsible Persons at the site. Triad filed a Freedom of Information Act request to investigate allegations that some plant trash from Triad may have been disposed of at the Cleve Reber site. In the opinion of management, the likelihood of the CERCLA investigation resulting in a loss in a material amount is remote. Potash Antitrust Investigation. On November 24, 1993, the Antitrust Division of the Department of Justice served the Company with a grand jury subpoena in connection with its investigation of allegations of price fixing by United States and Canadian potash producers. The subpoena requests that the Company produce certain documents relating to its potash business in the United States and Canada. The Company has assembled these documents for production. In addition, a number of employees and former employees of the Company have testified before the grand jury regarding the Company's potash operations. Terra International, Inc. On August 31, 1995, the Company filed suit in federal court in Mississippi against Terra International, Inc. ("Terra") seeking a declaratory judgment and other relief establishing that certain technology relating to the design of an ammonium nitrate neutralizer which the Company licensed to Terra is not defective and was not the cause of an explosion which occurred in 1994 at Terra's Port Neal, Iowa, fertilizer facility. Also, on August 31, 1995, Terra filed suit in federal court in Iowa against the Company seeking damages on the basis of losses caused by the explosion. Terra alleges that the Company negligently designed the ammonium nitrate neutralizer technology licensed to Terra and that that design defect led to the Port Neal explosion. In addition, two lawsuits have been filed in Iowa against the Company on behalf of certain persons killed or injured in the explosion. Rankin County, Mississippi, vs Jackson Oil Products Company, Inc., et. al. On September 21, 1995, the Company was served with a complaint in which it is named as an additional defendant in the referenced action filed in federal court in Mississippi. The plaintiff seeks to recover clean-up costs in connection with the remediation of a former waste oil processing facility located in Rankin County, Mississippi. The suit alleges that the Company contributed waste oil to the site. The Company is in the process of investigating the allegations. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS NONE. PART II ITEM 5.MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS The information required by this item is set forth in the Company's 1995 Annual Report to Shareholders under the caption "Quarterly Results," contained in "Management's Discussion and Analysis of Financial Condition and Results of Operations," which information is incorporated herein by reference. ITEM 6.SELECTED FINANCIAL DATA The information required by this item is set forth in the Company's 1995 Annual Report to Shareholders under the caption "Financial Highlights" which information is incorporated herein by reference. ITEM 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The information required by this item is set forth in the Company's 1995 Annual Report to Shareholders under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations," which information is incorporated herein by reference. ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The consolidated financial statements, together with the report thereon of Arthur Andersen LLP dated July 28, 1995, appearing in the Company's 1995 Annual Report to Shareholders are 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 (a) The information required by this item regarding directors is set forth in the Company's Proxy Statement for the 1995 annual meeting of shareholders under the captions "Nominees for Election to Serve Until 1998," "Directors Continuing to Serve Until 1997," and "Directors Continuing to Serve Until 1996," which information is incorporated herein by reference. (b) Executive officers of the Registrant as of June 30, 1995, are as follows: Executive officers are elected for a one-year term by the Board of Directors. OFFICE AND EMPLOYMENT DURING THE NAME OF OFFICER AGE LAST FIVE FISCAL YEARS Charles O. Dunn 47 President and Chief Executive Officer since April 1 1993; Executive Vice President (1988- 1993) William F. Hawkins 64 Senior Vice President-Finance and Administration since April 28, 1987 David W. Arnold 58 Senior Vice President-Technical Group since July 1, 1991; Senior Vice President-Research and Engineering (1987-1991) C. E. McCraw 47 Senior Vice President-Operations since July 12, 1994; Senior Vice President-Fertilizer Group (1991-1994); Vice President-Fertilizer Group (1991); Vice President-Operations (1987-1991) Robert E. Jones 48 Vice President and General Counsel since October 24, 1989 John J. Duffy 61 Vice President-Marketing since July 1, 1995; Vice President-Sales and Marketing (1994-1995); Director of Sales and Marketing (1991-1994); Director, Field Sales (1988-1991) Rosalyn B. Glascoe 51 Corporate Secretary since June 24, 1986 (c) The information called for with respect to the identification of certain significant employees is not applicable to the Registrant. (d) There are no family relationships between the directors and executive officers listed above. There are no arrangements nor understandings between any named officer and any other person pursuant to which such person was selected as an officer. (e) There are no legal proceedings involving directors, nominees for directors, or officers. The information required by this item regarding compliance with Section 16(a) of the Exchange Act is set forth in the Company's Proxy Statement for the 1995 annual meeting of shareholders under the caption "Compliance with Section 16(a) of the Exchange Act," which information is incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION The information required by this item is set forth in the Company's Proxy Statement for the 1995 annual meeting of shareholders under the captions "Compensation of Executive Officers" and "Retirement Program," which information is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by this item is set forth in the Company's Proxy Statement for the 1995 annual meeting of shareholders under the captions "Security Ownership of Certain Beneficial Owners" and "Management Ownership of the Company's Stock," which information is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by this item is set forth in the Company's Proxy Statement for the 1995 annual meeting of shareholders under the caption "Compensation Committee Interlocks and Insider Participation," which information is incorporated herein by reference. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) FINANCIAL STATEMENTS AND SCHEDULES The consolidated financial statements, together with the report thereon of Arthur Andersen LLP dated July 28, 1995, appearing in the 1995 Annual Report to Shareholders are incorporated by reference in this Form 10-K. With the exception of the aforementioned information and information incorporated by reference in Items 5, 6, 7 and 8, the 1995 Annual Report to Shareholders is not to be deemed filed as part of this Form 10-K. The following financial statement schedule should also be read in conjunction with the financial statements in such 1995 Annual Report to Shareholders. Financial statement schedules not included in this Form 10-K have been omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. Separate financial statements of 50% or less owned persons accounted for by the equity method which are not shown herein have been omitted because, if considered in the aggregate, they would not constitute a significant subsidiary. (i)Financial Statements: Report of Independent Public Accountants Consolidated Balance Sheets, June 30, 1995 and 1994 Consolidated Statements of Income Years Ended June 30, 1995, 1994 and 1993 Consolidated Statements of Shareholders' Equity, Years Ended June 30, 1995, 1994 and 1993 Consolidated Statements of Cash Flows, Years Ended June 30, 1995, 1994 and 1993 Notes to Consolidated Financial Statements (ii)Report of Independent Public Accountants on Financial Statement Schedules (iii)Exhibits: Exhibits filed as part of this report are listed below. Certain exhibits have been previously filed with the Commission and are incorporated herein by reference. SEC EXHIBIT REFERENCE NO. DESCRIPTION 1 Shareholder Rights Plan; filed as Exhibit 1 to the Company's Report on Form 8-A dated August 15, 1994, SEC File No. 2-7803, and incorporated herein by reference. 3.1 Articles of Incorporation of the Company; filed as Exhibit 3.1 to the Company's Amendment No. 1 to Form S-1 Registration Statement filed August 2, 1994, SEC File No. 33-53119, and incorporated herein by reference. 3.2 Bylaws of the Company; filed as Exhibit 3.2 to the Company's Amendment No. 1 to Form S-1 Registration Statement filed August 2, 1994, SEC File No. 33-53119, and incorporated herein by reference. 4.1 Revolving Credit/Term Loan Agreement dated August , 1992, between the Company and NationsBank of Tennessee, purchaser of the Company's Series I Secured Note, Due June 30 1999, in the aggregate principal amount of $20,000,000; filed as Exhibit 4.1 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1992, SEC File No. 2-7803, and incorporated herein by reference. 4.2 Indenture of Mortgage, Deed of Trust, Assignment and Security Agreement dated as of September 1, 1976, among the Company, the New Orleans Bank for Cooperatives, John H. Farrelly, as trustee for the benefit of the New Orleans Bank for Cooperatives under certain deeds of trust, and Deposit Guaranty National Bank); filed as Exhibit B to Exhibit 2 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1976, SEC File No. 2-7803, and incorporated herein by reference. 4.3 Sixteenth Supplemental Indenture dated as of June 30, 1994, between the Company and Deposit Guaranty National Bank. 4.4 Fifteenth Supplemental Indenture and Amendment to Series I Revolving Credit/Term Loan Agreement dated as of June 17, 1994, between the Company and Deposit Guaranty National Bank. 4.5 Fourteenth Supplemental Indenture dated as of June 17, 1994, between the Company and Deposit Guaranty National Bank. 4.6 Thirteenth Supplemental Indenture dated as of July 16, 1993, between the Company and Deposit Guaranty National Bank; filed as Exhibit 4.1 to the Company's Current Report on Form 8-K dated April 26, 1994, SEC File No. 2-7803, and incorporated herein by reference. 4.7 Twelfth Supplemental Indenture dated as of August 6, 1992, between the Company and Deposit Guaranty National Bank; filed as Exhibit 4.3 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1992, SEC File No. 2-7803, and incorporated herein by reference. 4.8 Eleventh Supplemental Indenture dated as of July 16, 1990, between the Company and Deposit Guaranty National Bank, together with Exhibit A thereto, being an Agreement for Real Estate Purchase Option dated July 16, 1990, for the sale of the Company's Hardee County, Florida, property and underlying phosphate reserves; filed as Exhibit 4.2 to Amendment No. 1 of the Company's Report on Form 8 dated November 7, 1990, SEC File No. 2-7803, and incorporated herein by reference. 4.9 Tenth Supplemental Indenture dated as of December 26, 1989, between the Company and Deposit Guaranty National Bank, together with Exhibit A thereto, being a Note Purchase Agreement dated as of December 26, 1989, between the Company and John Hancock Variable Life Insurance Company, purchaser of the Company's 9.97% Secured Notes, Series , Due 1999, in the aggregate principal amount of $6,000,000; filed as Exhibit 4.3 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1990, SEC File No. 2-7803, and incorporated herein by reference. 4.10 Ninth Supplemental Indenture dated as of February 23, 1988, between the Company and Deposit Guaranty National Bank; filed as Exhibit 4.1 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1988, File No. 2-7803, and incorporated herein by reference. 4.11 Eighth Supplemental Indenture dated as of May 15, 1983, between the Company and Deposit Guaranty National Bank; filed as Exhibit 4.1 to Post-Effective Amendment No. 3 to Registration Statement No. 2-71827 and incorporated herein by reference. 4.12 Seventh Supplemental Indenture dated as of October 1, 1979, between the Company and Deposit Guaranty National Bank; filed as Exhibit 2 to Post-Effective Amendment No. 3 to Registration Statement No. 2-57390 and incorporated herein by reference. 4.13 Sixth Supplemental Indenture dated as of September 1, 1979, between the Company and Deposit Guaranty National Bank, filed as Exhibit 3 to Post-Effective Amendment No. 3 to Registration Statement No. 2-57390 and incorporated herein by reference. 4.14 Fifth Supplemental Indenture dated as of June 1, 1978, between the Company and Deposit Guaranty National Bank; filed as Exhibit 7 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1979, SEC File No. 2-7803, and incorporated herein by reference. 4.15 Fourth Supplemental Indenture dated as of May 1, 1978, between the Company and Deposit Guaranty National Bank; filed as Exhibit 9 to Post-Effective Amendment No. 2 to Registration Statement No. 2-57390 and incorporated herein by reference. 4.16 Third Supplemental Indenture dated as of June 28, 1977, between the Company and Deposit Guaranty National Bank; filed as Exhibit 6 to Post-Effective Amendment No. 1 to Registration Statement No. 2-57390 and incorporated herein by reference. 4.17 Second Supplemental Indenture dated as of September 30, 1976, among the Company, New Orleans Bank for Cooperatives, John H. Farrelly and Deposit Guaranty National Bank; filed as Exhibit 6 to Registration Statement No. 2-57390 and incorporated herein by reference. 4.18 First Supplemental Indenture, dated as of September 7, 1976, among the Company, New Orleans Bank for Cooperatives, John H. Farrelly and Deposit Guaranty National Bank; filed as Exhibit 3 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1976, SEC File No. 2-7803, and incorporated herein by reference. 10.1 Mississippi Chemical Corporation 1994 Stock Incentive Plan; filed as Appendix A to the Company's 1995 Proxy Statement and incorporated herein by reference. 10.2 Mississippi Chemical Corporation 1995 Stock Option Plan for Nonemployee Directors; filed as Appendix B to the Company's 1995 Proxy Statement and incorporated herein by reference. 10.3 Mississippi Chemical Corporation 1995 Restricted Stock Purchase Plan for Nonemployee Directors; filed as Appendix C to the Company's 1995 Proxy Statement and incorporated herein by reference. 10.4 Purchase Agreement entered into as of September 15, 1994, by and between the Company and Air Products and Chemicals, Inc., for the sale and purchase of ammonium nitrate prills.1 10.5 Amendment No. 1 to Purchase Agreement entered into as of May 31, 1995, by and between the Company and Air Products and Chemicals, Inc. 10.6 Agreement effective as of October 1, 1991, entered into by the Company's subsidiary Mississippi Phosphates Corporation for the exclusive distribution of diammonium phosphate produced by Mississippi Phosphates Corporation; filed as Exhibit 10.1 to Amendment No. 1 to the Company's Report on Form 8 dated January 7, 1993, SEC File No. 2-7803, and incorporated herein by reference. 10.7 Amendment of Agreement, effective as of August 1, 1994, to the Agreement entered into as of October 1, 1991, by the Company's subsidiary Mississippi Phosphates Corporation for the exclusive distribution of diammonium phosphate produced by Mississippi Phosphates Corporation. [FN] 1 Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential business information has been deleted from paragraph 1.5, paragraph 6.1, paragraph 11.1; Exhibit A and Exhibit F of the Purchase Agreement, and an application for confidential treatment has been filed separately with the Commission. 10.8 Amendment of Agreement, effective as of July 1, 1993, to the Agreement entered into as of October 1, 1991, by the Company's subsidiary Mississippi Phosphates Corporation for the exclusive distribution of diammonium phosphate produced by Mississippi Phosphates Corporation; filed as Exhibit 10.3 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1993, SEC File No. 2-7803, and incorporated herein by reference. 10.9 Agreement made and entered into as of September 15, 1991, between Office Cherifien des Phosphates and the Company's subsidiary Mississippi Phosphates Corporation for the sale and purchase of phosphate rock; filed as Exhibit 10.1 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1991, File No. 2-7803, and incorporated herein by reference. 10.10 Amendment No. 3, effective as of January 1, 1995, to the Agreement effective as of September 15, 1991, between Office Cherifien des Phosphates and the Company's subsidiary Mississippi Phosphates Corporation for the sale and purchase of phosphate rock.2 10.11 Amendment No. 2, effective as of July 1, 1993, to the Agreement effective as of September 15, 1991, between Office Cherifien des Phosphates and the Company's subsidiary Mississippi Phosphates Corporation for the sale and purchase of phosphate rock.3 [FN] 2 Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential business information has been deleted from Schedule 1 to Amendment No. 3, Exhibit B, and an application for confidential treatment has been filed separately with the Commission. 3 Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential business information has been deleted from paragraphs numbered 5 and 8 of Amendment No. 2; from the first paragraph, paragra ph numbered 1, paragraph numbered 2, and paragraph numbered 3 of Schedule 1, Exhibit A; from Schedule 2, Exhibit B; from Schedule 3, Exhibit C, and from Schedule 4, Exhibit D; and an application for confidential treatment has been filed separately with the Commission. 10.12 Amendment No. 1, effective as of July 1, 1992, to the Agreement effective as of September 15, 1991, between Office Cherifien des Phosphates and the Company's subsidiary Mississippi Phosphates Corporation for the sale and purchase of phosphate rock.4 10.13 Gas Sales Agreement entered into by the Company and Sonat Marketing Company as of July 13, 1995, for the sale and purchase of natural gas.5 10.14 Triad Chemical Joint Venture Agreement; filed as Exhibit G1 to Post-Effective Amendment No. 6 to Registration Statement No. 2-25041 and incorporated herein by reference. 10.15 Amendment to Joint Venture Agreement entered into by the Company and First Mississippi Corporation effective as of May 28, 1993; filed as Exhibit 10.4 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1993, SEC File No. 2-7803, and incorporated herein by reference. 10.16 Products Withdrawal Agreement dated June 3, 1968, between First Mississippi Corporation and MisCoa covering withdrawal of product from Triad Chemical; filed as Exhibit H to Post-Effective Amendment No. 7 to Registration Statement No. 2-25041 and incorporated herein by reference. 10.17 Amendment to Products Withdrawal Agreement entered into by the Company and First Mississippi Corporation effective as of May 28, 1993; filed as Exhibit 10.5 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1993, SEC File No. 2-7803, and incorporated herein by reference. [FN] 4 Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential business information has been deleted from the first and second paragraphs of paragraph numbered 1 of Amendment No. 1 and an application for confidential treatment has been filed separately with the Commission. 5 Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential business information has been deleted from Article IV, Price, and an application for confidential treatment has been filed separately with the Commission. 10.18 Agreement for Real Estate Purchase Option dated July 16, 1990, for the sale of the Company's Hardee County, Florida, property and underlying phosphate reserves; filed as an exhibit to Exhibit 4.2 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1990, SEC File No. 2-7803, and incorporated herein by reference. 13 Excerpts from the Company's 1995 Annual Report to Shareholders. 21 List of subsidiaries of the Company. 23 Consent of Arthur Andersen LLP. 27 Financial Data Schedule. (b) REPORTS ON FORM 8-K: No reports were filed on Form 8-K during the three months ended June 30, 1995. 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. MISSISSIPPI CHEMICAL CORPORATION By: /s/ Charles O. Dunn President Principal Executive Officer By: /s/ William F. Hawkins Senior Vice President-Finance and Administration Principal Financial Officer and Chief Accounting Officer Date: September 28, 1995 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. SIGNATURE TITLE DATE /s/ Charles O. Dunn Director, September 28, 1995 President and Chief Executive Officer (principal executive officer) /s/ Coley L. Bailey Director, Chairman of the September 28, 1995 Board /s/ John Sharp Howie Director, Vice Chairman of September 28, 1995 the Board /s/ John W. Anderson Director September 28, 1995 /s/ Frank R. Burnside, Director September 28, 1995 Jr. /s/ Robert P. Dixon Director September 28, 1995 /s/ W. R. Dyess Director September 28, 1995 /s/ Woods E. Eastland Director September 28, 1995 /s/ G. David Jobe Director September 28, 1995 /s/ George D. Penick, Jr. Director September 28, 1995 /s/ David M. Ratcliffe Director September 28, 1995 /s/ Wayne Thames Director September 28, 1995 MISSISSIPPI CHEMICAL CORPORATION EXHIBIT INDEX TO FORM 10-K EXHIBIT PAGE NUMBER DESCRIPTION NUMBER 1 Shareholder Rights Plan; filed as Exhibit 1 to the Company's Report on Form 8-A dated August 15, 1994, SEC File No. 2-7803, and incorporated herein by reference. 3.1 Articles of Incorporation of the Company; filed as Exhibit 3.1 to the Company's Amendment No. 1 to Form S-1 Registration Statement filed August 2, 1994, SEC File No. 33-53119, and incorporated herein by reference. 3.2 Bylaws of the Company; filed as Exhibit 3.2 to the Company's Amendment No. 1 to Form S-1 Registration Statement filed August 2, 1994, SEC File No. 33-53119, and incorporated herein by reference. 4.1 Revolving Credit/Term Loan Agreement dated August 6, 1992, between the Company and NationsBank of Tennessee, purchaser of the Company's Series I Secured Note, Due June 30 1999, in the aggregate principal amount of $20,000,000; filed as Exhibit 4.1 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1992, SEC File No. 2-7803, and incorporated herein by reference. 4.2 Indenture of Mortgage, Deed of Trust, Assignment and Security Agreement dated as of September 1, 1976, among the Company, the New Orleans Bank for Cooperatives, John H. Farrelly, as trustee for the benefit of the New Orleans Bank for Cooperatives under certain deeds of trust, and Deposit Guaranty National Bank); filed as Exhibit B to Exhibit 2 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1976, SEC File No. 2-7803, and incorporated herein by reference. 4.3 Sixteenth Supplemental Indenture dated as of June 30, [ ] 1994, between the Company and Deposit Guaranty National Bank. 4.4 Fifteenth Supplemental Indenture and Amendment to [ ] Series I Revolving Credit/Term Loan Agreement dated as of June 17, 1994, between the Company and Deposit Guaranty National Bank. 4.5 Fourteenth Supplemental Indenture dated as of June 17, [ ] 1994, between the Company and Deposit Guaranty National Bank. 4.6 Thirteenth Supplemental Indenture dated as of July 16, 1993, between the Company and Deposit Guaranty National Bank; filed as Exhibit 4.1 to the Company's Current Report on Form 8-K dated April 26, 1994, SEC File No. 2-7803, and incorporated herein by reference. 4.7 Twelfth Supplemental Indenture dated as of August 6, 1992, between the Company and Deposit Guaranty National Bank; filed as Exhibit 4.3 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1992, SEC File No. 2-7803, and incorporated herein by reference. 4.8 Eleventh Supplemental Indenture dated as of July 16, 1990, between the Company and Deposit Guaranty National Bank, together with Exhibit A thereto, being an Agreement for Real Estate Purchase Option dated July 16, 1990, for the sale of the Company's Hardee County, Florida, property and underlying phosphate reserves; filed as Exhibit 4.2 to Amendment No. 1 of the Company's Report on Form 8 dated November 7, 1990, SEC File No. 2-7803, and incorporated herein by reference. 4.9 Tenth Supplemental Indenture dated as of December 26, 1989, between the Company and Deposit Guaranty National Bank, together with Exhibit A thereto, being a Note Purchase Agreement dated as of December 26, 1989, between the Company and John Hancock Variable Life Insurance Company, purchaser of the Company's 9.97% Secured Notes, Series , Due 1999, in the aggregate principal amount of $6,000,000; filed as Exhibit 4.3 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1990, SEC File No. 2-7803, and incorporated herein by reference. 4.10 Ninth Supplemental Indenture dated as of February 23, 1988, between the Company and Deposit Guaranty National Bank; filed as Exhibit 4.1 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1988, File No. 2-7803, and incorporated herein by reference. 4.11 Eighth Supplemental Indenture dated as of May 15, 1983, between the Company and Deposit Guaranty National Bank; filed as Exhibit 4.1 to Post-Effective Amendment No. 3 to Registration Statement No. 2-71827 and incorporated herein by reference. 4.12 Seventh Supplemental Indenture dated as of October 1, 1979, between the Company and Deposit Guaranty National Bank; filed as Exhibit 2 to Post-Effective Amendment No. 3 to Registration Statement No. 2-57390 and incorporated herein by reference. 4.13 Sixth Supplemental Indenture dated as of September 1, 1979, between the Company and Deposit Guaranty National Bank, filed as Exhibit 3 to Post-Effective Amendment No. 3 to Registration Statement No. 2-57390 and incorporated herein by reference. 4.14 Fifth Supplemental Indenture dated as of June 1, 1978, between the Company and Deposit Guaranty National Bank; filed as Exhibit 7 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1979, SEC File No. 2-7803, and incorporated herein by reference. 4.15 Fourth Supplemental Indenture dated as of May 1, 1978, between the Company and Deposit Guaranty National Bank; filed as Exhibit 9 to Post-Effective Amendment No. 2 to Registration Statement No. 2-57390 and incorporated herein by reference. 4.16 Third Supplemental Indenture dated as of June 28, 1977, between the Company and Deposit Guaranty National Bank; filed as Exhibit 6 to Post-Effective Amendment No. 1 to Registration Statement No. 2-57390 and incorporated herein by reference. 4.17 Second Supplemental Indenture dated as of September 30, 1976, among the Company, New Orleans Bank for Cooperatives, John H. Farrelly and Deposit Guaranty National Bank; filed as Exhibit 6 to Registration Statement No. 2-57390 and incorporated herein by reference. 4.18 First Supplemental Indenture, dated as of September 7, 1976, among the Company, New Orleans Bank for Cooperatives, John H. Farrelly and Deposit Guaranty National Bank; filed as Exhibit 3 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1976, SEC File No. 2-7803, and incorporated herein by reference. 10.1 Mississippi Chemical Corporation 1994 Stock Incentive Plan; filed as Appendix A to the Company's 1995 Proxy Statement and incorporated herein by reference. 10.2 Mississippi Chemical Corporation 1995 Stock Option Plan for Nonemployee Directors; filed as Appendix B to the Company's 1995 Proxy Statement and incorporated herein by reference. 10.3 Mississippi Chemical Corporation 1995 Restricted Stock Purchase Plan for Nonemployee Directors; filed as Appendix C to the Company's 1995 Proxy Statement and incorporated herein by reference. 10.4 Purchase Agreement entered into as of September 15, 1994, [ ] by and between the Company and Air Products and Chemicals, Inc., for the sale and purchase of ammonium nitrate prills.6 [FN] 6 Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential business information has been deleted from paragraph 1.5, paragraph 6.1, paragraph 11.1; Exhibit A and Exhibit F of the Purchase Agreement, and a n application for confidential treatment has been filed separately with the Commission. 10.5 Amendment No. 1 to Purchase Agreement entered into as of [ ] May 31, 1995, by and between the Company and Air Products and Chemicals, Inc. 10.6 Agreement effective as of October 1, 1991, entered into by the Company's subsidiary Mississippi Phosphates Corporation for the exclusive distribution of diammonium phosphate produced by Mississippi Phosphates Corporation; filed as Exhibit 10.1 to Amendment No. 1 to the Company's Report on Form 8 dated January 7, 1993, SEC File No. 2-7803, and incorporated herein by reference. 10.7 Amendment of Agreement, effective as of August 1, 1994, [ ] to the Agreement entered into as of October 1, 1991, by the Company's subsidiary Mississippi Phosphates Corporation for the exclusive distribution of diammonium phosphate produced by Mississippi Phosphates Corporation. 10.8 Amendment of Agreement, effective as of July 1, 1993, to the Agreement entered into as of October 1, 1991, by the Company's subsidiary Mississippi Phosphates Corporation for the exclusive distribution of diammonium phosphate produced by Mississippi Phosphates Corporation; filed as Exhibit 10.3 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1993, SEC File No. 2-7803, and incorporated herein by reference. 10.9 Agreement made and entered into as of September 15, 1991, between Office Cherifien des Phosphates and the Company's subsidiary Mississippi Phosphates Corporation for the sale and purchase of phosphate rock; filed as Exhibit 10.1 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1991, File No. 2-7803, and incorporated herein by reference. 10.10 Amendment No. 3, effective as of January 1, 1995, to the [ ] Agreement effective as of September 15, 1991, between Office Cherifien des Phosphates and the Company's subsidiary Mississippi Phosphates Corporation for the sale and purchase of phosphate rock.7 10.11 Amendment No. 2, effective as of July 1, 1993, to the [ ] Agreement effective as of September 15, 1991, between Office Cherifien des Phosphates and the Company's subsidiary Mississippi Phosphates Corporation for the sale and purchase of phosphate rock.8 [FN] 7 Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential business information has been deleted from Schedule 1 to Amendment No. 3, Exhibit B, and an application for confidential treatment has been filed separately with the Commission. 8 Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential business information has been deleted from paragraphs numbered 5 and 8 of Amendment No. 2; from the first paragraph, paragraph numbered 1, paragraph numbered 2, and paragraph numbered 3 of Schedule 1, Exhibit A; from Schedule 2, Exhibit B; from Schedule 3, Exhibit C, and from Schedule 4, Exhibit D; and an application for confidential treatment has been filed separately with the Commission. 10.12 Amendment No. 1, effective as of July 1, 1992, to the [ ] Agreement effective as of September 15, 1991, between Office Cherifien des Phosphates and the Company's subsidiary Mississippi Phosphates Corporation for the sale and purchase of phosphate rock.9 10.13 Gas Sales Agreement entered into by the Company and Sonat [ ] Marketing Company as of July 13, 1995, for the sale and purchase of natural gas.10 10.14 Triad Chemical Joint Venture Agreement; filed as Exhibit G1 to Post-Effective Amendment No. 6 to Registration Statement No. 2-25041 and incorporated herein by reference. 10.15 Amendment to Joint Venture Agreement entered into by the Company and First Mississippi Corporation effective as of May 28, 1993; filed as Exhibit 10.4 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1993, SEC File No. 2-7803, and incorporated herein by reference. [FN] 9 Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential business information has been deleted from the first and second paragraphs of paragraph numbered 1 of Amendment No. 1 and an application for confidential treatment has been filed separately with the Commission. 10 Pursuant to the Securities Exchange Act of 1934, Rule 24b-2, confidential business information has been deleted from Article IV, Price, and an application for confidential treatment has been filed separately with the Commission. 10.16 Products Withdrawal Agreement dated June 3, 1968, between First Mississippi Corporation and MisCoa covering withdrawal of product from Triad Chemical; filed as Exhibit H to Post-Effective Amendment No. 7 to Registration Statement No. 2-25041 and incorporated herein by reference. 10.17 Amendment to Products Withdrawal Agreement entered into by the Company and First Mississippi Corporation effective as of May 28, 1993; filed as Exhibit 10.5 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1993, SEC File No. 2-7803, and incorporated herein by reference. 10.18 Agreement for Real Estate Purchase Option dated July 16, 1990, for the sale of the Company's Hardee County, Florida, property and underlying phosphate reserves; filed as an exhibit to Exhibit 4.2 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1990, SEC File No. 2-7803, and incorporated herein by reference. 13 Excerpts from the Company's 1995 Annual Report to [ ] Shareholders. 21 List of subsidiaries of the Company. [ ] 23 Consent of Arthur Andersen LLP. [ ] 27 Financial Data Schedule. EX-4.3 2 EXHIBIT 4.3 SIXTEENTH SUPPLEMENTAL INDENTURE This Sixteenth Supplemental Indenture dated as of June 30, 1994, between Mississippi Chemical Corporation, a Mississippi corporation (the "Company"), and Deposit Guaranty National Bank, as Trustee (the "Trustee"), to the Indenture of Mortgage, Deed of Trust, Assignment and Security Agreement dated as of September 1, 1976, among the Company, New Orleans Bank for Cooperatives (now the National Bank for Cooperatives), John H. Farrelly, as trustee for the benefit of the New Orleans Bank for Cooperatives (the "Old Trustee") under certain deeds of trust specified in the Original Indenture, and the Trustee (the "Original Indenture"), as supplemented by a First Supplemental Indenture dated as of September 7, 1976 (the "First Supplemental Indenture"), a Second Supplemental Indenture dated as of September 30, 1976 (the "Second Supplemental Indenture"), a Third Supplemental Indenture dated as of June 28, 1977 (the "Third Supplemental Indenture"), a Fourth Supplemental Indenture dated as of May 1, 1978 (the "Fourth Supplemental Indenture"), a Fifth Supplemental Indenture dated as of June 1, 1978 (the "Fifth Supplemental Indenture"), a Sixth Supplemental Indenture dated as of September 1, 1979 (the "Sixth Supplemental Indenture"), a Seventh Supplemental Indenture dated as of October 1, 1979 (the "Seventh Supplemental Indenture"), an Eighth Supplemental Indenture dated as of May 15, 1983 (the "Eighth Supplemental Indenture"), a Ninth Supplemental Indenture dated as of February 23, 1988 (the "Ninth Supplemental Indenture"); a Tenth Supplemental Indenture dated as of December 26, 1989 (the "Tenth Supplemental Indenture"); an Eleventh Supplemental Indenture dated as of July 16, 1990 (the "Eleventh Supplemental Indenture"); a Twelfth Supplemental Indenture dated as of August 6, 1992 (the "Twelfth Supplemental Indenture"); a Thirteenth Supplemental Indenture dated as of July 16, 1993 (the "Thirteenth Supplemental Indenture"); a Fourteenth Supplemental Indenture dated as of June 17, 1994 (the "Fourteenth Supplemental Indenture"); and a Fifteenth Supplemental Indenture dated as of June 17, 1994 (the "Fifteenth Supplemental Indenture") (the Original Indenture, as supplemented by the First through the Fifteenth Supplemental Indentures, being hereinafter referred to as the "Indenture"), W I T N E S S E T H T H A T: WHEREAS, the Company's Board of Directors has recommended to the Company's shareholders that the Company cease doing business as a cooperative and otherwise implement the terms of the Plan described in the Company's Proxy Statement/Prospectus dated May 27, 1994, a copy of which has heretofore been provided to the Company's shareholders and to all Noteholders under the Indenture; and WHEREAS, as of July 16, 1990, the Company granted to Freeport-McMoRan Resource Partners, Limited Partnership ("Freeport") an option to purchase the Company's Hardee County, Florida, property and the underlying phosphate reserves pursuant to an Agreement for Real Estate Purchase Option (the "Original Option"); and WHEREAS, as of July 1, 1993, the Original Option was assigned by Freeport to IMC-Agrico Company ("IMC-Agrico"), a Delaware general partnership; and WHEREAS, the Board has authorized the Company to convey certain property to IMC-Agrico in partial exercise of the Original Option and to enter into the remaining IMC-Agrico Agreements as defined below, substantially final copies of which have been heretofore provided to the holders of the Series A Notes, Series H Notes, Series I Notes, and Series J Notes; and WHEREAS, the Company and Trustee desire to amend and supplement the Indenture as hereinafter set forth; and WHEREAS, this Sixteenth Supplemental Indenture is in substantially the form approved by the holders of not less than 51% in aggregate unpaid principal amount of each of the Series A Notes, the Series H Notes, the Series I Notes, and the Series J Notes, and 51% in aggregate unpaid principal amount of all the outstanding Notes; and WHEREAS, this Sixteenth Supplemental Indenture witnesseth that the Indenture is hereby amended and supplemented as follows: ARTICLE I SECTION 1.1. The proviso at the end of the first sentence of paragraph 3 of the Granting Clauses of the Original Indenture, and the second sentence of such paragraph 3, are hereby deleted in their entirety and the following new proviso and second sentence are substituted in their stead: provided, however, that the security interests created in this paragraph 3 in Commodity Loan Inventory are in all respects subordinate and inferior to all security interests which the Company has heretofore granted or may hereafter grant to secure indebtedness in an amount not to exceed the amount of the Permitted Lien described in Section 7.01(c). For the purposes of this Indenture, "Commodity Loan Inventory" means all inventory of the Company, of every description whatsoever, maintained in the conduct of the Company's business, whether such inventory is now existing or hereafter acquired as additional inventory, or as replacement for existing inventory, consisting of fertilizer, chemicals, raw materials in the manufacture of fertilizer and fertilizer materials, fertilizer in the process of mixing, and liquid and mixed fertilizer and fertilizer in bulk or bags, and all proceeds and product of said inventory, which secure existing or future indebtedness in an amount not to exceed the amount of the Permitted Lien described in Section 7.01(c). SECTION 1.2. The phrase numbered (ii) in the second paragraph of exceptions following paragraph 6 of the Granting Clauses of the Original Indenture (renumbered as paragraph 5 by Section 1.01 of the First Supplemental Indenture) is hereby deleted in its entirety and the words "intentionally omitted" are substituted in lieu thereof. SECTION 1.3. Section 1.01 of the Indenture is hereby amended by including therein the following definitions which shall be inserted after the definition of "Florida Property": "IMC-Agrico Agreements" shall mean (i) a General Warranty Deed ("Deed") conveying to IMC-Agrico Company ("IMC-Agrico") a portion equal to approximately 14/67 of the Company's property and underlying phosphate reserves located in Hardee County, Florida (the Company's property and underlying phosphate reserves are hereinafter collectively referred to as the "Florida Reserves," and the portion of the property conveyed by the Deed is hereinafter referred to as the "Adjacent Property"), which Florida Reserves constitute a part of the Florida Property; (ii) the Agreement for Real Estate Purchase Option between the Company and IMC-Agrico (the "Purchase Option") granting to IMC-Agrico the exclusive option to purchase the balance of the Florida Reserves; (iii) the Agreement for Real Estate Put Option between the Company and IMC-Agrico (the "Put Option") granting to the Company the right to put the balance of the Florida Reserves to IMC-Agrico in the event the Purchase Option expires or is terminated; and (iv) the Agreement for Real Estate Repurchase Option between IMC-Agrico and the Company (the "Repurchase Option") granting to the Company the exclusive option to repurchase the Adjacent Property, in the event IMC-Agrico fails to purchase the balance of Florida Reserves through the Purchase Option or the Put Option. SECTION 1.4. The phrase numbered (i) in Section 4.05(c) is hereby amended by deleting the words "less than 30 nor" in the fourth line thereof. Section 1.5. The phrase numbered (ii) in Section 4.05(c) is hereby amended by adding the following in the last line thereof immediately after the word "utilities" and immediately preceding the semicolon: , and (z) certifying that no Event of Default, or event which with notice or lapse of time or both would constitute an Event of Default, shall have occurred and be continuing SECTION 1.6. Section 4.06 is hereby amended by deleting the words "six months" wherever they appear and substituting the words "two years" in their stead. SECTION 1.7. The period at the end of clause (b) of Section 5.08 is hereby deleted and replaced by a semicolon and the following new clause (c) is added immediately thereafter: (c) notwithstanding the foregoing in this Section 5.08, the Company shall, if so authorized by its shareholders, effect the merger described in the Company's Proxy Statement/Prospectus dated May 27, 1994; thereafter, the surviving company of such merger, the name of which shall be Mississippi Chemical Corporation, shall possess all of the rights and be subject to all obligations of the Company set forth herein and shall expressly assume in writing all the obligations of the Company under the Note Purchase Agreements, the Series H Note Purchase Agreement, the Series I Revolving Credit Loan Agreement, the Series J Revolving Credit Agreement and this Indenture, and thereafter all references in this Indenture to the "Company" shall be deemed references to the surviving corporation named Mississippi Chemical Corporation. SECTION 1.8. Section 5.11(b)(i)(A) of the Original Indenture, as previously amended, is hereby amended by deleting the same in its entirety and substituting the following in its stead: (A) create, incur, assume or suffer to exist any Lien upon any of the Florida Property (other than Permitted Liens and any Lien created by or resulting from the execution or performance of the IMC-Agrico Agreements or the sale of the Florida Reserves pursuant to the IMC-Agrico Agreements) and will promptly pay and discharge all taxes, assessments and governmental charges or levies and all lawful claims of whatever kind on or in respect thereof, which if unpaid, might become or result in any Lien on the Florida Property, or SECTION 1.9. Section 5.11(b)(i)(B) of the Original Indenture, as previously amended, is hereby amended by deleting the same in its entirety and substituting the following in its stead: (B) sell, lease, transfer, assign, convey or in any manner dispose of any of the Florida Property, except: (1) to the extent that the provisions of Section 4.05 of this Indenture would so permit, were the Florida Property at the time included in the Trust Estate and (2) pursuant to the provisions of the IMC-Agrico Agreements. SECTION 1.10. Section 5.11(b)(ii) of the Original Indenture, as previously amended by the Eighth Supplemental Indenture, is hereby deleted in its entirety, and the following new Section 5.11(b)(ii) is substituted in its stead: (ii) at such time as the holders of 51% in aggregate principal amount at the time outstanding of any series of Notes then outstanding request in writing that the Company subject the Florida Property to the Lien of this Indenture, the Company shall, within 30 days thereafter, execute and deliver to the Trustee (and to a co-trustee domiciled in Florida if then so required by Florida law) in recordable form under the laws of Florida, and record or file, such mortgages, deeds of trust, financing statements and security agreements, each in form and substance satisfactory to the holders of 51% of the aggregate principal amount of the Notes then outstanding, necessary or advisable with respect to all of its right, title and interest in and to the Florida Property specifically subject to the rights of IMC-Agrico under the IMC-Agrico Agreements and shall execute, deliver and record or file all other documents (including but not limited to an indenture supplemental to this Indenture, policies of title insurance and/or an Opinion or Opinions of Counsel with respect to the title of the Company thereto and such other documents as the Trustee may require), each in form and substance satisfactory to the holders of 51% of the aggregate principal amount of the Notes then outstanding, in order to subject the Florida Property to the Lien of this Indenture or, with the consent of the holders of 51% of the aggregate principal amount of the Notes of each series then outstanding, to subject to the Lien of this Indenture an amount of the Florida Property equal to the then outstanding principal amount of the Notes multiplied by a fraction, the numerator of which shall be the then fair market value of the Florida Property (determined in a manner satisfactory to the holders of the aforesaid percentages of the Notes of each series then outstanding) and the denominator of which shall be the then fair market value (determined as aforesaid) of all property (real, personal or mixed) then subject to the Lien of this Indenture, subject only to Permitted Liens, and the Trustee shall thereupon be empowered on behalf of the Company to, and shall promptly, record or file such mortgages, deeds of trust, financing statements and security agreements in such offices in the State of Florida as shall be necessary or advisable under the circumstances in order fully to subject such property to the Lien of this Indenture, and no consent of or further act by the Company shall be necessary in connection therewith; and SECTION 1.11. Sections 5.11(c) and (d), added to the Original Indenture by the Eleventh Supplemental Indenture, are hereby deleted in their entirety. SECTION 1.12. Section 5.16, added to the Original Indenture by the Tenth Supplemental Indenture, is hereby amended by deleting the words "as now in effect" in the eighth and ninth lines thereof and substituting the words "as in effect on the effective date of the Sixteenth Supplemental Indenture" in their stead. SECTION 1.13. Section 5.17, added to the Original Indenture by the Twelfth Supplemental Indenture, is hereby amended by deleting the words "as now in effect" in the ninth line thereof and substituting the words "as in effect on the effective date of the Sixteenth Supplemental Indenture" in their stead. SECTION 1.14. Section 5.18, added to the Original Indenture by the Fourteenth Supplemental Indenture, is hereby amended by deleting the words "as now in effect" in the eleventh line thereof and substituting the words "as in effect on the effective date of the Sixteenth Supplemental Indenture" in their stead. SECTION 1.15. Section 6.02 of the Original Indenture is hereby amended by the deletion of the words "any present or future Commodity Loan Inventory" in clause (ii) in the fourteenth line thereof and substituting the words "intentionally omitted" in their stead. SECTION 1.16. Section 7.01 of the Original Indenture is hereby amended by deleting clause (c) in its entirety and substituting the following new clause (c) in its stead: (c) Liens on Commodity Loan Inventory securing indebtedness of the Company in an amount not to exceed $15,000,000. SECTION 1.17. Section 7.01 of the Original Indenture, as amended by the Eighth Supplemental Indenture, is hereby amended by deleting clause (k) in its entirety and substituting the following new clause (k) in its stead: (k) Intentionally omitted; SECTION 1.18. Section 7.05(a) of the Original Indenture, as amended by the Eighth Supplemental Indenture, is hereby further amended by the addition of the words "ending on or before June 30, 1994," in the second line thereof immediately following the word "year" and immediately preceding the words "Net Tangible Assets". SECTION 1.19. Section 7.05(b) of the Original Indenture is hereby amended by the addition of the words "ending on or before June 30, 1994," in the first line thereof immediately following the words "fiscal year" and immediately preceding the words "Net Tangible Assets". SECTION 1.20. Section 7.05(c) of the Original Indenture is hereby amended by the addition of the words "with respect to fiscal years ending on or before June 30, 1994," in the second line thereof immediately following "7.05(b)" and immediately preceding the words "the Company". SECTION 1.21. Section 7.05 of the Original Indenture is hereby further amended by the addition of the following new Section 7.05(d) at the end thereof: (d) In fiscal years beginning on or after July 1, 1994, the Company shall not directly or indirectly pay or declare a cash dividend, or make a cash purchase of treasury stock (i) if an Event of Default shall have occurred and be continuing, (ii) if the payment of such a dividend or cash purchase price for treasury stock would result in an Event of Default, or (iii) if Net Tangible Assets do not exceed 166% of the aggregate unpaid principal amount of Secured Funded Debt then outstanding. SECTION 1.22. Section 7.09 of the Original Indenture is hereby deleted in its entirety and the following new Section 7.09 is substituted in its stead: The Company will engage primarily in the business of manufacturing and distributing fertilizer and in such other businesses as are reasonably related or incidental thereto, including but not limited to operations vertically or horizontally integrated therewith. In addition, the Company may invest and/or engage in lines of business unrelated to fertilizer if the sum of (a) the aggregate assets of the unrelated lines of business on the consolidated balance sheet of the Company and its Restricted Subsidiaries, plus (b) all contingent contractual liabilities of the Company and its Restricted Subsidiaries for the liabilities and other direct or indirect obligations of such unrelated lines of business does not represent more than 10% of the total assets of the Company and its Restricted Subsidiaries. SECTION 1.23. Article Seven-A, added to the Original Indenture by the Tenth Supplemental Indenture, is hereby amended by deleting the words "as in effect on December 26, 1989" in the fifth line thereof and substituting the words "as in effect on the effective date of the Sixteenth Supplemental Indenture" in their stead. SECTION 1.24. Article Seven-B, added to the Original Indenture by the Twelfth Supplemental Indenture, is hereby amended by deleting the words "as in effect on August 6, 1992" in the fifth line thereof and substituting the words "as in effect on the effective date of the Sixteenth Supplemental Indenture" in their stead. SECTION 1.25. Article Seven-C, added to the Original Indenture by the Fourteenth Supplemental Indenture, is hereby amended by deleting the words "as in effect on June 9, 1994" in the fifth line thereof and substituting the words "as in effect on the effective date of the Sixteenth Supplemental Indenture" in their stead. ARTICLE 2 MISCELLANEOUS PROVISIONS SECTION 2.01. Except as supplemented and amended by this Sixteenth Supplemental Indenture, all the covenants, agreements, terms and stipulations contained in the Indenture, as heretofore in effect, shall continue in full force and effect. SECTION 2.02. This Sixteenth Supplemental Indenture may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original and all such counterparts shall together constitute but one and the same instrument. IN WITNESS WHEREOF, the parties have caused this Sixteenth Supplemental Indenture to be duly executed on and as of the date first above written. ATTEST: MISSISSIPPI CHEMICAL CORPORATION Signed and acknowledged in the presence of: By: /s/ Ethel Truly By: /s/ Rosalyn B. Glascoe Assistant General Counsel Corporate Secretary (CORPORATE SEAL) ATTEST: DEPOSIT GUARANTY NATIONAL BANK, as Trustee Signed and acknowledged in the presence of: By: /s/ Susan R. Tsimortos By: /s/ Janice M. Powell Vice President and Trust Assistant Trust Officer Officer (CORPORATE SEAL) STATE OF MISSISSIPPI COUNTY OF YAZOO Personally appeared before me, the undersigned authority in and for the said county and state, on this 29th day of June, 1994, within my jurisdiction, the within named Ethel Truly and Rosalyn B. Glascoe, who acknowledged that they are Assistant General Counsel and Corporate Secretary, respectively, of Mississippi Chemical Corporation, a Mississippi corporation, and that for and on behalf of the said corporation, and as its act and deed they executed the above and foregoing instrument, after first having been duly authorized by said corporation so to do. /s/ Linda G. Bentley Notary Public My Commission expires: May 20, 1997 (Notarial Seal) STATE OF MISSISSIPPI COUNTY OF HINDS Personally appeared before me, the undersigned authority in and for the said county and state, on this 30th day of June, 1994, within my jurisdiction, the within named Susan R. Tsimortos and Janice M. Powell, who acknowledged that they are Vice President and Trust Officer and Assistant Trust Officer, respectively, of Deposit Guaranty National Bank, a national banking association, and that for and on behalf of the said corporation, and as its act and deed they executed the above and foregoing instrument, after first having been duly authorized by said corporation so to do. /s/ Mary E. Huskey Notary Public My Commission expires: Feb. 18, 1996 (Notarial Seal) EX-4.4 3 EXHIBIT 10.4 PURCHASE AGREEMENT THIS AGREEMENT, is made and entered into as of the 15th day of September, 1994, to be effective on the 1st day of October, 1994 ("Effective Date"), by and between MISSISSIPPI CHEMICAL CORPORATION, a Mississippi corporation, with its principal place of business at Owen Cooper Administration Building, Highway 49E, Yazoo City, Mississippi 39194-0388 ("MCC"), and AIR PRODUCTS AND CHEMICALS, INC., a Delaware corporation, with its principal place of business at 7201 Hamilton Boulevard, Allentown, Pennsylvania 18195-1501 (collectively with its affiliates referred to as "Air Products"). WHEREAS, Air Products produces ammonium nitrate prills which it sells to agricultural users; and WHEREAS, Air Products has made a unilateral decision to continue operating its production facility but to exit the business of marketing its ammonium nitrate prills; and WHEREAS, MCC desires to purchase Air Products' ammonium nitrate prills; NOW, THEREFORE, in consideration of the mutual benefits to be derived, the parties agree as hereafter set forth. 1. DEFINITIONS 1.1 "Contract Year" shall mean initially a period beginning on October 1, 1994, and running through June 30, 1995, and shall thereafter mean a twelve (12) month period beginning July 1 of each calendar year. 1.2 "Agricultural Product" shall mean ammonium nitrate prills produced by Air Products at its Pace, Florida, facility. This Agreement envisions that the volume of Agricultural Product produced at Air Products' Pace, Florida, facility will remain the same throughout the term of this Agreement, excepting nominal and incremental production increases resulting from increases in operating efficiencies. 1.3 "Variable Netback" with respect to ammonium nitrate prills shall mean the excess of (i) subparagraph 1.3.1 over (ii) the sum of subparagraphs 1.3.2 and 1.3.3, as each of these are described below. 1.3.1 "Ammonium Nitrate Prills Revenue" shall mean the revenues realized for ammonium nitrate prills sold by MCC. 1.3.2 "Direct Costs" shall mean the weighted average per-ton costs incurred in connection with the sale of ammonium nitrate prills for such items as, including but not being limited to, discounts; freight allowances; customer truck fees; freight into storage; storage costs; bag costs; bagging charges; delivery expenses; handling charges; rail delivery allowances; weighing fees; pneumatic truck charges; direct transfer fees; special equipment fees; wharfage; railcar lease costs and other such expenses of delivery directly relating to the sale of ammonium nitrate prills by MCC as they may arise. 1.3.3 "Adjustments to Netback" shall mean any actual, projected or accrued costs incurred in the normal course of business and attributable to that month which are not Direct Costs, including but not being limited to, shrinkage projection; interest cost resulting from extended terms or slow-paying accounts; losses resulting from nonperforming accounts on all ammonium nitrate prills; emergency storage costs; losses for which there is no apparent responsible third party (examples of this include, but are not limited to, losses occurring during transit not attributable to product quality problems or any apparent problem with carrier's equipment and losses occurring during storage not attributable to product quality problems or any apparent problem in handling or storage facility); interest on ammonium nitrate prill inventory; and taxes paid by MCC which are assessed on the sale and/or distribution of ammonium nitrate prills. 1.3.3.1 It is agreed that storage costs and Adjustments to Netback when calculated on a per-ton basis may be volume sensitive over a period of time exceeding one (1) month. MCC will make every effort to accurately project such volume-sensitive costs on a monthly basis and will use this projection in the Variable Netback calculation. MCC will endeavor to estimate and adjust these costs monthly. However, at the end of each Contract Year, a final adjustment will be made based on actual costs. 1.3.3.2 Any interest costs assessed under the provisions of this paragraph shall be at Chase Manhattan's Banker's Prime Lending Rate for the relevant period. 1.3.4 In order to determine Variable Netback, the following costs shall not be subtracted as an adjustment for calculating Variable Netback: any costs which are incurred by MCC or Air Products associated with the general administration or operation of their respective facilities, including but not being limited to, costs incurred for such items as production; in-plant storage; switching charges; in-plant maintenance; general and administrative expenses; administrative staff or plant labor overhead; or taxes levied on the manufacture of ammonium nitrate prills. A sample calculation of Variable Netback is set forth in Exhibit A incorporated herein. 1.4 "Cash Cost" shall mean Air Products' projected cash cost of producing Agricultural Product (raw material and conversion) provided by Air Products to MCC for each calendar quarter, not to exceed current Price. 1.5 "Discount" shall mean the (confidential treatment has been requsted) per-ton ($confidential treatment has been requested/Ton) reduction on MCC's purchase price of Air Products' Agricultural Product plus escalation on the first (confidential treatment has been requested) per-ton ($ confidential treatment has been requested/Ton) after the end of the third Contract Year in accordance with the annual change in the United States Consumer Price Index for all urban consumers, using the period July 1, 1996, to June 30, 1997, as the base year. In no event shall the Discount fall below (confidential treatment has been requested) per-ton ($ confidential treatment has been requested/Ton). 1.6 "Price" shall mean Variable Netback calculated on a per-ton basis minus Discount. 1.7 For the purposes of this Agreement, reference to ammonium nitrate prills shall mean, in all cases, fertilizer grade prilled ammonium nitrate intended for agricultural use. 1.8 "Agreement" shall mean this Purchase Agreement and all of its Exhibits. 2. TERM 2.1 The term of this Agreement shall be a period of fifteen (15) years beginning on the Effective Date and automatically extending thereafter for additional five (5) year periods, unless terminated by notification from either party to the other party not less than one (1) year before the expiration of the initial term or one (1) year before the expiration of any five (5) year period, unless terminated sooner by either party as provided by another provision of this Agreement. 3. SALE AND PURCHASE OF AGRICULTURAL PRODUCT 3.1 Subject to the provisions of paragraph 3.4, during the term of this Agreement, Air Products shall sell to MCC, and MCC shall purchase from Air Products, all of the Agricultural Product produced by Air Products at its Pace, Florida, facility. 3.2 Upon execution of this Agreement, Air Products agrees to provide MCC with a forecast of Agricultural Product production for each month through June 30, 1995. At the end of each month thereafter, Air Products will provide a three (3) month rolling forecast. Air Products will use its reasonable efforts to produce the quantity of Agricultural Product provided in the month-end forecast for the following month. 3.3 On or before June 30 of each year, Air Products shall provide MCC with a good-faith forecast of its anticipated production of Agricultural Product in the twelve (12) month period beginning July 1. At MCC's request, Air Products will also provide an outlook as to the direction its Agricultural Product production is likely to take over the course of the next two (2) years. 3.4 On or before the first day of each calendar quarter, the parties will discuss purchases hereunder and Air Products' production estimates for the immediately following calendar quarter. In the event that MCC determines, in its sole discretion, that it will be unable to make arrangements for the marketing, in a commercially reasonable manner, of the entire production of Agricultural Product for such calendar quarter, then it shall advise Air Products of the quantity of Agricultural Product that it can efficiently market and that it will purchase from Air Products during such calendar quarter. To the extent that the production of Agricultural Product during a calendar quarter exceeds MCC's commitment to purchase Agricultural Product during such calendar quarter, MCC shall release Air Products from its obligation to sell the excess Agricultural Product during the quarter to MCC, and Air Products shall have the right to sell the excess Agricultural Product to parties other than MCC. 4. SHIPMENTS 4.1 Air Products will provide rail siding space for handling full and empty railcars at no cost to MCC. MCC acknowledges that Air Products' rail siding space is limited and is not designed for long-term storage, and will make reasonable efforts to minimize the on-site number of railcars, in no event to exceed forty (40) railcars without Air Products' specific approval. 4.2 Air Products will be responsible for the loading of Agricultural Product at the Pace, Florida, facility. MCC will be responsible for the loading of Agricultural Product at all other locations. 4.3 MCC will provide scheduling of all railcars and bulk trucks and bills of lading for all shipments, rail and truck. Air Products agrees to accommodate MCC's terminal and printer at the Pace, Florida, facility for this purpose. MCC shall also provide communication with carriers and shipment tracking. Air Products shall electronically report to MCC weights and vehicle numbers for any shipments leaving the Pace, Florida, facility not later than the next business day following the shipment. 4.4 The party responsible for loading under paragraph 4.2 shall be responsible for inspection and acceptance or rejection of any railcar or truck prior to loading. The party responsible for loading shall also be responsible for complying with all applicable laws and regulations with respect to the loading for shipment and shipment of the product. 5. DELIVERY 5.1 Title and risk of loss to Agricultural Product shall pass to MCC upon Air Products' delivery of Agricultural Product into railcar or truck of MCC or its customer at the Pace, Florida, facility. 6. PRICING AND PAYMENT 6.1 Payment to Air Products from MCC with respect to sales in any calendar month is calculated by (i) multiplying (confidential treatment has been requested) times the number of tons of Agricultural Product shipped from Pace, Florida, directly to MCC's customers and shipped from MCC's inventory to MCC's customers during the month, (ii) plus (confidential treatment has been requested) times the number of tons of Agricultural Product shipped into MCC's inventory during the month, and (iii) minus credit for the weighted average (confidential treatment has been requested) previously paid on the tons of Agricultural Product shipped from MCC's inventory to MCC's customers during the month. An example of the payment calculation is included herein as Exhibit A and Exhibit A-1. 6.2 Each month MCC shall pay for the previous month's purchases by MCC of Agricultural Product based on shipments weighed out through truck or rail from Pace, Florida. In no event shall there be more than twenty (20) railcars loaded and on Air Products' property which have not been invoiced by Air Products. MCC will provide to Air Products the data necessary for Air Products to invoice MCC as soon as practical following month-end, but not later than the twelfth (12th) day of the month. The sales to MCC for any given month will be paid to Air Products by the fifteenth (15th) day of the month following such sales. MCC will pay each invoice by electronic transfer of funds to Air Products' account in accordance with Exhibit B, which is incorporated herein. 6.3 Air Products shall provide MCC with a copy of the current calibration certificate for the truck scales on a quarterly basis, and shall provide a photocopy of the rail scale calibration certificate twice per year. 6.4 MCC shall have the obligation once every twelve (12) months during the term of this Agreement, and for twenty-four (24) months following termination, to cause its independent public accountants to audit MCC's books and records insofar as they relate to the calculation of the Variable Netback and to express an opinion of its auditors that the Variable Netback has been calculated in accordance with this Agreement. An adjustment shall be made as necessary to reflect any corrections during the previous twelve (12) months, or during the last twelve (12) months of this Agreement if terminated, as determined by the audit. 7. TAXES 7.1 Each party shall bear and pay all federal, state and local taxes based upon or measured by its net income or net worth, and all taxes, fees or other charges based upon its corporate existence or its general right to transact business. 8. TECHNOLOGY TRANSFER 8.1 MCC will provide to Air Products technical information related to the manufacture of Agricultural Product as set forth in Exhibit E hereto and to the extent necessary to allow Air Products to manufacture Agricultural Product meeting the specifications set forth in Exhibit F to this Agreement. In the event of a conflict between any provision of this Agreement and any provision of Exhibit E, "Technology Transfer," the provisions of Exhibit E will control with respect to the technology transferred from MCC to Air Products. 8.2 Air Products will undertake to adopt the technology transferred by MCC pursuant to Exhibit E, "Technology Transfer," for the purpose of achieving market compatibility between Agricultural Product and AMTRATE(R) produced by MCC. 8.3 The implementation of the technology described in Exhibit E, "Technology Transfer," is not anticipated to cost more than Five Hundred Thousand and 00/100 Dollars ($500,000.00). In the event that the cost of implementation exceeds this amount, then Air Products may choose to either expend such amounts as are necessary to install the technology or terminate this Agreement, at its sole and exclusive option. In the event that Air Products chooses to terminate the Agreement, then it shall terminate effective ninety (90) days from the date of Air Products' original notice to MCC under this paragraph 8.3. 8.4 In the event that Air Products is unable to meet the specifications set forth in Exhibit F following installation of the technology described in Exhibit E, Air Products shall have the right to install additional equipment or make such other modifications as are necessary to meet such specifications by March 30, 1995. In the event that Air Products elects not to make such installations or modifications as are necessary to meet the specifications, then MCC at its sole and exclusive option may modify the specifications or terminate this Agreement effective June 30, 1995. 8.5 During the course of this Agreement it may become necessary to make revisions in the specifications set forth as Exhibit F. In such event, MCC will notice Air Products of the proposed revisions and, for a period of ninety (90) days, will discuss with Air Products the changes necessary to effectuate such revisions. Air Products will in no event be required to install additional equipment or make modifications to meet such revised specifications; however, upon Air Products' decision not to adopt the revised specifications, MCC may, at its option, terminate this Agreement and the associated Technology Transfer effective one (1) year from the date of the original notice to Air Products of the proposed revisions under this paragraph 8.5. 9. WARRANTY 9.1 Air Products warrants it has title to Agricultural Product delivered hereunder and may properly sell the same and that such Agricultural Product shall conform to the specifications set forth in Exhibit C, which is incorporated herein until such time that MCC's proprietary coating technology is implemented. Upon the implementation of the coating technology, the specification attached as Exhibit F will be the specification for Agricultural Product and is intended to be the same specification as MCC's current production specification for AMTRATE(R). Air Products shall maintain data on any quality testing of any Agricultural Product and shall provide certificates as to quality to MCC upon reasonable request. Air Products shall retain daily production samples for ninety (90) days. MCC, at its expense, shall have the right to test the Agricultural Product for the purpose of determining compliance with the specifications. 10. STORAGE 10.1 Air Products shall make available in-plant storage for the Agricultural Product (consisting of not less than two thousand five hundred (2,500) tons of bulk ammonium nitrate storage and twenty thousand (20,000) tons of ammonium nitrate solutions storage as 100% ammonium nitrate) at no cost to MCC, and the in-plant storage costs will not be a factor in calculating Variable Netback. Likewise, MCC shall make available in-plant storage for its ammonium nitrate prills at Yazoo City, Mississippi, with no related cost factor attributable to the Variable Netback. 11. ASSIGNMENT OF CONTRACTS 11.1 In consideration for MCC's agreement to purchase Air Products' production of Agricultural Product during the term of this Agreement, Air Products agrees to use all reasonable efforts to assign to MCC, and MCC will accept assignment of, each of its contracts with its customers, (confidential treatment has been requested). In the event that any customer withholds consent to an assignment of its contract with Air Products, Air Products will withhold such tons under this Agreement as are necessary to supply Air Products' obligation to such customer under its contract with such customer and shall immediately notify the customer of Air Products' intent to terminate its contract at the earliest allowable date. 12. FORCE MAJEURE 12.1 Neither party shall be liable for any failure or delay in performance hereunder (except for the payment for Agricultural Product previously delivered hereunder) which may be due to Force Majeure. 12.1.1 For the purposes hereof, the term Force Majeure means a condition or event occurring beyond the control of the party suffering the event which prevents performance under this Agreement. Force Majeure includes, without limitation, any war (whether declared or undeclared), fire, flood, lightning, earthquake, storm, or act of God; mechanical breakdown or partial or total destruction of the manufacturing facility; any strike, lockout or other labor difficulty, civil disturbance, riot, sabotage, accident or explosion; any official order, directive or industry-wide request by any governmental authority which, in the reasonable judgment of either party makes it necessary to cease or reduce production or other performance under this Agreement; any inability to secure necessary fuel, power, equipment, transportation or raw materials, including the inability to secure any such item by reason of allocations promulgated by any governmental authority; or Air Products' operating costs for producing Agricultural Product exceeds the revenues that it receives therefor. 12.2 Performance under this Agreement may be suspended during the period of any such Force Majeure. 12.2.1 The party affected by an event described herein shall, promptly upon learning of such event and ascertaining that it has or will affect its performance hereunder, give notice to the other party, stating the nature of the event, its anticipated duration and any action being taken to avoid or minimize its effect. Any Force Majeure event shall, so far as reasonably possible, be remedied with all reasonable dispatch, provided that the settlement of strikes, lockouts, industrial disputes, or disturbances shall be entirely within the discretion of the affected party. 12.2.2 Performance under this Agreement shall resume to the extent made possible by the end of the Force Majeure event. 13. EVENTS OF TERMINATION 13.1 Air Products may suspend this Agreement at any time during the initial term, or during any extension thereof, on six (6) months' notice to MCC in accordance with section 18 that it will cease production of Agricultural Product, in which case the suspension will be effective when actual production ceases. MCC may choose to terminate this Agreement, at its option, should Air Products' production of Agricultural Product not resume after a period of six (6) months. Neither party is required to submit to the provisions of section 16 regarding arbitration to exercise its options under this paragraph. 13.2 In the event that MCC is unable to earn a quarterly profit from the sale of Agricultural Product and the condition is expected to continue, MCC and Air Products shall negotiate in good faith to alleviate the hardship. In the event that the parties are unable to agree within a period of ninety (90) days on alternative arrangements which alleviate the hardship condition, the Agreement may be terminated one (1) year following the date of the original notice to Air Products of hardship under this subparagraph 13.2. Neither party is required to submit to the provisions of section 16 regarding arbitration to exercise its options under this paragraph. 13.3 Following receipt of a notice of suspension or termination under any subparagraph of this section 13, from either Air Products or MCC, MCC will make no commitment for sales of additional tons of Agricultural Product beyond the anticipated suspension or termination date of this Agreement; and Air Products hereby agrees to satisfy any Agricultural Product commitments made by MCC prior to MCC's receipt of notice of termination, up to commitments made for the current fertilizer year, but in no event less than a period of three (3) months. 14. LIABILITY 14.1 Air Products' sole liability, and MCC's sole and exclusive remedy, for Air Products' failure to deliver Agricultural Product shall be the difference between the price of such quantity of Agricultural Product under this Agreement and the higher price MCC necessarily pays to a third party to obtain product required in replacement. 14.2 Air Products' sole liability, and MCC's sole and exclusive remedy, for Air Products' failure to deliver Agricultural Product which conform to the specifications in effect under Exhibit C or Exhibit F shall be replacement by Air Products of a like quantity of conforming Agricultural Product at no additional cost to MCC and reimbursement of any commercially reasonable costs necessarily incurred by MCC in connection with the receipt, storage, handling, reshipment, or disposal of the nonconforming Agricultural Product. Any claim must be received by Air Products in writing within thirty (30) days of the receipt by MCC or MCC's customer. 14.3 From and after January 1, 1995, for claims brought by customers of MCC against Air Products where language disclaiming warranty and limiting liability as described in Exhibit D was not provided by MCC to the customer either by sales contract or by invoice subsequent to the sale, then MCC agrees to defend and indemnify Air Products with respect to such claim. The language set forth in Exhibit D is not currently in use by MCC and for purposes of transition, this paragraph 14.3 will become effective for the language to be included in all sales invoices from and after January 1, 1995, and for contracts, shall be included in each new or renewed contract between MCC and customers upon execution of any new contracts or renewal of an existing contract as they arise from and after January 1, 1995. 15. CONFIDENTIALITY 15.1 MCC acknowledges and agrees that the provisions of the 1994 Confidential Disclosure Agreement between MCC and Air Products shall govern the transfer of any confidential or proprietary business information by Air Products to MCC in connection with this Agreement or the performance of any rights or obligations contemplated hereunder. 15.2 Air Products and MCC each acknowledge and agree that the provisions of the 1994 Secrecy Agreement between MCC and Air Products shall be superseded by Exhibit E, "Technology Transfer," and that the provisions of Exhibit E shall exclusively govern the transfer of any confidential or proprietary technical information by MCC to Air Products in connection with this Agreement or the performance of any rights or obligations contemplated hereunder. Air Products and MCC each acknowledge and agree that the provisions of Exhibit H, "Secrecy Agreement," govern the transfer of any confidential or proprietary technical information by Air Products to MCC in connection with this Agreement or the performance of any rights or obligations contemplated hereunder. 16. DISPUTES 16.1 All disputes, controversies or differences between the parties arising out of, in relation to or in connection with this Agreement, or the breach thereof, which cannot be resolved through negotiations to the satisfaction of either of the parties within sixty (60) days after the date one party has notified the other party in writing of such dispute, controversy or difference, shall be resolved by binding arbitration. Both parties shall submit their respective positions with regard to the disputed matter in writing to an arbitration panel consisting of three arbitrators, one of whom shall be appointed by Air Products, one by MCC, and the third by the first two arbitrators. If the first two arbitrators cannot agree on the appointment of a third arbitrator, then such third arbitrator shall be a partner in one of the "Big Six" accounting firms not employed by Air Products or MCC or any of their respective affiliated companies (if the disputed matter is financial in nature); an engineer or similar professional familiar with operations similar to those of the Pace, Florida, facility (if the disputed matter is operational in nature); or, an attorney familiar with contracts of this kind (if the disputed matter involves an issue of contractual interpretation) appointed by the American Arbitration Association. The arbitration shall be conducted pursuant to the Commercial Arbitration Rules of the American Arbitration Association and shall be held in Jackson, Mississippi. The determination of the arbitration panel shall be final and binding on the parties hereto. Judgment upon the arbitration panel's award may be entered in any court having jurisdiction thereof. The fees and expenses of all arbitrators shall be paid equally by Air Products and MCC. 17. PUBLIC ANNOUNCEMENTS 17.1 Neither Air Products nor MCC or any of their respective affiliates shall issue or make any press release, public announcement, confirmation or other disclosure or information relating to this Agreement or the transactions contemplated hereby, except with the prior approval of the other party. 18. NOTICE 18.1 Any notice to be given under this Agreement shall be in writing and shall be delivered personally or by certified mail (postage prepaid and return receipt requested), courier or overnight delivery service (delivery charge prepaid), or by telecopy. Any notice shall be effective only if and when it is received by the addressee. For the purposes hereof, the addresses and telephone and telecopier numbers of Air Products and MCC are as follows: Air Products: Air Products and Chemicals, Inc. Attention: Corporate Secretary 7201 Hamilton Boulevard Allentown, PA 18195-1501 Telephone: 610/481-7071 Telecopier: 610/481-5765 MCC: Mississippi Chemical Corporation Attention: Corporate Secretary P. O. Box 388 Yazoo City, MS 39194-0388 Telephone: 601/746-4131 Telecopier: 601/746-9158 19. GOVERNING LAW 19.1 This Agreement shall be governed by, construed under, and enforced in accordance with the laws of the state of Mississippi. 20. ENTIRE AGREEMENT 20.1 This Agreement and its Exhibits constitute the entire understanding between the parties and supersedes all prior discussions, statements, and representations, oral or written, relating to the subject matter of this Agreement. No amendment or modification shall be valid unless in writing specifically referencing this Agreement and signed by a duly authorized representative of each party. All purchase orders or purchase acknowledgments which may be used to order or acknowledge orders for delivery of Agricultural Product shall be deemed intended for record purposes only, and any terms or conditions contained therein shall not serve to add to or modify the terms and conditions of this Agreement. 21. GENERAL PROVISIONS 21.1 MCC agrees to adhere to all existing and future site safety, hygiene and environmental regulations and policies while at the Pace, Florida, facility. 21.2 No waiver or failure to enforce any term of this Agreement shall effect or limit a party's right thereafter to enforce or compel strict compliance with every term of this Agreement. 21.3 If any provision of this Agreement is held invalid by any court of law or administrative or regulatory body, all other provisions hereof shall continue in full force and effect. 21.4 This Agreement may not be assigned by either party without the prior written consent of the other party. This Agreement shall inure to the benefit of and be binding upon the successors and, if properly assigned, the assigns of both parties. 21.5 No person not a party to this Agreement shall have any interest in or right under this Agreement as a third-party beneficiary or otherwise. IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first set forth above. MISSISSIPPI CHEMICAL CORPORATION AIR PRODUCTS AND CHEMICALS, INC. By: /s/ Charles O. Dunn By: /s/ Robert E. Gadomski President Group Vice President - Chemicals Date: September 15, 1994 Date: September 19, 1994 EXHIBIT A EXAMPLE BILLING Year To Date Ammonium Nitrate Prills Revenue $16,093,509.00 (Confidential treatment has been (Confidential requested) treatment has been requested) (Confidential treatment has been (Confidential requested) treatment has been requested) Variable Net-Back 12,968,645.37 Total Ammonium Nitrate Prill Tons 98,509 Sold (Confidential treatment has been (Confidential requested) treatment has been requested) Confidential treatment has been (Confidential requested) treatment has been requested) PRICE $122.65 Agricultural Product: YTD Tons Sold - Direct 18,000 YTD Tons Sold from Inventory 3,337 Total Tons Sold YTD 21,337 YTD Payment Due for Agricultural $2,616,983.05 Product Sold Credit for Previous Payments ($1,231,980.00) Current Month Payment 1,385,003.05 Shrinkage Monthly (3,173.85) A. Exhibit A - 1 Interest Monthly (1,312.37) B. Exhibit A - 1 Payment for Tons Sold $1,380,516.83 Payment for tons Shipped to $317,385.00 C. Exhibit A - 1 Inventory Credit for Tons Sold from Inventory ($157,239.25) D. Exhibit A - 1 Payment Due for Agricultural Product $1,540,662.58
EXHIBIT A - 1 EXAMPLE INVENTORY CALCULATION TONS Albany Montgomery Total BEGINNING INVENTORY: MCC Product 3,619 1,664 5,283 Agricultural Product 381 665 1,046 4,000 2,329 6,329 SHIPMENTS TO INVENTORY: MCC product 3,000 1,500 4,500 Agricultural Product 1,900 800 2,700 4,900 2,300 7,200 TOTAL TONS AVAILABLE MCC product 6,619 74.37% 3,164 68.35% 9,783 Agricultural Product 2,281 25.63% 1,465 31.65% 3,746 8,900 4,629 13,529 SALES FROM INVENTORY MCC product 1,885 74.37% 1,487 68.35% 3,372 Agricultural Product 649 25.63% 688 31.65% 1,337 2,534 2,175 4,709 ENDING INVENTORY MCC product 4,734 74.37% 1,677 68.35% 6,411 Agricultural Product 1,632 25.63% 777 31.65% 2,409 6,366 2,454 8,820 DOLLAR VALUE; AGRICULTURAL PRODUCT Total BEGINNING $ VALUE: $44,828.46 $78,303.75 $123,132.21 SHIPMENTS TO INVENTORY $223,345.00 $94,040.00 C. $317,385.00 VALUE AVAILABLE FOR SALE $268,173.46 $172,343.75 $440,517.21 SALES FROM INVENTORY $76,302.93 $80,936.32 D. $157,239.25 ENDING INVENTORY VALUE $191,874.24 $91,406.28(1) $283,280.52 PER TON AGRICULTURAL PRODUCT INVENTORY Total BEGINNING INVENTORY VALUE $117.66 $117.75 $117.72 SHIPMENTS TO INVENTORY Cash Cost $117.55 $117.55 Price 122.65 122.65 Lesser of Cash Cost and $117.55 $117.55 $117.55 Price VALUE AVAILABLE FOR SALE 117.57 117.64 $117.60 VALUE SHIPPED FROM 117.57 117.64 $117.60 INVENTORY ENDING INVENTORY VALUE $117.57 $117.64 $117.60 SHRINKAGE CALCULATION Total Shipments to Inventory $223,345.00 $94,040.00 $317,385.00 Shrinkage Factor 1.00% 1.00% Shrinkage $2,233.45 $940.40 A. $3,173.85 INTEREST CALCULATION Total Chase Manhattan Prime 7.75% Beginning Inventory $44,828.46 $78,303.75 Ending Inventory 191,874.24 91,406.28 Total 236,702.70 169,710.03 Average $118,351.35 $84,855.02 Total Interest $764.35 $548.02 B. $1,312.37 (1) Figures may not total as ending inventory value represents Per Ton Value Times Rounded Ton Figure
EXHIBIT B ELECTRONIC TRADE PAYMENTS 1. Company Name and Address Air Products and Chemicals, Inc. 7201 Hamilton Boulevard Allentown, PA 18915-1501 2. Company I.D. Number (IRS) 231274455 (IRS Taxpayer Number and (DUNS) 00-300-1070 Company DUNS Number) 3. Depository Bank Name and Address Mellon Bank, N.A. Mellon Bank Center Pittsburgh, PA 15258-0001 4. Depository Bank Transit 043000261 Routing Number 5. Depository Bank Operations Janice L. Pottmeyer Contact Name and Telephone Number 412/234-2489 6. Account Name Air Products and Chemicals, Inc. 7. Account Number 115-1265 8. Type of Transaction We Want Deposited CTP [x] CT X [ ] to Your Account 9. Company Contact Name and Ellen D. Appell, Treasury Telephone Number 610/481-7659 EXHIBIT C PRODUCT SPECIFICATION FOR AMMONIUM NITRATE PRILLS PRODUCED AT PACE, FLORIDA The properties listed below are for material sampled at the Finished Product Belt COMPOSITION PROPERTY UNITS MINIMUM MAXIMUM ANALYTICAL METHOD Total Nitrogen % 34.0 --- SD-131 Ammonium Nitrate % 97.2 --- SD-131 Magnesium % 1.6 2.0 501.13 Nitrate Total Moisture % --- 0.45 501.12 pH SU 6.0 7.0 501.14 Amines-Oil ppm 300.0 400.0 501.09 Coating PHYSICAL CHARACTERISTICS Mesh Particle Size (U.S. Standard Mesh) Range, % Distribution +6 0-1 +8 10-25 +10 25-35 +12 35-50 +14 5-10 -14 0-2 Unpacked Bulk Density 60-63 lb/cu.ft. Angle of Repose 25-28 degrees Appearance near-white prills EXHIBIT D LIMITATION OF LIABILITY AND DISCLAIMER OF WARRANTY A. SELLER AND MANUFACTURER MAKE NO WARRANTY, EXPRESS OR IMPLIED, EXCEPT THAT THE PRODUCT IS OF THE QUALITY SET FORTH IN MCC'S APPLICABLE PUBLISHED SPECIFICATIONS (IF ANY). THE AFORESAID WARRANTY RUNS ONLY TO THE BUYER. SELLER AND MANUFACTURER WARRANT NEITHER THE RESULTS TO BE OBTAINED FROM USE OF THE PRODUCT, ITS MERCHANTABILITY, NOR ITS FITNESS FOR ANY PARTICULAR PURPOSE. B. The quantity of Product is deemed to be the quantity determined at the time of shipment by shipper's scale weights or marine survey, whichever is applicable. C. Seller and Manufacturer disclaim all risk and liability directly or indirectly related to unloading, discharge, storage, handling, use (whether alone, in combination with other substances or in the operation of any process), and/or sale of the Product, and directly or indirectly arising out of compliance or noncompliance with the laws, ordinances, and regulations of any governmental entity or agency. Without limiting the generality of the foregoing, Seller and Manufacturer expressly disclaim liability for the failure of discharge or unloading implements or material used by the Buyer (whether or not supplied by Seller or Manufacturer) and for the infringement of patent or other proprietary rights. D. Any technical advice or assistance furnished Buyer, whether before or after delivery of the Product, for use in connection with unloading, discharge, handling, storage, shipment, processing or use of product, or in connection with the design or operation of any machinery or equipment related thereto, will be without charge and without warranty; Buyer shall accept such technical advice or assistance at Buyer's sole risk. E. In no event shall Seller or Manufacturer be liable to Buyer for loss of profits or for consequential, special or indirect damages resulting from delay in or failure of performance hereunder or in any way related hereto. In no event shall Seller or Manufacturer be liable to Buyer or any other party in connection with any claim related to or arising out of this sale, including for negligence, in an amount exceeding so much of the purchase price as is applicable to that portion of the Product with respect to which such claim relates. Failure to give notice of a claim with respect to the Product within ten (10) days after the occurrence upon which such claim is founded shall constitute a waiver by Buyer of such claim. F. No consent to, waiver of or excuse from a breach hereunder, whether express or implied, shall constitute a consent to, waiver of, or excuse from any prior, concurrent or subsequent breach of the same or any other term or provision. EXHIBIT E TECHNOLOGY TRANSFER The parties to the Agreement to which this Exhibit E is annexed agree that MCC will provide to Air Products sufficient information to allow Air Products to manufacture prilled ammonium nitrate in accordance with the Agreement and with MCC specifications for the product known by the trade name AMTRATE(R), the specifications for which are found at Exhibit F to the Agreement. SECTION 1. DEFINITIONS. For purposes of this Exhibit E: (a) "Product" means fertilizer grade prilled ammonium nitrate to be manufactured by Air Products to MCC's specifications for AMTRATE(R). (b) "MCC Coating Technology" means the know-how, process and apparatus for production and application of a coating agent for Product using MCC Information and Supplemental MCC Information. (c) "Territory" means Air Products' Pace, Florida, facility. (d) "Effective Date" is the effective date of the Agreement to which this Exhibit E is annexed. (e) "MCC Information" means designs, technical experience, data and know-how for the design and operation of ammonium nitrate plants and other valuable information conveyed to Air Products during the Term of the Agreement relating to (i) processes for producing particulate ammonium nitrate, including all steps undertaken from the preparation of the feedstock through the treatment of the end product; (ii) product specifications and additives designed to improve the physical properties of the particulate product; and (iii) processes for the production and use of a coating agent which is described in U.S. Patent 4,521,239. (f) "Supplemental MCC Information" means the inventions, specifications, production data, specialized know-how, skill and other secret and confidential technical information relating to the manufacture of ammonium nitrate which is owned or controlled by MCC or under which MCC has the royalty-free right to license others and which MCC acquires and conveys to Air Products during the Term of the Agreement. (g) "Term of the Agreement" means the period during which the Agreement to which this Exhibit E is annexed is in effect. SECTION 2. THE GRANT. (a) For the Term of the Agreement and upon the conditions hereinafter more specifically set forth, MCC hereby grants to Air Products, under said MCC Information and Supplemental MCC Information, the nonexclusive right to manufacture the Product in the Territory. (b) Except as MCC and Air Products may hereafter agree in writing, Air Products shall have no right (i) to permit or subcontract others to use the MCC Information or Supplemental MCC Information, or (ii) to disclose to or permit or sublicense others to use the MCC Information or Supplemental MCC Information, or (iii) to use the MCC Information or Supplemental MCC Information in connection with the manufacture, use or sale of ammonium nitrate prills other than under the terms of the Agreement. SECTION 3. DUTIES OF MCC. Any translation of MCC Information or Supplemental MCC Information or conversion of any MCC Information or Supplemental MCC Information from one numeric system to another shall be performed by Air Products at its own expense. Nothing contained herein shall be construed as requiring MCC to perform any act in conflict with the laws of the Untied States of America pertaining to the export of technical information or data. (a) MCC shall provide basic engineering information in sufficient detail and scope to allow Air Products to design, procure and construct additions and modifications to the Air Products facilities as needed to allow Air Products to manufacture Product. (b) MCC shall review and comment on engineering drawings and design documents prepared by Air Products in response to (a) above. (c) MCC shall provide operating instructions, laboratory procedures for required quality control testing, and specifications and vendor data for procurement of raw materials for use of the MCC Coating Technology. (d) MCC shall assist Air Products in a hazards review of the MCC Coating Technology prior to implementation by Air Products. (e) MCC shall, at Air Products' request, perform periodic inspections of construction in progress at the Air Products facility. (f) MCC shall, at Air Products' request, provide on-site consultation at Air Products' facility during commissioning and start-up for the purpose of assisting Air Products in the proper manufacture of the Product. MCC shall advise Air Products of any additional modifications, additions or adjustments necessary to facilitate manufacture of the Product. (g) MCC shall provide quality testing in MCC's laboratories and test facilities as MCC may deem appropriate in assessing whether Product manufactured by Air Products meets MCC's standards for AMTRATE(R), using samples provided by Air Products at the request of MCC. SECTION 4. DUTIES OF AIR PRODUCTS. (a) Promptly after receipt of the basic engineering information from MCC, Air Products shall proceed with all reasonable diligence to design, procure and install additions and modifications as needed to allow Air Products to begin manufacture of the Product provided, however, that at no time shall Air Products be compelled to install any additions or modifications or otherwise engage in any action which is in conflict with Air Products' safety, health or environmental standards or policies. (b) Air Products shall provide MCC a schedule for performance of the Air Products' duties and report progress against the same. (c) Air Products shall provide engineering design documents and drawings for MCC review and comment and shall make a good-faith effort to revise the design as recommended by MCC. (d) Air Products shall train Air Products personnel in accordance with operating instructions and quality control procedures provided by MCC and shall ensure that said instructions and procedures are followed. (e) Air Products shall provide samples for testing as reasonably requested by MCC. (f) Air Products shall proceed with all due diligence to achieve successful manufacture of the Product at the earliest reasonable time. (g) Air Products will buy raw materials for preparation of the coating agent only from MCC-approved vendors. (h) Air Products will cooperate with MCC on the specifications and sourcing of raw materials other than those defined in paragraph (g) above as necessary to assure compatibility of Product with MCC's AMTRATE(R). SECTION 5. PROTECTION AND OWNERSHIP OF MCC INFORMATION AND SUPPLEMENTAL MCC INFORMATION. (a) All MCC Information and Supplemental MCC Information furnished to Air Products hereunder remains the property of MCC. (b) Air Products agrees to keep confidential all MCC Information and Supplemental MCC Information provided to Air Products in tangible form and labeled "Confidential MCC." Air Products may not, without written consent from MCC, communicate or allow to be communicated any MCC Information or Supplemental MCC Information to anyone except to its officers, employees, and agents, and only to such extent as may be necessary for the proper manufacture and sale of the Product in accordance with the Agreement and this Exhibit E. (i) Air Products will cause said agents and employees to sign confidentiality agreements in conformance with Air Products' current policy and procedure, attached as Exhibit G. (ii) Air Products shall assist in prosecution of any civil or criminal action brought against any former Air Products agent or employee in the event of breach of such secrecy obligations. (c) If necessary to share information with any third party in order to practice MCC Information or Supplemental MCC Information, Air Products must bind the third party with a secrecy agreement no less stringent than this Exhibit E. Air Products shall assist in the prosecution of any civil or criminal action brought against any third party in the event of a breach of such secrecy obligations. (d) Except as needed to practice MCC Information or Supplemental MCC Information for manufacture of Product, Air Products will not, without the prior written consent of MCC, use, reproduce or copy, or permit the use, reproduction or copying of any of said drawings, prints, data and other documents. Air Products agrees that any reproduction, notes, summaries or similar documents relating to the MCC Information or Supplemental MCC Information supplied hereunder immediately upon their creation will be marked "Confidential MCC," will be covered by the terms of this Exhibit E and will be returned to MCC pursuant to paragraph 10(c). (e) The obligations and restrictions imposed by Section 5(b) above shall not apply with respect to MCC Information and Supplemental MCC Information: (i) which at the time of disclosure is in the public domain; (ii) which after disclosure is published or otherwise becomes part of the public domain through no fault of Air Products; (iii) which Air Products can show was in its possession at the time of disclosure and is not under an ongoing obligation of confidentiality to MCC or its affiliates or to a third party; or (iv) which Air Products can show was received by it after the time of disclosure hereunder from a third party who did not require Air Products to hold it in confidence and who did not acquire it, directly or indirectly, from MCC or its affiliates under an obligation of confidence. (f) It is further agreed and understood that even if relieved of the obligation of confidentiality by the exceptions recited above in Section 5(e), or exceptions as may otherwise be permitted by this Exhibit E, Air Products shall not disclose or cause or permit to be disclosed, to any party any correlation or identity which may exist between any part of the MCC Information or Supplemental MCC Information and any other information available or made available to Air Products from any other source. (g) For the purposes of the foregoing paragraphs, disclosures made to Air Products under or in connection with this Agreement which are specific, e.g., as to engineering and design practices and techniques, equipment, products, operating conditions, etc., shall not be deemed to be within the exceptions stated in Section 5(e) merely because individual features are known to the public or in the possession of Air Products. In addition, any combination of features shall not be deemed to be within the foregoing exceptions merely because individual features are known to the public or in Air Products' possession, but only if the combination itself and its principal of operation are generally known to the public or in the possession of Air Products. SECTION 6. PROTECTION OF INDUSTRIAL PROPERTY. (a) Air Products expressly acknowledges and agrees that, except in the Territory and to the extent of the grant set forth in Section 2(a) hereof, it does not acquire under the Agreement or this Exhibit E any rights in or to the use of the MCC Information and Supplemental MCC Information anywhere in the world. (b) Air Products further undertakes that it may not at any time contest anywhere in the world ownership of any of the MCC Information and Supplemental MCC Information rights of MCC. SECTION 7. COSTS AND EXPENSES. (a) MCC shall bear all costs and expenses incurred in discharging its duties pursuant to Section 3 of this Exhibit E. (b) Air Products shall bear all costs and expenses incurred in discharging its duties pursuant to Section 4 of this Exhibit E plus all costs and expenses incurred in the manufacture of the Product. SECTION 8. INDEMNIFICATION AND RELEASE. (a) MCC shall indemnify Air Products and hold it harmless against and from any liability, claims or damages and expenses whatsoever in any way arising out of a claim for misappropriation of trade secrets or infringement of a patent owned or exclusively licensed by a third party by virtue of Air Products' manufacture of Product. (b) Nothing contained in the Agreement or this Exhibit E shall be construed as: (i) requiring the filing by MCC of any patent application, the securing of any patent or any patent in force after the maintaining of any patent in force after the Effective Date; (ii) conferring by implication, estoppel or otherwise upon Air Products any license or other right under any patent except rights expressly granted hereunder to Air Products. (c) Air Products shall indemnify MCC for (i) third-party claims for injury or property damage occurring at Air Product's Pace, Florida, facility which arise in connection with Air Products' procurement, construction, and operations relating to manufacture of Product; provided, however, that this indemnification obligation shall not apply where such claim arises as a consequence of the practice of MCC Information or Supplemental MCC Information; and (ii) vendor demands for payment in connection with Air Products' implementation of MCC Information or Supplemental MCC Information; provided, however, that this Indemnification obligation shall not apply where such demand arises as a consequence of MCC's unauthorized commitments to such vendor. SECTION 9. IMPROVEMENT. (a) Air Products may not conduct any research into MCC Coating Technology except that Air Products may conduct necessary safety studies relating to MCC Coating Technology. (b) Air Products may not patent or otherwise disclose any inventions or improvements made or acquired by Air Products applicable to MCC Information or Supplemental MCC Information, and the same shall be fully disclosed by Air Products to MCC and shall be the property of MCC without obligation of any type or kind to Air Products. SECTION 10. EFFECT OF TERMINATION. Upon termination or expiration of the Agreement, Air Products promises: (a) to cease all manufacture and sale of Product; (b) to cease the use of all MCC Information and Supplemental MCC Information; (c) to return to MCC all documents free of charge which have been retained by Air Products (including but not limited to any reproductions, notes or summaries) relating to the MCC Information and Supplemental MCC Information provided by MCC; and (d) to disable to the extent necessary to render it unusable, all equipment installed to facilitate the application of MCC Information and Supplemental MCC Information. Air Products' obligations of confidentiality shall survive the termination of the Agreement and this Exhibit E and shall expire the later of the year 2014 or fifteen (15) years after termination of the Agreement. SECTION 11. NONASSIGNABILITY. This Exhibit E and each and every covenant, term and condition herein is binding upon and inures to the benefit of the parties hereto and their respective successors, but neither this Exhibit E nor any rights hereunder may be assigned or sublicensed, directly or indirectly, voluntarily or by operation of law, by Air Products without first receiving the prior written consent of MCC. SECTION 12. UNENFORCEABLE TERMS. In the event any term or provision of this Exhibit E shall for any reason be declared invalid by order of any court or administrative or regulatory body, MCC, in its sole discretion, shall have the right to either terminate the Agreement by giving at least one (1) year's prior notice to Air Products or declare by notice to Air Products that such invalidity, illegality or unenforceability shall not affect any other term or provision hereof. In the latter event, this Exhibit E shall be interpreted and construed as if such term or provision had never been contained herein to the extent the same shall have been held invalid. [MCC CONFIDENTIAL -- THIS EXHIBIT IS NOT TO BE COPIED OR DISTRIBUTED TO OR VIEWED BY ANYONE WHO IS NOT A PARTY TO A SECRECY AGREEMENT WITH MCC OR AIR PRODUCTS] EXHIBIT F Product Specifications for Agricultural Product Following Installation of MCC Technology set forth in Exhibit E (Confidential treatment has been requested) EXHIBIT G 1. Employee Patent, Copyright and Confidential Information Agreement 2. Security Statement For Termination of Employment 3. Certificate of Air Products' Policy and Procedures Regarding the Maintenance of Confidential Information and Trade Secrets EMPLOYEE PATENT, COPYRIGHT AND CONFIDENTIAL INFORMATION AGREEMENT In consideration of my employment by Air Products and Chemicals, Inc., its divisions, affiliates and subsidiaries (all, collectively, referred to hereinafter as the Company), I agree that I will: A. Communicate to the Company promptly and fully in writing, in such format as the Company may deem appropriate, all inventions made or conceived by me whether alone or jointly with others from my time of entering the Company's employee until I leave, and as requested, to assign to the Company those of such inventions which (1) relate to a field of business, research or investigation in which the Company has an interest, or (2) result from, or are suggested by, any work which I may do for or on behalf of the Company; B. Make and maintain adequate permanent records of all such inventions, in the form of memoranda, notebook entries, drawings, print-outs, or reports relating thereto, in keeping with then current Company procedures. I agree that these records, as well as the inventions themselves, shall be and remain the property of the Company at all times; C. Cooperate with and assist the Company and its nominees, at their sole expense, during my employment and thereafter, in securing and protecting patent rights in which I am a named inventor or other similar rights in the United States and foreign countries. In this connection I specifically agree to execute all papers which the Company deems necessary to protect its interests including the execution of assignments of invention and to give evidence and testimony, as may be necessary, to secure and enforce the Company's rights; D. Except as the Company may otherwise authorize in writing, not use or disclose to others, reproduce or copy at any time, except as my Company duties may require, either during or subsequent to my employment, any private information of the Company or of others as to whom the Company has an obligation of confidentiality which may come to my attention or be developed by me during the course of my employment other than information which is or becomes public knowledge in a lawful manner; E. Upon termination of my employment with the Company, deliver to it all records, data and memoranda of any nature which are in my possession or control and which relate to my employment or the activities of the Company, including, for example, notebooks, diaries, reports, photographs, films, manuals and computer software media. F. Following termination of my employment, honor and abide by my continuing obligation of confidentiality. I agree that, in any situation which arises and involves a question of my freedom to disclose particular information to a subsequent employer or anyone else, I will contact the Company in writing and elicit its opinion on my freedom to make such a disclosure. It is also agreed that: G. All creative works which I produce during my employment and which relate to the Company's business or technology shall be considered to have been prepared for the Company as a part of and in the course of my employment. Any such work shall be owned by the Company regardless of whether it would otherwise be considered a work made for hire. Such works shall include, among other things, computer programs and documentation, non-dramatic library works (e.g., professional papers and journal articles), visual arts (e.g., pictorial, graphic and three-dimensional), sound recordings, motion pictures and other audiovisual works. H. Nothing in this agreement shall bind me or the Company to any specific period of service or employment, nor shall the termination of such employment in any way affect the obligations assumed by me herein. Further, this agreement replaces any and all prior agreements or understandings between me and the Company concerning these subjects; I. This agreement shall bind my heirs, executors, and administrators, and shall inure to the benefit of the successors and assigns of the Company. J. I will not disclose to any other employee of the Company any information as to which I owe a continuing obligation of confidentiality to a previous employer or client. Any inventions, patented or unpatented, which were made or conceived by me prior to my employment are excluded from the operation of this agreement, and I warrant that there are no such inventions, other than those listed by me in the space provided on the back of this document. (L.S.) ---------------------------------------- Signature of the Employee WITNESS: DATED: (List invention information on the back of this agreement.) Form 4000 (REV. 3/94) SECURITY STATEMENT FOR TERMINATION OF EMPLOYMENT I, , make the ----------------------------------------------------------------- following statement to Air Products and Chemicals, Inc., its divisions, affiliates and subsidiaries (hereinafter referred to as Air Products) with the understanding and intent that my statement will be used by Air Products in carrying out its duty to protect the security of Classified Information respecting the national defense of the United States. As to such Classified Information: 1. I {a. [ ] have (complete items 2, 3, 4)b. [ ] have not (skip items 2, 3, 4)} knowingly had access to such Classified Information during my employment by Air Products. 2. I {a. [ ] do b. [ ] do not} now have in my possession or custody or control any document or other thing containing or incorporating Classified Information, or other matter classified ``CONFIDENTIAL''or higher to which I obtained access during my employment. All such material that I may have had in my possession has been returned by me. 3. I {a. [ ] am b. [ ] am not} retaining or taking away with me from my place of employment any document or thing containing or incorporating Classified Information, or other matter classified ``CONFIDENTIAL''or higher to which I obtained access during my employment, in any manner whatsoever. 4. I {a. [ ] shall b. [ ] shall not} hereafter in any manner reveal or divulge to any person any Classified Information of which I have gained knowledge during my employment, except as may be hereafter authorized by the Department of Defense. If any of statements 2, 3, or 4 is completed with selection `a,'' attach a full explanation of the circumstances, including the names of any persons authorizing the particular handling of the Classified Information. If the employee refuses to sign the statement, a full explanation of the circumstances of the refusal shall be attached hereto. In either event, the matter shall be brought immediately to the attention of the Security Officer, prior to the departure of the employee if possible. With respect to any of statements 1, 2, 3, or 4 above answered affirmatively, the employee is advised that the penal provisions of the Espionage Laws, (Title 18, U.S. Code, Section 793, 794, 795, 796, 797, 798), provide that one who unlawfully retains or discloses Classified Information is subject to severe criminal penalties and that the making of a false statement pertaining to Classified Information in this document may be punished as a felony under Title 18, U.S. Code. Further, with respect to other information which is covered by my Employee Patent, Copyright, and Confidential Information Agreement with Air Products, I recognize the property right which Air Products has in its private Company Information, whether or not classified with a security marking and in whatever form recorded. In terminating my employment with Air Products, except as authorized under circumstances explained in the statement attached, I have returned and accounted for all material and copies, of whatever kind, containing Company Information, received or prepared by me in connection with my employment, except for information which is available to the public generally, and I have retained no copies, reproductions or excerpts of such material whether written, printed, photographed or otherwise encoded or stored. Each of the above statements is true to the best of my knowledge and belief. Witness: Signed: Title: Date: NOTE: This form when completely filled out will be filed in the employee's personnel folder. CERTIFICATE OF AIR PRODUCTS' POLICY AND PROCEDURES REGARDING THE MAINTENANCE OF CONFIDENTIAL INFORMATION AND TRADE SECRETS I, Plant Manager of Air Products and Chemicals, Inc., do hereby certify that the following is a true and accurate summary of Air Products and Chemicals, Inc.'s, policy and procedure regarding the maintenance of confidential information and trade secrets: The Air Products - Escambia Quality Management System is based on written procedures and specifications which define the steps required to process customer orders from receipt, through delivery of product and services. In the event proprietary information is to be disclosed to vendors, executed confidentiality agreements are required in advance of requests for quotations. Quality Management documentation is strictly controlled to ensure that only the appropriate, current and approved version of all documentation is available at the point of use. Additional copies can by made available when required only when they are identified as noncontrolled. Policies, procedures, specifications and work instructions affecting the Air Products - Escambia Quality Management System are reviewed and approved by identified and authorized persons prior to issue. Any revisions to the documentation are controlled by the same review and approval process, and the obsolete versions are removed from service. Changes to the documentation are recorded so the holders of the documents may be made aware of the nature of the revision. IN WITNESS WHEREOF, I have hereunto set my hand this 14th day of September, 1994. /s/ Brian A. Gebbia Plant Manager EXHIBIT H SECRECY AGREEMENT The parties to the Agreement to which this Exhibit H is annexed agree as follows: Air Products possesses technical Information, technical experience, data and know-how for the operation of an ammonium nitrate plant at its Pace, Florida, facility and possesses other valuable AP Information relating to the production of coated particulate ammonium nitrate (all of the foregoing hereinafter referred to as "AP Information"). Air Products considers the AP Information to be proprietary to Air Products and of significant commercial value. Air Products is willing to disclose such AP Information to MCC via documents, discussions and visits to its Pace, Florida, facility for the sole purpose of implementing the MCC Coating Technology, the MCC Information and Supplemental MCC Information (as those terms are defined in Exhibit E to the Purchase Agreement) and as necessary to facilitate the modifications to the Pace, Florida, facility required to enable the use of the MCC Coating Technology, MCC Information and Supplemental MCC Information. MCC neither anticipates the need for nor expects to receive any AP Information; however, in the event that it becomes necessary for MCC to receive such AP Information and if the disclosure of the AP Information satisfies the provisions of paragraph 5 of this Secrecy Agreement with respect to advance notice and acceptance, then MCC will be bound by the terms of this Secrecy Agreement. IN CONSIDERATION THEREOF, it is agreed as follows: 1. MCC will not, without Air Products' consent, use or disclose to any other person, firm or corporation any of the AP Information disclosed, and MCC further agrees to require its employees and any others who, of necessity, shall be given access to, or receive disclosure of, any of said AP Information to maintain the same in confidence. 2. AP Information as used herein does not include technical AP Information, data, designs, drawings or other material which: (a) MCC can show was in its possession at the time of disclosure and was not acquired, directly or indirectly, from Air Products; or (b) is acquired by MCC from others who have no confidential commitment to Air Products with respect to same; or (c) becomes, through no fault of MCC, a part of the public domain by publication or otherwise. 3. Disclosures of AP Information by Air Products made to MCC under or in connection with this Secrecy Agreement which are specific, e.g., as to engineering and design practices and techniques, equipment, products, operating conditions, compositions, formulations, etc., shall not be deemed to be within the exceptions stated in paragraph 2 hereof merely because individual features are known to the public or in the possession of MCC. In addition, any combination of features shall not be deemed to be within the exceptions stated in paragraph 2 hereof merely because individual features are known to the public or are in MCC's possession, but only if the combination itself and its principle of operation are generally known to the public or is in the possession of MCC. 4. Except as may otherwise by permitted by this Secrecy Agreement, MCC shall not disclose, or cause or permit to be disclosed, to any party not subject to this Secrecy Agreement any correlation or identity which may exist between any part of AP Information acquired by MCC pursuant to or in connection with this Secrecy Agreement and any other AP Information available or made available to MCC from any other source. 5. Any disclosure of AP Information which is considered confidential howsoever communicated whether orally, visually, in writing or by other means shall be covered by this Secrecy Agreement, provided Air Products identified such disclosures as confidential in advance of the communication and, if such disclosure is communicated orally or visually, to summarize and confirm the confidential nature of such communication in writing within ninety (90) days of communication. 6. All drawings, prints, data and other documents disclosing such AP Information to MCC shall remain the property of Air Products and shall be deemed loaned to MCC only for the limited purposes specified above, and MCC will not, without the prior written consent of Air Products, use, reproduce or copy, or permit the use, reproduction or copying of any of said drawings, prints, data and other documents. MCC shall return AP Information to Air Products upon request, and MCC may not retain any copies of any documents containing such AP Information except that one copy may be retained in MCC's Legal Department files for archival purposes. 7. Nothing contained in this Secrecy Agreement or in any disclosure hereunder made by Air Products shall be construed to grant to MCC any license or other rights in or to the AP Information so disclosed or under any patent or patent application relating thereto. 8. This Secrecy Agreement shall not be modified other than in writing and shall be construed under the laws of the state of Mississippi. 9. This Secrecy Agreement expires in 2014. EX-4.5 4 EXHIBIT 4.5 FOURTEENTH SUPPLEMENTAL INDENTURE This Fourteenth Supplemental Indenture dated as of June 17, 1994, between Mississippi Chemical Corporation, a Mississippi corporation (the "Company"), and Deposit Guaranty National Bank, as Trustee (the "Trustee"), to the Indenture of Mortgage, Deed of Trust, Assignment and Security Agreement dated as of September 1, 1976, among the Company, New Orleans Bank for Cooperatives (now the National Bank for Cooperatives), John H. Farrelly, as trustee for the benefit of the New Orleans Bank for Cooperatives (the "Old Trustee") under certain deeds of trust specified in the Original Indenture, and the Trustee (the "Original Indenture"), as supplemented by a First Supplemental Indenture dated as of September 7, 1976 (the "First Supplemental Indenture"), a Second Supplemental Indenture dated as of September 30, 1976 (the "Second Supplemental Indenture"), a Third Supplemental Indenture dated as of June 28, 1977 (the "Third Supplemental Indenture"), a Fourth Supplemental Indenture dated as of May 1, 1978 (the "Fourth Supplemental Indenture"), a Fifth Supplemental Indenture dated as of June 1, 1978 (the "Fifth Supplemental Indenture"), a Sixth Supplemental Indenture dated as of September 1, 1979 (the "Sixth Supplemental Indenture"), a Seventh Supplemental Indenture dated as of October 1, 1979 (the "Seventh Supplemental Indenture"), an Eighth Supplemental Indenture dated as of May 15, 1983 (the "Eighth Supplemental Indenture"), a Ninth Supplemental Indenture dated as of February 23, 1988 (the "Ninth Supplemental Indenture"); a Tenth Supplemental Indenture dated as of December 26, 1989 (the "Tenth Supplemental Indenture"); an Eleventh Supplemental Indenture dated as of July 16, 1990 (the "Eleventh Supplemental Indenture"); a Twelfth Supplemental Indenture dated as of August 6, 1992 (the "Twelfth Supplemental Indenture"); and a Thirteenth Supplemental Indenture dated as of July 16, 1993 (the "Thirteenth Supplemental Indenture") (the Original Indenture, as supplemented by the First through the Thirteenth Supplemental Indentures, being hereinafter referred to as the "Indenture"), W I T N E S S E T H T H A T: WHEREAS, the Company has duly authorized the issuance of a series of New Notes (as defined in the Indenture) limited in aggregate outstanding principal amount to $30,000,000, to be known as its Revolving Credit Note, Series J, Final Maturity June 30, 1997 (the "Series J Note"), having the terms hereinafter provided; and WHEREAS, when issued and authenticated in accordance with the provisions of the Indenture, the Series J Note will be secured on a parity with all other Notes outstanding under the Indenture; and WHEREAS, all acts and things necessary to make the Series J Note issued pursuant to this Fourteenth Supplemental Indenture, when executed by the Company and authenticated and delivered by the Trustee as provided in the Indenture, the valid, binding and legal obligations of the Company, and to constitute these presents, together with the Original Indenture, a valid indenture and agreement according to its terms, have been done and performed, and the execution of this Fourteenth Supplemental Indenture and the issue of the Series J Note hereunder and under the Original Indenture have in all respects been duly authorized, and the Company in the exercise of its legal right and power, executes this Fourteenth Supplemental Indenture and the Company proposes to make, execute, issue and deliver a series of New Notes in substantially the form set forth herein, in the form of one registered note without coupons; and WHEREAS, the Company and the Trustee desire to amend the Indenture as hereinafter set forth pursuant to Section 10.01(a) thereof for the purpose of establishing and issuing the Series J Notes in accordance with the provisions of Section 2.14 thereof; NOW, THEREFORE, the Indenture is hereby amended and supplemented as follows: ARTICLE I TERMS PARAGRAPH 1.01. Table of Contents. The Table of Contents of the Indenture is hereby amended and supplemented as follows: (a) By adding the following in alphabetical order to the index of Article One, Section 1.01: Series J Revolving Credit Agreement p. 18 Series J Note p. 18 (b) By adding the following in numerical order to the index of Articles Two and Five: Section2.23 Series J Note p. 32 Section5.18 Covenant of the Company for the Benefit of Series J Note p. 66 (c) By adding the following immediately following the index to Article Seven: Article Seven-C. Covenants of the Company in Article Seven Extended to the holders of the Series J Note p. 73 PARAGRAPH 1.02. Definitions. Section 1.01 of the Indenture is hereby amended and supplemented as follows: (a) (i) by adding the words "and Series J" after the words "Series B" in the sixth line of the definition of "Restricted Subsidiary," as amended by the First, Tenth and Twelfth Supplemental Indentures; (ii) by adding after the words "Article Seven-B of the Indenture" in clause (i) of the definition of "Restricted Subsidiary," as amended by the First, Tenth and Twelfth Supplemental Indentures, the following: , or in such section, as incorporated in Article Seven-C of the Indenture, (b) by adding the following immediately after the definition of "Series I Revolving Credit/Term Loan Agreement": "Series J Revolving Credit Agreement" means the Revolving Credit Agreement described in Section 2.23(c) hereof, together with any amendments thereto delivered to the Trustee in conformity with this Indenture. "Series J Note" means the Revolving Credit Note, Series J, final maturity June 30, 1997, of the Company, authorized and secured by this Indenture pursuant to Section 2.23 hereof. PARAGRAPH 1.03. Provision for the Series J Notes. Article Two of the Indenture is hereby amended and supplemented by adding the following Section 2.23 thereto: PARAGRAPH 2.23 The Series J Note (a) There is hereby created a Note to be known as the Revolving Credit Note, Series J, Final Maturity June 30, 1997, of the Company (the "Series J Note"). The Series J Note shall be issued in the form of one registered note and shall be in substantially the following form: THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE RESOLD, TRANSFERRED OR ASSIGNED WITHOUT REGISTRATION OR WITHOUT OBTAINING AN EXEMPTION FROM SUCH REGISTRATION MISSISSIPPI CHEMICAL CORPORATION Revolving Credit Note, Series J Final Maturity June 30, 1997 Date of initial advance: --------------- $30,000,000 (Maximum advance) FOR VALUE RECEIVED, the undersigned MISSISSIPPI CHEMICAL CORPORATION, a Mississippi corporation (hereinafter with its successors, referred to as the "Company"), hereby promises to pay to NationsBank of Tennessee, N.A. (hereinafter referred to as the "Payee"), or its duly registered assigns, on dates set forth below, the lesser of the principal sum of THIRTY MILLION DOLLARS ($30,000,000) or the aggregate unpaid principal amount of all Revolving Credit Loans (as hereinafter defined) made by the Payee to the Company hereunder, and to pay interest from the date hereof on the principal amounts hereof from time to time outstanding at a rate or rates per annum as hereinafter set forth. Revolving Credit Agreement This Note is issued pursuant to the provisions of, inter alia, the Series J Revolving Credit Agreement (as hereinafter defined) between the Payee and the Company dated as of June 17, 1994, to which Agreement reference is hereby made for a statement of the terms and conditions under which the loans evidenced hereby were or are to be made. Definitions The following terms, as used in this Note, shall have the following meanings: "Credit Facility" means the maximum amount available to be lent by the Payee to the Company pursuant to the Series J Revolving Credit Agreement, initially, $30,000,000. "Credit Facility Reduction Notice" means a written notice by the Company to the Payee pursuant to which the Company elects to reduce the amount of the Credit Facility which reduction shall be in minimum increments of $2,500,000. "Eurodollar Business Day" means any day on which commercial banks are open for domestic and international business (including dealings in U.S. Dollar deposits) in London and New York City. "Eurodollar Interest Period" means for each LIBOR Based Rate Loan, the period during which interest at the LIBOR Based Rate, determined as provided in this Note, shall be applicable, provided, however, that each such period shall be either one (1), two (2), three (3), six (6) or twelve (12) months, which shall be measured from the date specified by the Company in each Eurodollar Rate Request for the commencement of the computation of interest at the LIBOR Based Rate, to the numerically corresponding day in the calendar month in which such period terminates; provided, however, that if there is no such numerically corresponding day in such succeeding month, such Eurodollar Interest Period shall end on the last Business Day of such succeeding month. If a Eurodollar Interest Period would otherwise end on a day which is not a Business Day, such Eurodollar Interest Period shall end on the next succeeding Business Day; provided, however, that if such next succeeding Business Day follows in a new month, such Eurodollar Interest Period shall end on the immediately preceding Business Day. The Company may not elect any Eurodollar Interest Period which ends later than the Final Maturity Date. Interest shall accrue from and including the first day of a Eurodollar Interest Period to but excluding the last day of such Eurodollar Interest Period. "Eurodollar Rate Request" means telephonic notice by the Company to be received by the Payee by 11:00 am (Nashville time) one (1) Eurodollar Business Day (or the latest Payee Business Day prior thereto if such day is not a Payee Business Day) prior to the date specified in the Eurodollar Rate Request for the commencement of the Eurodollar Interest Period, and specifying the amount of the LIBOR Based Rate Loan and the applicable Eurodollar Interest Period desired by the Company for such LIBOR Based Rate Loan. The Company shall promptly confirm such notice in writing. "Final Maturity Date" means the date all of the principal of, premium, if any and interest on the Series J Note is payable, whether by scheduled installments, acceleration or otherwise. "Fixed Rate" means a fixed rate of interest equal to the rate on U.S. Treasury Notes with comparable terms and maturities approximately equal to the Fixed Rate Interest Period plus 2.00% per annum. "Fixed Rate Interest Period" means for each Fixed Rate Loan, the period during which such loan bears interest at a Fixed Rate. If a Fixed Rate Interest Period would otherwise end on a day which is not a Business Day, such Fixed Rate Interest Period shall end on the next succeeding Business Day; provided, however, that if such next succeeding Business Day follows in a new month, such Fixed Rate Interest Period shall end on the immediately preceding Business Day. The Company may not elect any Fixed Rate Interest Period which ends later than the Final Maturity Date. Interest shall accrue from and including the first day of a Fixed Rate Interest Period to but excluding the last day of such Fixed Rate Interest Period. "Fixed Rate Request" means written notice by the Company that it elects to have all or a portion of the outstanding principal amount of this Note bear interest at a Fixed Rate, which notice shall specify the principal amount of such Fixed Rate Loan and the duration of the Fixed Rate Interest Period. "LIBOR Based Rate" means a rate per annum equal to the sum of (a) the LIBOR Rate for dollar deposits approximately equal in principal amount to the LIBOR Based Rate Loan requested in the Eurodollar Rate Request and with a maturity comparable to the Eurodollar Interest Period in question, plus (b) 1.25% for any Eurodollar Interest Period or portion thereof. "LIBOR Rate" means, with respect to any LIBOR Based Rate Loan for any Eurodollar Interest Period, the interest rate per annum for deposits in Dollars which currently appears on the Telerate Screen Page 3807 (as defined herein) (rounded up to the next 1/16 of 1% if such rate appears as a fraction smaller than 1/16 of 1%) as of 12:00 noon, Nashville time, on the day that is one (1) Eurodollar Business Day preceding the first day of the applicable Eurodollar Interest Period. If no such offered rate appears on the Telerate Screen Page 3807, the rate in respect of the applicable Eurodollar Interest Period will be the rate per annum (rounded up to the next 1/16 of 1% if such rate is a fraction smaller than 1/16 of 1%) at which deposits in Dollars are offered by the Reference Banks (as hereinafter defined) at approximately 12:00 noon, Nashville time, on the date that is one (1) Eurodollar Business Day preceding the commencement of such applicable Eurodollar Interest Period to prime banks in the London interbank market for a period of time equal to such applicable Eurodollar Interest Period in a Representative Amount (as hereinafter defined). Payee will request each of the Reference Banks to provide a quotation of its rate. If at least two such quotations are provided, the rate in respect of such applicable Eurodollar Interest Period will be the arithmetic mean of the quotations. If fewer than two quotations are provided as requested, the LIBOR Based Rate will be unavailable and such loan amount shall bear interest at the Prime Rate. "Payee Business Day" means a day on which commercial banks in Nashville, Tennessee, are not authorized or required to close. "Prime Rate" means the fluctuating reference or benchmark rate of interest that is publicly announced by NationsBank of Tennessee, N.A. as its Prime Rate to be in effect from time to time with any changes in such Prime Rate to be effective on the date of the public announcement of such change. The Prime Rate is not necessarily the lowest rate of interest charged by NationsBank of Tennessee, N.A. "Quarterly Payment Date" means the last day of each March, June, September and December commencing on the first such day following the date of the initial advance under the Series J Revolving Credit Agreement. "Reference Banks" means the principal London offices of Barclays Bank PLC, National Westminister Bank PLC, Bankers Trust International, Ltd. and Bank of Tokyo, Ltd. "Revolving Credit Loan" means a Prime Rate, LIBOR Based Rate or Fixed Rate Loan made pursuant to the Series J Revolving Credit Agreement. "Series J Revolving Credit Agreement" means the Revolving Credit Agreement between the Company and NationsBank of Tennessee, N.A., dated as of June 17, 1994, as the same is amended or supplemented. "Telerate Screen Page 3807" means the display designated as page 3807 on the Telerate Screen (or such other page as may replace page 3807 on that service for the purpose of displaying London interbank offered rates of major banks). Interest Rate All advances hereunder shall, unless the Company otherwise elects as hereinafter set forth, bear interest at the Prime Rate. The Company shall have the right at any time, on prior irrevocable written or telex notice to the Payee not later than 11:00 a.m., Nashville time, to convert any Prime Rate, Fixed Rate, or LIBOR Based Rate Loan into a Revolving Credit Loan of another type, or to continue any LIBOR Based Rate Loan for a Eurodollar Interest period or any Fixed Rate Loan for a Fixed Rate Interest Period (specifying in each case the interest Period to be applicable thereto), subject in each instance to the following: (a) no LIBOR Based Rate Loan shall be converted at any time other than at the end of the Eurodollar Interest Period applicable thereto; (b) no Fixed Rate Loan shall be converted at any time other than at the end of the Fixed Rate Interest Period applicable thereto unless the Company also pays at the same time the prepayment penalty, if any, due hereunder as specified in the section on Prepayments; (c) each conversion shall be effected by applying the proceeds of the new LIBOR Based Rate, Fixed Rate, and/or Prime Rate Loan, as the case may be, to the Revolving Credit Loan (or portion thereof) being converted; and (d) the number of LIBOR Based Rate Loans and Fixed Rate Loans at any time outstanding shall not exceed an aggregate of five (5). Each Fixed Rate Request and/or Eurodollar Rate Request shall be irrevocable and shall refer to this Note and specify (i) the identity and principal amount of the particular Revolving Credit Loan that the Company requests be converted or continued, (ii) if such notice requests conversion, the date of such conversion (which shall be a Business Day for Fixed Rate Loans and a Eurodollar Business Day for LIBOR Based Rate Loans), and (iii) if a Revolving Credit Loan is to be converted to a LIBOR Based Rate Loan or a Fixed Rate Loan or a LIBOR Based Rate Loan or Fixed Rate Loan is to be continued, the Eurodollar or Fixed Rate Interest Period with respect thereto. In the event the Company shall not give notice to continue any LIBOR Based Rate or Fixed Rate Loan for a subsequent period, such Revolving Credit Loan (unless repaid) shall automatically be converted into a Prime Rate Loan. If the Company shall fail to specify in the request the type of borrowing or, in the case of a Fixed Rate Loan, the applicable Fixed Rate Interest Period, the Company will be deemed to have requested a Prime Rate Loan. If the Company shall fail to specify in any Eurodollar Rate Request the applicable Eurodollar Interest Period, the Company will be deemed to have selected a Eurodollar Interest Period of one (1) month's duration. Notwithstanding anything to the contrary contained above, if an Event of Default shall have occurred and be continuing, no LIBOR Based Rate or Fixed Rate Loan may be continued and no Prime Rate Loan may be converted into a Fixed Rate or LIBOR Based Rate Loan. Interest Payments All payments hereunder shall be made in lawful money of the United States of America, with interest on the whole of said principal amount remaining from time to time unpaid from the date hereof at a LIBOR Based Rate, the Prime Rate or a Fixed Rate and as provided herein, until the principal hereof shall become due and payable (whether at maturity, on a date fixed for prepayment, by acceleration or otherwise). Interest shall be computed in all cases on the basis of a 360-day year for the actual number of days elapsed. Interest shall be payable as follows: with respect to any portion of this Note bearing interest at a LIBOR Based Rate (a "LIBOR Based Rate Loan"), interest shall be payable on the last day of each applicable Eurodollar Interest Period, unless such Eurodollar Interest Period exceeds three (3) months, in which event interest shall be payable with respect to the principal amount bearing interest at such LIBOR Based Rate on each Quarterly Payment Date occurring after the first day of the Eurodollar Interest Period through the last day of such Eurodollar Interest Period, and on the last day of each Eurodollar Interest Period; with respect to any portion of this Note bearing interest at the Prime Rate (a "Prime Rate Loan"), interest shall be payable on each Quarterly Payment Date; with respect to any portion of this Note bearing interest at a Fixed Rate (a "Fixed Rate Loan"), interest shall be payable on each Quarterly Payment Date and on the last day of each Fixed Rate Interest Period, in each case commencing on the first such date following the making of such loan. Place of Payments; Default Rate The principal of, premium, if any, and interest on this Note shall be payable at the principal office of NationsBank of Tennessee, N.A., or at such other place as the registered holder may designate from time to time in writing which designation shall be made at least ten (10) days before such principal, premium or interest is due. Without limitation of any other rights of the holder, overdue payments of principal (including any overdue prepayment of principal) or premium, if any, and (to the extent permitted by applicable law) overdue payments of interest shall bear interest at the rate applicable to such overdue principal, plus two percent (2%) per annum. Maximum Rate Notwithstanding the above, in no event whatsoever shall the interest rate applicable to this Series J Note exceed the maximum amounts collectible under applicable laws in effect from time to time. If for any reason whatsoever the interest rate applicable to this Series J Note exceeds the maximum permissible rate under applicable laws in effect from time to time, then, ipso facto, the obligation to pay such interest shall be reduced to the maximum amounts collectible under applicable laws in effect from time to time, and any amounts paid to the Payee that exceed such maximum amounts shall be applied to the reduction of the principal balance of this Series J Note and/or refunded to the Company so that at no time shall the interest rate applicable to this Series J Note exceed the maximum amounts permitted from time to time by applicable law. This provision shall control every other provision herein and in any and all other agreements and instruments now existing or hereafter arising between the Company and the Payee with respect to this Series J Note. Principal Advances and Payments Subject to the provisions of the Series J Revolving Credit Agreement, the Company may request (upon one day's notice in writing) that the Payee advance an amount in increments of $1,000,000 which, when added to the amount previously requested and still unpaid, does not exceed the Credit Facility. Unless sooner paid, all outstanding principal on this Note, together with any unpaid accrued interest, shall be payable on June 30, 1997. All borrowings evidenced by this Note and all payments and prepayments of the principal hereof and interest hereon and the respective dates thereof shall be endorsed by the Payee on Schedule I attached hereto or on a form substantially similar to said Schedule I attached hereto and made a part hereof, or otherwise recorded by the Payee in its internal records; provided, however, that the failure of the Payee to make such a notation or any error in such a notation shall not in any manner affect the obligation of the Company to make the payments of principal and interest in accordance with the terms of this Note and the Series J Revolving Credit Agreement. In the event any day on which payment of principal or interest is due is not a Payee Business Day, such payment may be made on the next succeeding Payee Business Day. Change in Legality Notwithstanding anything to the contrary herein contained, if any change in any law or regulation or in interpretation thereof by any governmental authority charged with the administration or interpretation thereof shall make it unlawful for the Payee to make or maintain any LIBOR Based Rate Loan or to give effect to its obligations as contemplated in the Series J Revolving Credit Agreement, then, by written notice to the Company describing such changes, the Payee may (1) declare that LIBOR Based Rate Loans will not thereafter be made by the Payee under the Series J Revolving Credit Agreement, whereupon the Company shall be prohibited from requesting LIBOR Based Rate Loans from the Payee unless such changes are subsequently withdrawn or otherwise rendered ineffective, notice of which shall be promptly provided by the Payee to the Company; and (2) require that all outstanding LIBOR Based Rate Loans shall be converted to Prime Rate Loans, in which event (a) all such LIBOR Based Rate Loans shall be automatically converted without penalty or additional charge to the Company to Prime Rate Loans as of the effective date of such notice as set forth below and (b) all payments and prepayments of principal that would otherwise have been applied to repay the converted LIBOR Based Rate Loans shall instead be applied to repay the Prime Rate Loans resulting from the conversion of such LIBOR Based Rate Loans. For purposes of the preceding paragraph, a notice to the Company by the Payee shall be effective, if lawful, on the last day of the Eurodollar Interest Period for each respective LIBOR Based Rate Loan; in all other cases, such notice shall be effective on the later of (i) the date of receipt by the Company or (ii) the date set forth in such notice. Alternate Rate Anything herein to the contrary notwithstanding, if, prior to the determination of the LIBOR Based Rate in respect of any Eurodollar Rate Request as herein provided, Payee advises the Company in writing that (i) dollar deposits in the amount of a requested principal amount of a LIBOR Based Rate Loan are not generally available in the London Interbank Market; (ii) the rate at which such dollar deposits are being offered will not adequately and fairly reflect the cost to the Payee of making or maintaining such LIBOR Based Rate Loan during such Eurodollar Interest Period; or (iii) reasonable means do not exist for ascertaining the LIBOR Rate, any request by the Company for a LIBOR Based Rate Loan shall, until the circumstances giving rise to such notice no longer exist, be deemed to be a request for a Prime Rate Loan. Each determination by the Payee hereunder shall be conclusive absent manifest error. If at any time subsequent to the giving of such notice Payee determines that because of a change in circumstances the LIBOR Based Rate is again available, Payee shall so advise the Company and the Company shall have the option to convert the rate of interest payable hereunder from the Prime Rate to the LIBOR Based Rate by submitting a Eurodollar Rate Request to Payee and otherwise complying with the provisions of this Note with respect thereto. Prepayments The Company shall have the right to prepay (a) any Prime Rate Loan at any time, in whole or in part, and (b) each LIBOR Based Rate Loan, in whole or in part, on the last day of the applicable Eurodollar Interest Period for such loan, in each case at the prepayment price of the principal amount to be prepaid plus interest to the prepayment date, without premium or penalty; provided any prepayments shall be in principal increments of $1,000,000 or greater. The Company shall have the right at any time to prepay any Fixed Rate Loan, in whole or in part, at the redemption price of 100% of the principal amount so prepaid plus interest to the prepayment date, plus the Yield-Maintenance Premium, if any. As used herein, "Yield Maintenance Premium" shall mean an amount equal to the quotient of: (A) the product of (1) the outstanding principal amount of the Fixed Rate Loan immediately prior to prepayment, multiplied by (2) the excess of the Fixed Rate applicable thereto over the sum of two percent (2%) per annum plus the annual yield on a United States Treasury Bond having substantially the same maturity as the Fixed Rate Loan (the "Treasury Bond Yield"), as such yield is reported in The Wall Street Journal or, in the event such Treasury Bond Yield is no longer published in The Wall Street Journal, a similar publication acceptable to Payee, on the fifth (5th) business day preceding the date of prepayment and (3) the number of months remaining in the Fixed Rate Loan term; divided by (B) twelve (12). Such quotient shall be discounted to present value as of the date of prepayment by applying a discount rate equal to the Treasury Bond Yield. This Note or the installments thereof so prepaid will cease to bear interest on the specified prepayment date, provided funds for its prepayment are on deposit with the Payee or with the Trustee at that time, and this Note or such installments shall no longer be entitled to the benefit of the Indenture and shall not be deemed to be outstanding under the provisions of the Indenture. Indenture This Note is the sole note of an authorized issue of notes of the Company, as provided in the Indenture mentioned below and is herein called the "Series J Note," of the series designated "Revolving Credit Notes, Series J, Final Maturity June 30, 1997," limited to $30,000,000 in aggregate principal amount outstanding, all issued and to be issued under and equally and ratably secured by an Indenture of Mortgage, Deed of Trust, Assignment and Security Agreement dated as of September 1, 1976, among the Company, the New Orleans Bank for Cooperatives (now the National Bank for Cooperatives), John H. Farrelly, as trustee under certain deeds of trust, and Deposit Guaranty National Bank, as Trustee (said indenture, together with all indentures supplemental thereto, being herein called the "Indenture" and said corporate trustee or its successor as trustee being herein called the "Trustee"), to which Indenture reference is hereby made for a description of the property mortgaged and pledged, the nature and extent of the security, the rights and remedies and limitations of said rights and remedies of the holders of the Series J Note, and of the rights, powers, duties and immunities of the Trustee thereunder, and of the rights and obligations of the Company thereunder, and the terms and conditions upon which the Series J Note is, and will be, issued and secured. This Note is entitled to the benefits of the Indenture. By accepting this Note, each holder agrees to be bound by and subject to the provisions of the Indenture. The Indenture contains provisions permitting the Company and the Trustee, with the consent of the holders of not less than fifty-one percent (51%) of the aggregate unpaid principal amount of all Notes and of not less than fifty-one percent (51%) of the unpaid principal amount of each Series of Notes at the time outstanding except for the Series D, E and F Pollution Control Notes, the Series G Industrial Development Note, and any other Notes with respect to which the Supplemental Indenture relating to the issuance of such series of Notes provides that such series shall not have the series vote, or, if one or more but not all of the series of Notes then outstanding would be affected by such amendment, modification or alteration, of not less than fifty-one percent (51%) in aggregate unpaid principal amount of the Notes of each series so affected, evidenced as provided in the Indenture, to execute supplemental indentures adding any provision to, or changing in any manner, or eliminating any of the provisions of, the Indenture; provided however, that without the written consent of the holders of one hundred percent (100%) in aggregate unpaid principal amount of any series of Notes affected thereby at the time outstanding, no such supplemental indenture shall (1) extend the final maturity of any Note of such series or reduce the rate or extend the time of payment of interest thereon, or reduce the amount of the principal thereof, or reduce any premium payable on the prepayment thereof, or reduce the amount required to be paid as a mandatory prepayment of any Note of such series or extend the time within which any such prepayment is to be made or alter the manner in which any note of such series is selected for prepayment, or (2) affect the rights of holders of some of the Notes without similarly affecting the rights of the holders of all of the Notes at the time outstanding, or (3) create any priority with respect to Notes of any series over Notes of any other series, or (4) reduce the aforesaid percentages of the principal amount of the Notes or any series thereof required to approve any such supplemental indenture or reduce the percentage required to effectuate a waiver as referred to in the next sentence, or (5) amend Section 10.02 of the Indenture. The Indenture also provides that the holders of not less than fifty-one percent (51%) in aggregate unpaid principal amount of any or each series of Notes at the time outstanding may on behalf of the holders of all Notes of such series or all series, respectively, waive compliance with or failure to comply with certain covenants contained in the Indenture. Default If an Event of Default as defined in the Indenture shall occur and be continuing, the principal of all Notes may be declared due and payable upon the conditions and in the manner and with the effect provided in the Indenture. The Trustee or the holders of the Notes shall be entitled to recover reasonable counsel fees incurred in any action, suit or proceeding brought to enforce the Notes or the Indenture in which judgment is recovered. Registration This Note shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been signed by the Trustee under the Indenture referred to herein. Subject to the restrictions on transfer set forth in the Indenture and the Series J Revolving Credit Agreement, transfers of this Note may be registered upon a register maintained for such purpose by the Trustee, as provided in the Indenture. Prior to due presentment of this Note for registration of transfer, the Company may treat the registered holder hereof as the absolute owner of this Note for the purpose of receiving all payments of principal, premium, if any, and interest hereon and for all other purposes hereof, of the Series J Revolving Credit Agreement and of the Indenture. Liability No recourse shall be had for the payment of the principal of, or the interest on, this Note or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture or any indenture supplemental thereto, against any incorporator, officer, director or stockholder, as such, past, present or future, of the Company or of any predecessor or successor corporation, either directly or through the Company or otherwise, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty, or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released. Controlling Law This Note is made and delivered in Jackson, Mississippi, and shall be governed by the local laws of the State of Mississippi without giving effect to the conflicts of laws provisions thereof. Waiver The parties hereto, including the Company and any and all guarantors, endorsers and pledgors, hereby waive presentment, demand, notice of dishonor, protest and all other demands and notices in connection with the delivery, acceptance, performance and enforcement of this Note. IN WITNESS WHEREOF, MISSISSIPPI CHEMICAL CORPORATION has caused this Note to be signed in its corporate name by the manual or facsimile signature of its President or one of its Vice Presidents and its corporate seal to be impressed hereon or a facsimile thereof to be imprinted hereon and to be attested by a manual or facsimile signature of its Secretary or one of its Assistant Secretaries. (CORPORATE SEAL) MISSISSIPPI CHEMICAL CORPORATION By: ----------------------------- Name: Title: ATTEST: By: --------------------------- Name: Title: This is the Series J Note described in the Indenture referred to herein. DEPOSIT GUARANTY NATIONAL BANK as Trustee By: ----------------------------- Authorized Officer SCHEDULE I [FORM OF ENDORSEMENT OF SERIES J NOTE WITH RESPECT TO ADVANCES OF CREDIT FACILITY AND PAYMENTS ON ACCOUNT OF PRINCIPAL] ADVANCE OF CREDIT FACILITY AND PAYMENTS ON ACCOUNT OF PRINCIPAL
Amount of Any # of Days Amount of Credit Applicable In Credit Outstanding Unused Facility Rate Interest Maturity Interest Facility Principal Commitment Date Advanced Basis Rate Date Period Repaid Balance Balance ==== ========= ===== ======== ============ ========= ========== =========== ========== ==== ========= ===== ======== ============ ========= ========== =========== ==========
(b) Only the Series J Note bearing thereon a certificate substantially in the form of the Trustee's certificate of authentication hereinbefore recited, executed by the Trustee, shall be valid or become obligatory for any purpose or entitle the holder thereof to any right or benefit under this Indenture, and the certificate of authentication by the Trustee upon the Series J Note executed on behalf of the Company as aforesaid shall be conclusive evidence that the Series J Note so authenticated has been duly authenticated and delivered hereunder and that the holder is entitled to the benefits of this Indenture. (c) The aggregate principal amount of the Series J Note which may be issued and outstanding under this Indenture at any one time shall not exceed $30,000,000, exclusive of Series J Notes executed and delivered as provided in Section 2.12 of the Indenture. The Series J Note shall mature, shall be subject to mandatory prepayments, shall bear interest on the unpaid principal amount thereof, and shall be dated, shall have such interest payment dates, and shall have such other terms and conditions, all as provided in the Series J Notes and in the Series J Revolving Credit Agreement (a copy of which is attached hereto as Exhibit A and incorporated by reference herein) as the same may be amended or supplemented. PARAGRAPH 1.04. Covenants of the Series J Revolving Credit Agreement Incorporated. Article Five of the Indenture is hereby amended and supplemented by adding the following new Section 5.18 thereto: SECTION 5.18. The Company covenants and agrees for the benefit of the Series J Noteholders that on and after the date on which the Series J Note is first issued hereunder and so long as any of the Series J Note is outstanding, it will observe and perform each of the covenants contained in the Series J Revolving Credit Agreement previously delivered to the Trustee, which covenants are hereby incorporated by reference herein and deemed to be a part of this Indenture as though such covenants as now in effect were set forth in full herein. From and after the delivery to the Trustee of a certified copy of any amendment to the Series J Revolving Credit Agreement, certified by an Officer's Certificate, the Company agrees that it will observe and perform each of the covenants contained in the Series J Revolving Credit Agreement as so amended and such covenants shall thereupon be incorporated by reference hereunder and deemed to be a part of this Indenture to the same extent as those covenants referred to in the first sentence hereof. Upon the written consent of the holders of at least fifty one percent (51%) of the aggregate unpaid principal amount of the Series J Notes at the time outstanding, compliance with any of the covenants now or hereafter incorporated pursuant to this Section 5.18 may be waived. PARAGRAPH 1.05. Amendment of Section 5.08(a). Section 5.08(a) of the Indenture is hereby amended by inserting in the ninth line thereof, immediately after the words "the Series I Revolving Credit/Term Loan Agreement" the following: ", the Series J Revolving Credit Agreement." PARAGRAPH 1.06. Article Seven-C. A new Article Seven-C is hereby added to the Indenture, immediately following Article Seven-B as follows: ARTICLE SEVEN-C COVENANTS OF THE COMPANY IN ARTICLE SEVEN EXTENDED TO THE HOLDERS OF THE SERIES J NOTES The Company covenants and agrees for the benefit of the holders from time to time of the Series J Notes that so long as any of the Series J Note is outstanding, the Company will perform each and every covenant set forth in Sections 7.01 through 7.09 of this Indenture, as in effect as of June 17, 1994, whether or not such covenants are amended pursuant to Article Ten of the Indenture, and whether or not performance thereof is waived by the holders of the Series B Notes on any one or more occasions pursuant to Section 7.10 of the Indenture, and such covenants are incorporated in this Article Seven-C by reference, to the same extent as though set forth in full herein; provided, however, that any of such provisions, as incorporated herein, may be amended, and performance thereof may be waived, with the written consent of the registered holders of at least fifty-one percent (51%) of the aggregate unpaid principal amount of the Series J Notes at the time outstanding. PARAGRAPH 1.07. Amendment of Section 8.01(c). Section 8.01(c) of the Indenture is hereby amended by deleting the word "or" following the words "Article Seven-A," and by inserting after the words "Article Seven-B," a comma and the words "or Article Seven-C." PARAGRAPH 1.08. Amendment of Section 8.01(d). Section 8.01(d) of the Indenture is hereby amended by deleting the word "or" after the words "Series H Note Purchase Agreement," in the third line thereof, and by inserting after the words "the Series I Revolving Credit/Term Loan Agreement" a comma and the words "or the Series J Revolving Credit Agreement." PARAGRAPH 1.09. Amendment of Section 8.01(e). Section 8.01(e) of the Indenture is hereby amended by inserting in the second and fourth lines thereof after the words "Series I Revolving Credit/Term Loan Agreement" a comma and by inserting after said comma the words "Series J Revolving Credit Agreement." ARTICLE 2 MISCELLANEOUS PROVISIONS PARAGRAPH 2.01. Indenture in Effect. Except as supplemented and amended by this Fourteenth Supplemental Indenture, all the covenants, agreements, terms and stipulations contained in the Indenture, as heretofore in effect, shall continue in full force and effect. PARAGRAPH 2.02. Counterparts. This Fourteenth Supplemental Indenture may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original and all such counterparts shall together constitute but one and the same instrument. IN WITNESS WHEREOF, the parties have caused this Fourteenth Supplemental Indenture to be duly executed on and as of the date first above written. ATTEST: MISSISSIPPI CHEMICAL CORPORATION Signed and acknowledged in the presence of: By: /s/ Ethel Truly By: /s/ Rosalyn B. Glascoe Assistant General Counsel Corporate Secretary (CORPORATE SEAL) ATTEST: DEPOSIT GUARANTY NATIONAL BANK, as Trustee Signed and acknowledged in the presence of: By: /s/ Susan R. Tsimortos By: /s/ Janice M. Powell Vice President and Trust Officer Assistant Trust Officer (CORPORATE SEAL) STATE OF MISSISSIPPI COUNTY OF YAZOO Personally appeared before me, the undersigned authority in and for the said county and state, on this 29th day of June, 1994, within my jurisdiction, the within named Ethel Truly and Rosalyn B. Glascoe, who acknowledged that they are Assistant General Counsel and Corporate Secretary, respectively, of Mississippi Chemical Corporation, a Mississippi corporation, and that for and on behalf of the said corporation, and as its act and deed they executed the above and foregoing instrument, after first having been duly authorized by said corporation so to do. /s/ Linda G. Bentley Notary Public My Commission expires: May 20, 1997 (Notarial Seal) STATE OF MISSISSIPPI COUNTY OF HINDS Personally appeared before me, the undersigned authority in and for the said county and state, on this 30th day of June, 1994, within my jurisdiction, the within named Susan R. Tsimortos and Janice M. Powell, who acknowledged that they are Vice President and Trust Officer and Assistant Trust Officer, respectively, of Deposit Guaranty National Bank, a national banking association, and that for and on behalf of the said corporation, and as its act and deed they executed the above and foregoing instrument, after first having been duly authorized by said corporation so to do. /s/ Mary E. Huskey Notary Public My Commission expires: February 18, 1996 (Notarial Seal) EXHIBIT A REVOLVING CREDIT AGREEMENT June 17, 1994 NationsBank of Tennessee, N.A. (the "Lender") hereby agrees to make to Mississippi Chemical Corporation, a Mississippi corporation (the "Company"), subject to the terms hereof and provided there is no default hereunder, revolving credit loans, all such loans outstanding and unpaid at any time to be in amount up to but not in excess of the aggregate principal amount of $30,000,000 (such amount, or such amount reduced as hereinafter provided, being herein called the "Commitment" of the Lender). The Commitment shall be available from June 30, 1994, up to the close of business on June 30, 1997. Each revolving credit borrowing under this Revolving Credit Agreement (this "Agreement") shall be made in a principal amount of at least $1,000,000. ARTICLE I TERMS SECTION 1.1. Revolving Credit Loans. (a) The Company agrees to execute and deliver to the Lender on the first loan closing date hereunder, against the making by the Lender of such loan to the Company, a promissory note (herein, together with any replacement notes, sometimes called the "Series J Note"), in substantially the form of EXHIBIT A attached hereto and incorporated by reference herein, properly authenticated by the Trustee. Loan closing dates may be fixed by the Company to be any Business Day from June 30, 1994, to and including June 29, 1997. The Company shall give the Lender notice (a "Borrowing Notice") not later than 11:00 a.m. Nashville time one (1) Business Day prior to any requested disbursement of a loan. Each Borrowing Notice shall be written and may be made by telecopier, overnight commercial courier, telex or cable. Each Borrowing Notice shall specify the requested date of such disbursement, the aggregate amount of such disbursement, the type of loan, i.e., Prime Rate, LIBOR Based Rate or Fixed Rate; and if a LIBOR Based Rate or Fixed Rate, the designated Eurodollar or Fixed Interest Period, as the case may be. Not later than noon Nashville time on each disbursement date, and subject to the terms and conditions hereof, the Lender will credit the proceeds of the loans to the Company's deposit account with the Lender. Each such Borrowing Notice shall obligate the Company to accept the disbursement of the loans requested thereby. Each loan shall be recorded on a schedule substantially similar to that appearing on the Series J Note (the "Schedule") by the Lender, shall be payable to the Lender and shall represent the obligation of the Company to pay either the amount of the Commitment or the aggregate unpaid principal amount of all revolving credit loans made by the Lender as recorded on the Schedule, whichever is less. Upon request of the Company, the Lender shall furnish to the Company a copy of the Schedule, as updated and revised to reflect such loans and all prior transactions under the Series J Note, in each case certified by a duly authorized officer of the Lender to be a true, correct, and complete copy of the Schedule, as then in effect. Revolving credit loans made by the Lender and payments of principal with respect to the Series J Note shall be evidenced by notations made by the Lender on the Schedule, showing the date and amount of each such loan or payment of principal; provided, however, that the failure of the Lender to make such a notation or any error in such a notation shall not in any manner affect the obligation of the Company to make payments of principal and interest in accordance with the terms of the Series J Note. The aggregate unpaid amount of loans set forth on the Schedule shall be rebuttably presumptive evidence of the principal amount owing and unpaid on such Series J Note. Upon the request of the Lender, the Company will furnish a new Series J Note (properly authenticated by the Trustee) to replace any such Series J Note, which replaced Series J Note shall be returned simultaneously to the Company by the Lender and marked "Cancelled" and, at such time, the first notation made on the Schedule attached to such replacement Series J Note shall set forth the aggregate unpaid amount of loans appearing on the Schedule of the Series J Note being so replaced. (b) Notwithstanding the foregoing provisions of this Agreement, the Lender shall not be obligated to make any additional revolving credit loans during any period (1) in which an Event of Default shall have occurred and be continuing, or (2) in which all or substantially all of the manufacturing business of the Company at its Yazoo City, Mississippi manufacturing facility is shut down, closed or stopped as a direct result of both (i) any alleged or actual violation of any Environmental Laws (as defined in Section 6.5 herein) and (ii) the imposition by a federal or state court or federal agency of competent jurisdiction of a cease and desist order, temporary restraining order, preliminary injunction, permanent injunction or other equitable relief, or (3) after the occurrence of a Material Adverse Effect, or (4) forty-four (44) days after a lien has been filed against assets of the Company or of a Restricted Subsidiary for federal income taxes which are in excess of $15 million dollars. SECTION 1.2. Form of Note. Each Series J Note shall bear interest, be payable at such time and place and be subject to mandatory and optional payment as provided in the form of Series J Note. SECTION 1.3. Agent's and Certain Other Fees. (a) As a consideration for the Lender's acting as agent for itself and for any Participating Banks (as defined in Section 10.9 herein) hereunder, the Company agrees to pay the Lender an agent's fee of $25,000 due on the initial closing date. On each anniversary date of the initial closing date (the "Anniversary Date"), the Company agrees to pay in advance to the Lender an annual agent's fee of (a) $25,000 if the Lender and its Affiliates (other than Participating Banks) collectively retain 75% or less of the principal amount of the Series J Note or (b) $10,000 if the Lender and its Affiliates (other than Participating Banks) collectively retain more than 75% of the principal amount of the Series J Note. Determination of the principal amount of the Series J Note held by the Lender and its Affiliates shall be on the basis of the average amount of the Series J Note held by them for the previous 12 months. A pro rata portion of the agent's fee shall be payable for the period from the last Anniversary Date occurring prior to June 30, 1997. (b) In addition, if the out-of-pocket expenses of Lender and any Participating Bank described in Section 10.7 hereof, when added to such expenses incurred in connection with the amendment of the Revolving Credit/Term Loan Agreement between Lender and the Company dated August 6, 1992 (the "Series I Loan"), do not exceed $30,000, the Company agrees to pay to the Lender a one-time closing fee equal to one-half the difference between $30,000 and such aggregate fees and expenses of Lender and any Participating Bank with respect to the Series I Loan and this Agreement. Such fees and expenses shall be designated at the initial closing date. (c) On the initial closing date and each Anniversary Date other than the last, the Company shall also pay the Lender a facility fee equal to .0625% of the then-existing Commitment. SECTION 1.4. Nonusage Fee. In addition to the amounts payable pursuant to Section 1.3 above, the Company agrees to pay to the Lender a nonusage fee of 1/4 of 1% per annum (on the basis of a year having 360 days for the actual number of days elapsed) on the average daily unused portion of the Commitment from June 30, 1994, to and including the earlier of the termination of the Commitment or June 30, 1997, such amount to be payable quarterly on the last day of each March, June, September and December hereafter commencing September 30, 1994. SECTION 1.5. Commitment Reduction. At any time and from time to time on or before June 30, 1997, the Company may terminate or reduce the Commitment by an amount not less than $2,500,000. Once reduced, the Commitment may be increased only with the written consent of the Lender. The Commitment may not be reduced to an amount less than the principal amount of the Commitment advanced and not repaid to the date of such reduction. Any such optional termination or reduction shall be without premium or penalty. SECTION 1.6. Changes in Circumstances. (a) Notwithstanding any other provision herein, if after the date of this Agreement any change in applicable laws or regulation or in the interpretation or administration thereof by any governmental authority charged with the interpretation or administration thereof (whether or not having the force of law) shall change the basis of taxation of payments to the Lender or to any Participating Bank under any LIBOR Based Rate Loan made by the Lender and such Participating Bank (each of Lender and any Participating Bank is referred to in this Section 1.6 as a "Participant" and are collectively referred to as "Participants") or any other fees or amounts payable hereunder (other than taxes imposed on the overall net income of such Participant by the country in which such Participant is located, or by the jurisdiction in which such Participant has its principal office, or by any political subdivision or taxing authority therein), or shall impose, modify or deem applicable any reserve requirement, special deposit, insurance charge (including FDIC insurance on Eurodollar deposits) or similar requirement against assets of, deposits with or for the account of, or credit extended by, such Participant or shall impose on such Participant or the London Interbank Market any other condition affecting this Agreement or LIBOR Based Rate Loans made by such Participant, and the result of any of the foregoing shall be to increase the cost to such Participant of making or maintaining its LIBOR Based Rate Loan or to reduce the amount of any sum received or receivable by such Participant hereunder (whether of principal, interest or otherwise) in respect thereof by an amount deemed by such Participant to be material, then the Company will pay to such Participant such additional amount or amounts as will compensate such Participant for such additional costs of reduction. (b) If either: (1) The introduction of, or any change in, or in the interpretation of, any United States or foreign law, rule or regulation; or (2) Compliance with any directive, guidelines or request from any central bank or other United States or foreign governmental authority (whether or not having the force of law) promulgated or made after the date hereof (but excluding, however, any law, rule, regulation, interpretation, directive, guideline or request contemplated by or resulting from the report dated July 1988 entitled "International Convergence of Capital Measurement and Capital Standards" issued by the Basle Committee on Banking Regulations and Supervisory Practices), affects or would affect the amount of capital required or expected to be maintained by any Participant (or any lending office of such Participant) or any corporation directly or indirectly owning or controlling any Participant (or any lending office of such Participant) based upon the existence of this Agreement, and such Participant shall have determined that such introduction, change or compliance has or would have the effect of reducing the rate of return on such Participant's capital or on the capital of such owning or controlling corporation as a consequence of its obligations hereunder (including its Commitment) to a level below that which such Participant or such owning or controlling corporation could have achieved but for such introduction, change or compliance (after taking into account that Participant's policies or the policies of such owning or controlling corporation, as the case may be, regarding capital adequacy) by an amount deemed by such Participant (in its sole discretion) to be material, then, from time to time, the Company shall pay to such Participant such additional amount or amounts as will compensate such Participant for such reduction attributable to making, funding and maintaining its Commitment and Loans hereunder. (c) A certificate of each Participant setting forth such amount or amounts as shall be necessary to compensate such Participant as specified in paragraph (a) or (b) above, as the case may be, shall be delivered to the Participant and the Company and shall be conclusive absent manifest error. The Company shall, subject to the provisions of Section 1.6(d) herein, pay each Participant the amount shown as due on any such certificate within ten (10) days after its receipt of such certificate. (d) Each Participant claiming any amount is due pursuant to the provisions of paragraphs (a) or (b) of this Section 1.6 shall (i) give the Company prompt written notice upon the earlier to occur of (A) any change in, or the promulgation of, any law, rule, regulation, interpretation, guideline, or request described in paragraph (a) or (b) above (a "Regulatory Change in Circumstances"), or (B) the receipt by such Participant of a notice of, or information respecting, any Regulatory Change in Circumstances, in each case, describing the Regulatory Change in Circumstances and the estimated costs or charges payable by the Company under this Section 1.6 as a result thereof, and (ii) cooperate fully with the Company and use its best efforts to mitigate the costs and/or charges to the Company of any such Regulatory Change in Circumstances, including, without limitation, permitting the Company, in its sole discretion, either to compensate such Participant as provided in paragraph (d) or to convert immediately (or at any time thereafter) any LIBOR Based Rate Loan to a Prime Rate Loan and compensate such Participant for the full amount of any penalties, charges, or losses resulting from such Regulatory Change in Circumstances and such conversion. Notwithstanding anything herein to the contrary, no amount shall be payable by reason of any Regulatory Change in Circumstances pursuant to the provisions of this Section 1.6 with respect to any period prior to the date the Company is notified of such Regulatory Change in Circumstances pursuant to this paragraph (d). (e) Failure on the part of any Participant to give the notice specified in subsection (d) above or to demand compensation for any increased costs or reduction in amount received or receivable or reduction in return on capital with respect to any Eurodollar Interest Period shall not constitute a waiver of such Participant's rights to demand compensation for any increased costs or reduction in amounts received or receivable or reduction in return on capital in such Eurodollar Interest Period. The protection of this Section 1.6 shall be available to each Participant regardless of any possible contention of invalidity or inapplicability of the law, regulation or condition that shall have been imposed. ARTICLE II PAYMENTS SECTION 2.1. Repayment Generally. The Company may, without terminating or reducing the Commitment, repay the amounts advanced at the time and in the manner provided in the Series J Note. SECTION 2.2. Required Prepayment. At the time of each reduction in the Commitment pursuant to the provisions of Section 1.5 herein, the Company shall, if permissible under the terms of the Series J Note, prepay the Series J Note in the amount, if any, required to reduce the aggregate outstanding principal thereof to an amount not in excess of the Commitment as so reduced. SECTION 2.3. Reinstatement of Commitment. Except as provided in Section 1.5 herein, all optional prepayments made pursuant to Section 2.1 hereof prior to June 30, 1997, shall automatically reinstate the Commitment hereunder in the amount of such optional prepayments subject to the terms of the revolving credit hereinabove provided. ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANT OF THE COMPANY AND LENDER SECTION 3.1. Company Representations and Warranties. The Company represents and warrants that, as of this date: (a) Business and Properties; Annual Reports. The Company has heretofore furnished the Lender with copies of its annual report on Form 10-K for its fiscal year ended June 30, 1993, as filed with the United States Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended, and the exhibits filed therewith (the "10-K Report"), and of its annual report to stockholders for such fiscal year (the "Stockholders' Report" and, collectively with the 10-K Report, the "Reports"). The Reports fairly describe the businesses in which the Company and its Subsidiaries are engaged, and the other matters purported to be described therein. (b) Financial Condition. (i) Financial Statements. The Company has heretofore furnished to the Lender (x) a balance sheet of the Company as at June 30, 1993, and the related statements of operations, stockholder-members' equity and changes in financial position or statements of cash flow for the five fiscal years then ended, all reported on by independent public accountants (the "Audited Financial Statements"), and (y) unaudited balance sheets of the Company as of March 31, 1994, and the related unaudited statements of operations, stockholder-members' equity, and statements of cash flow for the three-month period then ended (the "Unaudited Financial Statements" and, collectively with the Audited Financial Statements, the "Financial Statements"). The Financial Statements, including the related notes, have been prepared in accordance with generally accepted accounting principles, consistently applied, and present fairly the financial position of the Company as at the respective dates of said statements and the results of their operations for the respective periods covered thereby, except that the Unaudited Financial Statements are subject to normal year-end audit adjustments and lack notes thereto. (ii) No Material Change. Since March 31, 1994, there have been no material adverse changes in the condition, financial or otherwise, of the Company and its Subsidiaries, other than changes in the ordinary course of business, as anticipated in the Reports and Financial Statements, none of which, individually or in the aggregate, have been materially adverse to the Company and its Subsidiaries, considered as a consolidated group; provided, however, the Company has indicated to Lender its current intention (a) to dispose of a minimum of 51%, up to a maximum of 100%, of the common stock of Newsprint South, Inc., such disposition to occur on June 30, 1994, or as soon as possible thereafter, and (b) to cease operating as a cooperative, as more particularly described in the Proxy Statement/Prospectus dated May 27, 1994, a copy of which has heretofore been provided to Lender. (iii) Properties; Liens. The Company and its Subsidiaries are the owners of the assets reflected on the audited balance sheet as of June 30, 1993, included in the Financial Statements, except for inventory sold, accounts receivable collected, patronage refunds paid, capital equity credits paid to shareholders and other assets replaced, retired or otherwise disposed of since such date in the ordinary course of business; provided, however, the Company has indicated to Lender its current intention to dispose of a minimum of 51%, up to a maximum of 100%, of the common stock of Newsprint South, Inc., such disposition to occur on June 30, 1994, or as soon as possible thereafter. The Trust Estate is, and at the Closing Date will be, free from any Liens other than the Lien of the Indenture (in the case of assets owned by the Company) and other Liens of the type described in Section 7.01 of the Indenture ("Permitted Liens"), subject only to such encumbrances on or imperfections of its title thereto as do not and would not, either with respect to any single such interest or all such interests in the aggregate, materially detract from the value of such assets, either individually or in the aggregate, to the Company and its Restricted Subsidiaries. The Lien of the Indenture is, and upon the execution, filing and recording of the Fourteenth Supplemental Indenture, the Lien of the Indenture, as supplemented, will be, a valid and perfected mortgage or security interest upon the Company's interest in the real property and mineral interests located in Yazoo and Jackson Counties, Mississippi, and in Lea and Eddy Counties, New Mexico, and described in Annex A and Annex B to the original Indenture and, to the best of the Company's knowledge, upon the other assets required by the Indenture to form part of the Trust Estate, and will secure the Series J Notes equally and ratably with the other Notes secured by the Indenture. The Trust Estate constitutes substantially all of the real and personal assets of the Company, excepting only (I) the stock of and the Company's interests in the Unrestricted Subsidiaries, and (II) stock in the Bank owned by the Company, and (III) properties and interests specifically excluded by the Indenture. (iv) Leases. The Company and each of its Restricted Subsidiaries has quiet enjoyment or peaceful and undisturbed possession under all leases, subleases, easements or licenses to which it is party and pursuant to which it holds or uses real property or tangible personal property located in Yazoo and Jackson Counties, Mississippi or in Lea or Eddy Counties, New Mexico, and, to the best of its knowledge, all other jurisdictions in which it holds or uses real property or tangible personal property, except where the failure to have such quiet enjoyment or peaceful and undisturbed possession would not have a material adverse effect on the Company and its Restricted Subsidiaries as a consolidated group, and none of which contains any unusual or burdensome provision which will materially and adversely affect the operations of the Company and its Restricted Subsidiaries, taken as a whole. (v) Indebtedness. Parts I and II of SCHEDULE A hereto list each item of Short-Term Borrowing and Funded Debt to which the Company or any of its Restricted Subsidiaries is subject, and all such Short-Term Borrowing and Funded Debt is Indebtedness which the obligor is permitted to incur and to which it is permitted to be subject, without any breach of the Indenture, and Part III of SCHEDULE A lists all instruments providing for or governing Short-Term Borrowing or Funded Debt of the Company or any Restricted Subsidiary. Complete and correct copies of the instruments and agreements referred to in Part III of SCHEDULE A have been delivered to counsel to the Lender. All restrictions contained in such instruments and agreements on the incurrence by the Company of the Indebtedness represented by the Series J Note will have been waived, or the conditions to such incurrence will have been satisfied, not later than the date of the initial closing. (c) Subsidiaries and Affiliates. The Company has no Subsidiaries or affiliates, other than as listed on SCHEDULE B hereto. (d) Restricted Subsidiaries. The only Restricted Subsidiaries under the Indenture are Mississippi Phosphates Corporation, Mississippi Potash, Inc., Mississippi Nitrogen, Inc., and the Company's 50% equity interest in Triad Chemical, a joint venture in which the remaining 50% equity interest is held by First Mississippi Corporation. (e) Due Corporate Organization and Authority. The Company (i) is a corporation duly organized, validly existing and in good standing under the laws of Mississippi, (ii) has all requisite corporate power and authority to own and operate its properties and to conduct its business as now conducted, and has all necessary licenses, permits, consents or approvals from or by, and has made all necessary filings with, all governmental agencies or instrumentalities having jurisdiction over its business or properties, to the extent requisite for the ownership and operation of its properties and the conduct of its business, and (iii) has duly qualified and is authorized to do business and is in good standing as a foreign corporation in Alabama, Arkansas, Florida, Georgia, Illinois, Kentucky, Louisiana, Missouri, New Mexico, Tennessee and Texas, which states, in the opinion of the Company, comprise each and every jurisdiction wherein its ownership or leasing of its properties or the conduct of its business makes such qualification necessary. (f) Judgments; Pending Litigation. Except as disclosed in SCHEDULE C hereto, there are no judgments currently outstanding and unsatisfied against the Company or any Subsidiary, and no action, proceeding or investigation is pending or threatened before any court or administrative officer or agency, and to the best of the Company's knowledge no basis exists for any such action, preceding or investigation, which, either in any case or in the aggregate, might have a material adverse effect on the consolidated financial condition of the Company and its Subsidiaries, or which might call into question the validity of the Series J Note, the other Notes currently outstanding, the Indenture, this Agreement or any action taken or to be taken by the Company pursuant to or in connection with this Agreement or the Indenture. The Company does not consider that the matters listed on SCHEDULE C are likely to have a material adverse effect on the consolidated financial condition of the Company and its Subsidiaries. (g) Taxes. All tax returns required to be filed by the Company in any jurisdiction have been filed; all taxes, assessments, fees, and other governmental charges or levies (other than those currently payable without penalty) upon the Company or upon any of its assets, income or franchises, which are due and payable have been paid, other than those being contested in good faith and for which adequate provision has been made. The Internal Revenue Service has audited the Company's Federal income tax returns for all fiscal years through the fiscal year ended June 30, 1987, and, except as disclosed in SCHEDULE C hereto, has not challenged the Company's calculation of its tax liability for such years, other than challenges which have been settled, are not material in amount, or are reflected in the 10-K Report. The charges, accruals, and reserves on the Company's books in respect of Federal, state and local taxes are adequate for payment of all such taxes in respect of current periods, and the Company knows of no material additional assessments for any year for which an audit has not yet been completed (or the statute of limitations has not yet expired), which are not covered by such reserves. (h) No Conflict. Neither the execution or delivery of this Agreement, the Series J Note, the Fourteenth Supplemental Indenture or any instrument contemplated thereby, nor compliance with the terms and provisions hereof or thereof, nor the consummation of the transactions contemplated hereby or thereby, will conflict with, violate or result in a breach of or default under, or result in the creation or imposition of any Lien on any of the Company's assets pursuant to, the terms of any provision of any contract or agreement, any charter, by-law or other corporate restriction, any law, ordinance or rule or any order, certificate, license, regulation or demand of any state, territory or political subdivision thereof or any court, agency or other tribunal to which the Company or any of its assets are subject. The Company is not in material default under any of the foregoing. (i) Compliance with Laws, Regulations, etc. To the best of the Company's knowledge, neither it nor any of its Subsidiaries is in violation of any laws or governmental rules or regulations applicable to its business or properties (excluding any laws or governmental rules or regulations pertaining to Environmental Matters, all of which are referenced in Article VI) or any applicable order, writ, injunction, judgment or decree of any court, or any order of any governmental commission, bureau or other administrative agency, the violation of which would materially adversely affect the business, affairs, properties, operations or condition of the Company and its Subsidiaries, taken as a consolidated group. (j) ERISA. (i) Employee Benefit Plans . Each employee benefit plan which the Company or any ERISA affiliate has established or maintained or to which the Company or any ERISA affiliate is required to contribute (collectively, the "Plans") is in compliance in all material respects with all applicable provisions of the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations thereunder (collectively and as from time to time in effect, "ERISA"), and of the Internal Revenue Code of 1986 and the rules and regulations thereunder (collectively and as from time to time in effect, the "Code"). No Plan which is a defined benefit plan has been terminated since 1974 nor are there any proceedings pending for the termination of any such Plan. There does not exist any event or condition which would permit the institution of proceedings to terminate any Plan pursuant to Section 4042 of ERISA. The current value of the benefit liabilities of any Plan which is a defined benefit plan does not exceed the current value of such Plan's assets allocable to such benefit liabilities by any material amount. There has been no failure to meet the minimum funding standard (whether or not waived) with respect to any Plan subject to Section 412 of the Code or Section 302 of ERISA, and neither the Company, any Subsidiary nor any ERISA affiliate of the Company or any Subsidiary, has failed to make any quarterly installment payment to a Plan required under Section 302(e) of ERISA or Section 412(m) of the Code. Except as set forth on SCHEDULE D hereto, neither the Company, any Subsidiary nor any ERISA affiliate of the Company or any Subsidiary has established or maintained any Plan which is an employee pension benefit plan. Neither the Company nor any ERISA affiliate has at any time established or maintained, or been subject to a requirement that it make a contribution to, a multiemployer plan. Neither the Company, nor any Subsidiary nor any ERISA affiliate of any of them will, after issuing the Series J Note at the initial closing, either (i) have incurred or become liable for any tax assessed by the Internal Revenue Service for any alleged violation of Section 4975 of the Code or any civil penalty imposed by the Department of Labor for any alleged violation of Section 406 of the Code, or (ii) have caused or permitted to occur any "prohibited transaction" within the meaning of such Section 4975 of the Code or Section 406 of ERISA with respect to any Plan or any Multiemployment Plan. (ii) Definition of Certain Terms. As used in this Section 3.1(j), the terms "defined benefit plan," "employee benefit plan," "employee pension benefit plan" and multiemployment plan" shall have the respective meanings assigned to such terms in Section 3 of ERISA, the term "benefit liabilities" shall have the meaning assigned to such term in Section 4001(a) of ERISA, and the term "reportable event" shall mean a reportable event described in Section 4043(b) of ERISA as to which the 30-day notice requirement has not been waived under regulations of the PBGC. (k) Full Disclosure. Neither this Agreement nor any financial statements furnished by the Company to the Lender contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained therein, in light of the circumstances under which they were made and when considered as a whole, not misleading. There is no fact known to the Company which the Company has not disclosed to the Lender in writing which materially and adversely affects the business, operations, assets, or condition, financial or otherwise, of the Company. (l) Brokerage and Finder's Fees and Commissions. The Company will indemnify the Lender and hold the Lender harmless in respect of any commissions, fees, judgments or expenses of any nature and kind for which the Lender may become liable to pay by reason of any claims by or on behalf of brokers, finders or agents, based on any engagement by the Company of such broker, finder or agent in connection with the transactions contemplated by this Agreement or any litigation or similar proceeding arising from such claims. (m) Private Sale. The Company hereby represents that neither it nor any person authorized or employed by the Company as an agent, broker, dealer or otherwise in connection with the offering of the Series J Note or any similar security of the Company has, either directly or indirectly, sold or offered for sale or disposed of, or attempted or offered to sell or dispose of, the Series J Note or any similar securities of the Company, to, or solicited offers to buy any thereof from, or otherwise approached or negotiated with in respect thereto, any person or persons, other than the Lender, nor will the Company hereafter take any such action with respect to the Series J Note or any similar securities of the Company which would adversely affect the exemption of the sale of the Series J Note from the registration provisions of the Securities Act of 1933, as amended. (n) Margin Rules; Use of Proceeds. The net proceeds of the sale of the Series J Note will be used to finance costs associated with the termination of the Company's obligations with respect to Newsprint South, Inc., to finance the redemption and/or purchase of various stock series in association with the Company's ceasing to operate as a nonexempt cooperative in accordance with applicable provisions of the Code, and for other general corporate purposes in the Company's discretion. Neither the Company nor any of its Restricted Subsidiaries owns any "margin stock" within the meaning of Regulation G (12 C.F.R. part 207) of the Board of Governors of the Federal Reserve System, or has any present intention of acquiring any "margin stock" or of using any of the proceeds of the sale of the Series J Note, directly or indirectly, for the purpose of purchasing or "carrying" any "margin stock" or reducing or retiring any indebtedness which was originally incurred to purchase or "carry" any margin stock" or for any other purpose which might cause the transaction contemplated hereby to constitute a "purpose credit" within the meaning of said Regulation G, or cause this Agreement, the Fourteenth Supplemental Indenture or the Series J Note to violate said Regulation G, Regulation T or Regulation X of said Board of Governors (12 C.F.R., Parts 220 and 224), or any other regulation of the said Board of Governors, as now in effect, or Section 7 of the Securities Exchange Act of 1934, as now in effect (collectively, the "Margin Rules"). (o) Inapplicability of Specified Statutes. The Company is not, and none of its Subsidiaries is, a "holding company" or an "affiliate" of a "holding company," as such terms are defined in the Public Utility Holding Company Act of 1935, as amended, or an "investment company" or a company controlled by or acting on behalf of an "investment company," as defined in the Investment Company Act of 1940, as amended, or a "carrier" or a person which is in control of two or more "carriers," as defined in Sections 10102 or 11301 of Title 49, U.S.C. Neither this Agreement nor any transaction contemplated hereby, nor the Company's use of the proceeds of the Series J Note, is or will be in violation of any statute, regulation or executive order restricting loans to or investments in foreign countries or entities doing business therein. (p) Governmental Consent, etc. Neither the nature of the Company or of any of its Subsidiaries, nor any of its or their respective businesses or properties, nor any relationship between the Company or any of its Subsidiaries and any other Person, nor any circumstance in connection with the offer, issue, sale or delivery of the Series J Note is such as to require any consent, approval or other action by or any notice to or filing with any court or administrative or governmental body in connection with the execution and delivery of this Agreement or the Fourteenth Supplemental Indenture, the offer, issue, sale or delivery of the Series J Note or fulfillment of or compliance with the terms and provisions hereof or of the Fourteenth Supplemental Indenture or the Series J Note. The Company is not required to obtain the authorization for or consent to its execution and delivery of this Agreement or the Fourteenth Supplemental Indenture, the offer, issue, sale, execution or delivery of the Series J Note, or the compliance with the terms and provisions hereof or of the Fourteenth Supplemental Indenture or the Series J Note from any governmental agency or other Person, other than its officers or directors, acting as such, and the Persons listed in SCHEDULE E hereto all of which have been, or prior to the initial closing will be, obtained. SECTION 3.2. Lender Representations and Warranties. The Lender hereby represents and warrants as follows: (a) It has sufficient knowledge and experience in financial and business matters generally to be able to evaluate the risks and merits of the investment represented by the purchase of the Series J Note and it is able to bear such risks, including without limitation, the risk of loss of such investment. (b) No offering statement, prospectus or offering circular containing information with respect to the Series J Note, the purposes for which the Series J Note is being issued, or the Company has been or will be prepared, and it has made its own inquiry and analysis with respect to the Series J Note and the security therefor, the Company and its Subsidiaries and other material factors affecting the security and payment of the Series J Note. (c) It has either been supplied with or has had access to all information, including financial statements and other financial information, of the Company and its Subsidiaries to which a reasonable investor would attach significance in making investment decisions, and it has had the opportunity to ask questions and receive answers from knowledgeable individuals concerning the Company and its Subsidiaries, the Series J Note and the security therefor, so that as a reasonable investor, it has been able to make its decision to purchase the Series J Note. (d) It acknowledges that the Series J Note (a) is not being registered under the Securities Act of 1933 and is not being registered or otherwise qualified for sale under the "Blue Sky" laws and regulations of any state, (b) will not be listed on any stock or other securities exchange, (c) will carry no rating from any rating service, and (d) will not be readily marketable. (e) It is purchasing the Series J Note for its own account for investment and with no present intention of distributing or reselling the Series J Note or any part thereof, but subject, nevertheless, to the disposition of the Series J Note being at all times within its control, subject to the limitations set forth in Section 10.9 of this Agreement. The Lender agrees that the Series J Note will not be sold by it in contravention of the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, or in contravention of the securities laws of any state or of any other federal or state law respecting the Series J Note. SECTION 3.3. Covenant of the Company. The Company will at all times maintain a ratio of current assets to current liabilities, each calculated in accordance with Generally Accepted Accounting Principles, of not less than 1.30 to 1.00. ARTICLE IV EVENTS OF DEFAULT SECTION 4.1. Defaults. The occurrence of the following shall constitute a default (herein sometimes called a "default") by the Company hereunder: (a) any representation or warranty made hereunder by the Company shall be false or incorrect in any material respect as of the date hereof, unless such falsity or incorrectness is no longer material or any adverse impact thereof has been cured to the satisfaction of the Lender; (b) the Company's failure to perform or observe any covenant or agreement contained in Article I or Article II herein, or the Company's failure to perform or observe any other covenant or agreement contained herein on its part to be performed or observed if such failure shall remain unremedied for ten (10) days after written notice thereof shall have been given to the Company by the Lender; and (c) the occurrence of an Event of Default under the Indenture. SECTION 4.2. Remedies. If any default occurs and is continuing, then upon the election of the Lender: (a) the Commitment of the Lender to extend credit to the Company shall immediately terminate; and (b) all loans outstanding hereunder and any note evidencing the same shall immediately become due and payable upon demand without presentment, protest or other notice of any kind, all of which are hereby expressly waived. ARTICLE V INFORMATION TO BE FURNISHED SERIES J NOTEHOLDER SECTION 5.1. Financial Statements. The Company will deliver the following to each Participant, so long as such Participant holds any interest in the Series J Note, from the date of this Agreement: (a) as soon as practicable after the end of each quarterly fiscal period in each fiscal year of the Company, and in any event within 45 days thereafter, duplicate copies of: (i) a consolidated and consolidating balance sheet of the Company and its Subsidiaries as at the end of such quarter, and (ii) consolidated and consolidating statements of operations, stockholder-members' equity and statements of cash flow of the Company and its Subsidiaries and (in the case of the second, third and fourth quarters) for the portion of the fiscal year ending at the end of such quarter, setting forth in each case in comparative form the figures for the corresponding periods for the prior year, all in reasonable detail and certified as complete and correct, subject to changes resulting from normal year-end adjustments, by the principal financial officer or the Treasurer of the Company; (b) as soon as practicable after the end of each fiscal year of the Company and in any event within 90 days thereafter, duplicate copies of: (i) a consolidated balance sheet of the Company and its Subsidiaries as at the end of such year, and (ii) consolidated statements of income, stockholder-members equity and statements of cash flow of the Company and its Subsidiaries for such year, setting forth in each case in comparative form the corresponding figures for the prior year, all in reasonable detail and accompanied by the report thereon (except for such consolidating statements) of a firm of independent public accountants, as provided in Section 5.2 hereof; (c) promptly upon their becoming available, one copy of each financial statement, report, notice or proxy statement sent by the Company to its shareholders generally or by any Restricted Subsidiary to its shareholders (other than the Company) generally, and of each regular or periodic report and any registration statement or prospectus filed by the Company or any Restricted Subsidiary with any securities exchange or with the Securities and Exchange Commission or any successor agency; (d) upon request from the Lender or any other Participant, copies of each annual report required to be filed pursuant to ERISA in connection with each Plan for any Plan year promptly after the filing thereof, including (i) a statement of the assets and liabilities of such Plan as of the end of such Plan year and statements of changes in fund balance and in financial position, or a statement of changes in net assets available for Plan benefits for such Plan year, certified by a firm of independent public accountants of recognized national standing and (ii) an actuarial statement of such Plan applicable to such Plan year, certified by an enrolled actuary of recognized standing; (e) without duplication of any other materials required by this Section 5.1 to be furnished to the holders of any interest Series J Note, copies of all reports and financial statements furnished to the Trustee pursuant to Section 5.06 of the Indenture and copies of any financial statements or reports furnished to the holders of any other Series of Notes; and (f) with reasonable promptness, such other data and information as to the business and assets of the Company and of its Restricted Subsidiaries as from time to time may be reasonably requested by the Lender or any other Participant. Recipients of any financial statements or reports delivered by the Company pursuant to this Section 5.1 may furnish such statements and reports required to be furnished to any regulatory authority having jurisdiction over them. The Company agrees to furnish to the Participants additional copies of the materials referred to in this Section 5.1 upon request. SECTION 5.2. Auditors. The Company shall employ a firm of independent public accountants of good and recognized national standing who will examine the financial statements referred to in Section 5.1(b) hereof in accordance with generally accepted auditing standards and accordingly will include in such examination such tests of the accounting records and such other procedures as they consider necessary in the circumstances. Such financial statements shall present fairly the financial position of the Company and its Subsidiaries at the end of, and the results of operations and statements of cash flow for the periods specified in, Section 5.1(b) hereof in accordance with generally accepted accounting principles. The opinion to be expressed by such firm of independent public accountants with respect to such financial statements shall be without qualification, except that such opinion (i) may contain qualifications (a) resulting from changes in accounting principles and methods agreed to by such firm of independent public accountants and (b) commonly referred to as "subject to" qualifications relating to matters the probable effect of which is not readily determinable and the outcome of which is dependent upon decisions of parties other than the Company, and (ii) will not cover consolidating financial statements. SECTION 5.3. Officers' Certificates. Each set of financial statements delivered to the Lender or any other Participants pursuant to Section 5.1(a) or (b) hereof shall be accompanied by a certificate of the Chairman of the Board, the President or a Vice President and (without duplication) the chief financial officer of the Company, setting forth (i) in the case of statements delivered pursuant to Section 5.1(a) or (b) hereof, the information (including detailed calculations) required in order to establish whether the Company was in compliance with the requirements (a) of Sections 7.03 and 7.04 of the Indenture, as incorporated in Article Seven-C thereof, during the most recently completed fiscal quarter covered by the income statement then being furnished and (b) of Section 7.08 of the Indenture, as incorporated in Article Seven-C thereof, on the last day of the period covered by the income statement then being furnished, (ii) in the case of statements delivered pursuant to Section 5.1(b) hereof, the information (including detailed calculations) required in order to establish whether the Company was in compliance with the requirements of Sections 7.05 and 7.07 of the Indenture, as incorporated in Article Seven-C thereof, during the period covered by the income statement then being furnished and a certification as to insurance in force at the close of the preceding fiscal year meeting the requirements of Sections 5.03(a)(2) and 5.03(b) of the Indenture, and (iii) whether to the knowledge of such certifying officers, there exists on the date of such certificate any condition or event which then constitutes, or which after notice or lapse of time or both would constitute an Event of Default, and, if any such condition or event then exists, specifying the nature and period of existence thereof and the action being taken and proposed to be taken with respect thereto. SECTION 5.4. Accountants' Certificate. The report of the firm of independent public accountants covering the financial statements delivered pursuant to Section 5.1(b) hereof shall state that in making their audit of such financial statement, they have obtained no knowledge of any condition or event which then constitutes, or which after notice or lapse of time or both would constitute, an Event of Default or, if any such condition or event then exists, specifying the nature and period of existence thereof. SECTION 5.5. Notice of Reportable Events. The Company agrees to notify the Lender and each other Participant immediately of any fact, including but not limited to any Reportable Event, arising in connection with any Plan which might constitute grounds for the termination thereof by the PBGC or for the appointment by the appropriate United States district court of a trustee to administer the Plan. SECTION 5.6. Inspection. The Company will permit the Lender and each Participant, so long as such party holds any interest in the Series J Note, at the expense of the Participant requesting the same, to visit and inspect any of the properties of the Company or any Restricted Subsidiary, to examine all their books of account, records, reports and other papers, to make copies and extracts therefrom, and to discuss their respective affairs, finances and accounts with their respective officers and, in the presence of a representative of the Company, the Company's independent public accountants, all at such reasonable times and as often as may be reasonably requested. ARTICLE VI ENVIRONMENTAL MATTERS SECTION 6.1. Preamble. The parties have agreed upon the following provisions set forth in this Article VI, as the exclusive provisions of this Agreement, and as the exclusive remedies of the parties under this Agreement, with respect to Environmental Laws (as herein defined). No representation, warranty or covenant under this Agreement other than those contained in this Article VI (except closing requirements contained in Article VIII, Section 8.1(c)) shall apply to or be construed to include Environmental Laws. SECTION 6.2. Company's Environmental Representations, Warranties and Covenants. Other than as set forth in the Company's Annual Report on Form 10-K for the fiscal year ending June 30, 1993, and except as described in SCHEDULE F to this Agreement, the Company represents, warrants and covenants to Lender as follows: (a) The Company and each Restricted Subsidiary is in compliance in all material respects with all Environmental Laws. Neither the Company nor any Restricted Subsidiary has received notice from any third party of any existing violation or alleged violation of any Environmental Law. (b) There is no pending, or, to the best of the Company's knowledge, threatened litigation or proceeding in law or in equity, by any commission, agency or other administrative authority or by any third party with respect to any violation or any alleged violation by the Company or any Restricted Subsidiary of Environmental Laws. (c) The Company covenants that it and each Restricted Subsidiary will comply in all material respects with all Environmental Laws such that no Material Adverse Effect results. The Company shall not be deemed to be in default hereunder with respect to such covenant on account of any alleged or actual violation of any Environmental Law so long as the Company is in good faith contesting such claim; provided, however, in the event of an occurrence of a Material Adverse Effect, the Lender shall not be obligated to make further advances hereunder. SECTION 6.3. Required Notices. (a) The Company shall notify Lender promptly of the occurrence of any of the following: (i) receipt of notice from any governmental authority regarding an alleged violation of an Environmental Law relating to the operation of the Company or any Restricted Subsidiary; (ii) commencement of any judicial or administrative proceedings regarding an alleged violation of any Environmental Law by or against or otherwise affecting the Company or any Restricted Subsidiary; and (iii) receipt of written notice from a federal, state, foreign or local governmental agency or private party alleging that the Company is liable or responsible for costs associated with the response to cleanup, stabilization or neutralization of any environmental damage. (b) Lender shall notify the Company in writing of its determination that a Material Adverse Effect under Section 6.2(c) has occurred. Such notice shall be sent contemporaneously with Lender's termination of its obligation to continue making advances hereunder, but the Company shall have thirty (30) days in which to respond to the Lender before Lender may declare an event of default under Article IV, Section 4.1. SECTION 6.4. Inspection of Records and Permits. The Company shall maintain all records and permits in force and shall provide Lender, or an accounting firm or environmental analyst employed by the Lender acting as its agent, access to such records and permits and the right to make copies thereof during the normal business hours of the Company. SECTION 6.5. Definitions. (a) The term "Environmental Law(s)" means federal, state, or local laws, statutes, regulations, or rules, any decree, order, award, agreement, release, or notice from any federal, state, or local court, agency, government or governmental authority or any permits or licenses from any courts, agencies or other governmental authorities or any other party, including governmental standards promulgated thereunder or with respect thereto, which relate to the protection of the environment. (b) The term "Material Adverse Effect" means a change or effect which, in the reasonable determination of the Lender communicated to the Company in writing, constitutes a material adverse change in, or a material adverse effect upon, any of the financial condition, operations or business of the Company and its Restricted Subsidiaries taken as a whole, which (i) results from an actual violation of any Environmental Law, and (ii) which costs $25,000,000 or more to remediate, excluding expenditures for the correction of violations of Environmental Laws which can be capitalized on the balance sheet of the Company and its Restricted Subsidiaries in accordance with Generally Accepted Accounting Principles. ARTICLE VII WAIVERS SECTION 7.1. Waivers. No delay in the exercise of, or omission of the Lender to exercise, any right or power hereunder or under the Series J Note shall impair such right or power or be construed to be a waiver of any default or an acquiescence therein, and any single or partial exercise of any such right or power shall not preclude other or further exercise thereof or the exercise of any other right, and no waiver whatsoever shall be valid unless in writing signed by the Lender, and then only to the extent in such writing specifically set forth. All remedies herein or by law afforded shall be cumulative and all shall be available to the Lender until it has been paid in full in lawful money. ARTICLE VIII CLOSING REQUIREMENTS SECTION 8.1. Closing Conditions - Initial Loan. The Lender shall not be required to make the initial loan contemplated herein unless the Lender has been provided with: (a) Opinion of Counsel for the Company. An opinion of Robert E. Jones, Esq., General Counsel of the Company, dated as of June 17, 1994 ("Closing Date"), addressed to the Lender, substantially in the form of SCHEDULE G hereto, and containing such further opinions, in form and substance satisfactory to the Lender, as to such other legal matters incident to the transactions contemplated by this Agreement as the Lender may reasonably request. In giving the foregoing opinion, counsel for the Company may rely, to the extent he considers appropriate, on the opinions satisfactory in form and substance to the Lender, of local counsel satisfactory to the Lender as to matters governed by the law of any State other than Mississippi; provided, that each opinion so relied upon states that it may be relied upon by the Lender, and a copy thereof is delivered to the Lender. (b) Title Opinions and Title Reports. With respect to the real property in Yazoo and Jackson Counties, Mississippi, and Lea and Eddy Counties, New Mexico, constituting part of the Trust Estate: (i) title opinions of Messrs. Henry, Barbour & DeCell, of Yazoo County, Mississippi (in the case of property in Yazoo County, Mississippi), Messrs. Megehee, Pitcher, Tynes, Kinard & Smith, of Pascagoula, Mississippi (in the case of property in Jackson County, Mississippi), and of Messrs. McCormick, Forbes, Caraway and Tabor, of Carlsbad, New Mexico (in the case of property in Lea and Eddy Counties, New Mexico) or of other local counsel reasonably acceptable to you, to the effect that the Company or a Restricted Subsidiary, as the case may be, has good and marketable title to all such property as of the Closing Date, subject to no Liens of record, other than the Lien of the Indenture and Permitted Liens; and (ii) copies of title reports covering the period from August 6, 1992, to the Closing Date, supporting such opinions. In addition, with respect to other property of the Company and of Restricted Subsidiaries situated (or considered to have a situs) in Yazoo and Jackson Counties, Mississippi, and Lea and Eddy Counties, New Mexico, constituting part of the Trust Estate as to which the filing of UCC financing statements is the correct method of perfection, the Lender shall have received search reports of such counsel, or a search firm reasonably acceptable to the Lender, as to searches of the UCC records in the offices of the Secretary of State of the State of Mississippi, the Chancery Clerk of Yazoo and Jackson Counties, Mississippi, the Secretary of State of the State of New Mexico, and the County Clerks of Lea and Eddy Counties, New Mexico, covering the period from August 6, 1992, to such date on or prior to the Closing Date as is satisfactory to Lender, disclosing no liens of record against any such properties, other than the Lien of the Indenture and Permitted Liens. (c) Representations True. The representations and warranties of the Company contained herein shall be true and correct in all material respects on and as of the Closing Date with the same effect as though such representations had been made on and as of such date, except as affected by the transactions herein provided for and except for changes in the ordinary course of business since the date hereof. (d) No Event of Default. No event shall have occurred which (assuming that the Series J Note had been issued and outstanding on and at all times after the date hereof) would constitute an Event of Default, as defined in the Indenture or this Agreement, or with notice or lapse of time or both would become such an Event of Default. (e) Fourteenth Supplemental Indenture. The Fourteenth Supplemental Indenture shall have been duly authorized, executed and delivered by the Company and the Trustee in substantially the form of SCHEDULE H hereto, and duly filed and recorded in the offices of the Chancery Clerk of Jackson and Yazoo Counties, Mississippi, and the offices of the County Clerks of Lea and Eddy Counties, New Mexico. (f) Trustee's Certificate. The Trustee shall deliver to the Lender a certificate stating that it has received no notice of the occurrence of a default or Event of Default under the Indenture, that it has not commenced any proceedings to accelerate the maturity of any of the Notes, and that to the best of its knowledge no such proceedings have been commenced by any holder of Notes. (g) Insurance. There shall be in effect policies of insurance, satisfactory in form and substance to the Lender, and issued by insurance companies reasonably satisfactory to the Lender in an amount not less than the outstanding principal amount of all Notes secured by the Indenture, including the Series J Note, insuring the Company against physical damage to or theft of the Trust Estate, and the Trustee shall be named as a mortgage loss payee and as an additional insured, as its interests may appear, under a standard loss payee rider, and the Lender shall have received a certificate, dated the Closing Date, signed by the President or a Vice President of the Company, stating that all such required insurance is then in effect together with a copy of said policy or policies. SECTION 8.2. Closing Conditions - Subsequent Loans. Prior to each loan closing following the first loan closing, the Company shall submit to the Lender a Borrowing Notice as described in Section 1.1 above. ARTICLE IX NOTICES SECTION 9.1. Notices. Any notice herein required or permitted to be given may be given in writing by depositing the same in the United States mail, postage prepaid, or by telegraph, telecopy, telex, personal delivery or overnight courier, addressed: To the Company as follows: Mississippi Chemical Corporation P. O. Box 388 Yazoo City, Mississippi 39194 Attn: Corporate Secretary Fax No.: 601-746-9158 To the Lender as follows: NationsBank of Tennessee, N.A. NationsBank Plaza Nashville, Tennessee 37239 Attn: Large Commercial Division Fax No.: 615-749-4762 SECTION 9.2. Change of Address. The Company and the Lender and any of its successors in interest may change the address for service of notice upon it by a notice in writing to the other party hereto. ARTICLE X MISCELLANEOUS SECTION 10.1. Definitions. All capitalized terms used herein and not defined herein shall have the meanings ascribed thereto in the Indenture. In addition, for all purposes hereof, the following definitions shall apply unless the context otherwise requires: "Affiliate" means, with respect to the Lender, a Person (other than a subsidiary) which directly or indirectly through one or more intermediaries (i) controls, or is controlled by, or is under common control with, the Lender, or (ii) owns or controls 10% or more of the issued and outstanding shares having ordinary voting power or other rights of control of the Lender or of any Person which controls or is under common control with the Lender. For purposes of this definition, (x) a Person shall be deemed to own or control shares which such Person has the right to acquire or control through the exercise of warrants or options or the conversion of convertible securities which such Person owns or controls, and (y) the term "control" (including, with correlative meanings, the terms "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of securities, by contract, or otherwise. "Indenture" means the Indenture of Mortgage, Deed of Trust, Assignment and Security Agreement dated as of September 1, 1976 among the Company, the New Orleans Bank for Cooperatives, John H. Farrelly, as trustee under certain deeds of trust, and Deposit Guaranty National Bank, as trustee, together with all indentures supplemental thereto. "Participants" has the meaning set forth in Section 1.6 herein. "Participating Bank" has the meaning set forth in Section 10.9 herein. "Reportable Event" has the meaning set forth in ERISA. SECTION 10.2. Accounting Terms. All accounting terms used herein which are not otherwise expressly defined shall have the meanings respectively given to them in accordance with generally accepted accounting principles. SECTION 10.3. Successors and Assigns. Subject to the provisions of Sections 10.9 and 10.12 herein, the terms and provisions of this Agreement shall inure to the benefit of the registered holder from time to time of the Series J Note. SECTION 10.4. Setoff. If the Company becomes insolvent, however evidenced, or any default occurs hereunder or any attachment of any balance of the Company is threatened, any indebtedness from the Lender to the Company, to the extent permitted by law, may be offset and applied toward the payment of the Series J Note held by the Lender, whether or not such Series J Note, or any part thereof, shall then be due. Pursuant to the intent expressed in Section 6.04 of the Indenture, the Lender hereby covenants and agrees for the benefit of the holders of all Notes of any other series issued under or secured by the Indenture that in case at any time it receives, by reasons of setoff, payment upon the Series J Note, it will purchase a portion of such other Notes of other series held by such other Noteholders so that after such purchase each Noteholder of any Note of any series issued under or secured by the Indenture will hold an unpaid principal balance bearing the same proportion to the total principal amount of such Notes of all series at such time outstanding as existed prior to such receipt through setoff by the Lender. In the event any such setoff or purchase is disturbed by legal process or otherwise, appropriate further adjustments shall be made among the same Noteholders. SECTION 10.5. Purchase of Series J Note. If the Company, or any Subsidiary or affiliate of the Company, purchases or otherwise acquires any interest in the Series J Note, such portion of the Series J Note shall not be considered "outstanding" for the purposes of this Agreement. SECTION 10.6. Home Office Payment. Notwithstanding any provision to the contrary in this Agreement or in the Indenture, the principal of, premium, if any and interest on the Series J Note and any other amounts becoming due hereunder shall be paid by wire transfer of immediately available funds delivered to the account of the Lender, or in such other reasonable manner, or to such other account or address, as may from time to time be designated in writing by the Lender by notice to the Company. In all cases principal, premium, if any, and interest to be paid in respect of the Series J Note shall be paid without any presentment or notation of payment, and the amount of principal so paid on the Series J Note shall be regarded as having been retired and cancelled at the time of payment. SECTION 10.7. Expenses. The Company will pay or reimburse the Lender for reasonable out-of-pocket expenses incurred by Lender and any Participating Bank, including, but not limited to, the legal fees and expenses of counsel in connection with their representation through the initial closing (all of which shall be invoiced at the initial closing), title examination, and other expenses incurred in connection with the negotiation, preparation,and execution of this Agreement, the Series J Note, any related loan documents, filing costs and amendment costs; provided, however, the Company shall not be obligated to pay or reimburse Lender more than $30,000 in total expenses incurred with respect to said initial closing hereunder and the amendment of the Series I Loan. If it becomes necessary to enforce payment of the Series J Note or any of the terms hereof, the Company agrees to pay reasonable attorneys fees, court costs and all costs of collection. SECTION 10.8. Stamp and Other Taxes. The Company hereby covenants and agrees that it will pay all United States and State documentary stamp and other taxes (including any interest or penalties thereon) which may be payable in connection with, or arising out of, the execution and delivery of this Agreement and the Series J Note issued at the Closing (or of any Series J Note subsequently delivered pursuant to the provisions of this Agreement or the Indenture) or any amendment of this Agreement or the Series J Note, and will indemnify the Lender and all other holders of any of the Series J Note from time to time against, and save the Lender and them harmless from, any liability, cost or expense, in respect of any such stamp or other taxes and any interest or penalties thereon. SECTION 10.9. Sale of Series J Note. The Company and the Lender agree that the Lender may sell, transfer or assign the Series J Note only as a whole, it being the intention of the parties that there shall never be more than one registered holder of the Series J Note for all purposes including the giving of notice or consent; provided, however, the Lender may, notwithstanding the above, sell to one or more (not to exceed three) financial institutions (other than Affiliates of the Lender) reasonably acceptable to the Company, participation interests in an aggregate principal amount up to 49% of the principal amount of the Series J Note. Notwithstanding the above, the Lender may sell participation interests in the Series J Note to one or more Affiliates of the Lender without limitation. The Lender shall promptly inform the Company of the identity of any purchaser and the principal amount of such purchase. In the event of the sale of any participation interest, the Lender shall remain the registered holder of the Series J Note unless (a) the holders of all participation interests, including Affiliates of the Lender (the "Participating Banks") agree with the Lender to substitute a new agent for the holders of all interests in the Series J Note which agent must be a financial institution in place of the Lender and (b) the Lender sells all of its interest (subject to outstanding participation interests) to such agent. The provisions of this Section 10.9 shall be binding upon the Lender and each successor who shall at any time become the registered holder of the Series J Note. The interests of each Participating Bank may be sold by such Participating Bank only as a whole. SECTION 10.10. Special Purchase Option. If (a) the Company shall (i) request the Lender to consent to a waiver under (1) Section 5.13 of the Indenture or (2) Article Seven-C of the Indenture, or (ii) give notice to the Lender that it requests, pursuant to Section 10.02 of the Indenture, its consent to an indenture or indentures supplemental to the Indenture, for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture, or any such supplemental indenture (other than a supplemental indenture for which, under the proviso to such Section 10.02, the consent of the holders of 100% of the Notes of every Series affected thereby is required), or a supplemental indenture waiving or amending Section 5.17 of the Indenture, (b) the Company shall concurrently request of the holders of all other Series of Notes entitled to vote or act with respect thereto (i) a like waiver of (1) such Section 5.13 of the Indenture, or (2) the provision of Article Seven-A or Seven-B of the Indenture corresponding to the provision of such Article Seven-C to which the waiver requested of the Lender pertains, or (ii) its consent to such supplemental indenture or indentures, as the case may be, (c) the Company shall have obtained the consents referred to in clause (b) of this Section from the holders of each other Series of Notes whose consent is required for such matters, and the Company shall give notice of such fact to the Lender, which notice shall state that if the Lender does not consent to such matter, the Series J Note, including any interests of Participating Banks, shall be subject to the Company's right to purchase the Series J Note under this paragraph, and stating the date by which such consent must be given if the Company's purchase right is not to arise (which date shall be not less than 15 days after the expiration of 30 days from the later of the effective date of the Company's notice of its request under clause (a) of this Section, or the effective date of the Company's notice under this clause (c), (d) the Lender shall not have consented to the matters requested of it by the effective date of the Company's notice under clause (c) of this sentence, and (e) such consent shall not be given by the date specified in the Company's notice under clause (c) of this sentence as the date after which the Company's right to purchase the Series J Note will arise, then, at any time within 120 days after such date, the Company may at its option, upon at least 10 days' notice to the Lender, purchase all, but not less than all, of the Series J Note, including any interests of Participating Banks, at 100% of the principal amount outstanding plus interest accrued thereon to the purchase date. SECTION 10.11. Amendments. This Agreement may be amended only in writing executed by the Company and the Lender. SECTION 10.12. Representations to Survive. All representations and warranties made herein shall survive delivery of the Series J Note and the making of the loans. SECTION 10.13. Entire Agreement; Counterparts. This Agreement, the Indenture and the Fourteenth Supplemental Indenture embody the entire agreement and understanding between the Lender and the Company with respect to the Series J Notes and supersede all prior agreements and understandings relating to the subject matter hereof. Except as specifically set forth herein, the provisions of this Agreement shall be for the benefit of the Lender and not for the benefit of the Participating Banks. Headings to this Agreement are for purposes of reference only and shall not limit or otherwise affect the meaning hereof. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument, and in pleading or proving any provision of this Agreement it shall not be necessary to produce more than one of such counterparts. SECTION 10.14. Governing Law. This Agreement shall be governed by the local laws of the State of Mississippi, without giving effect to the conflicts of laws provisions thereof. MISSISSIPPI CHEMICAL CORPORATION By: /s/ Ethel Truly Assistant General Counsel NATIONSBANK OF TENNESSEE, N.A. By: /s/ Michael D. McKay Senior Vice President EXHIBIT A THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE RESOLD, TRANSFERRED OR ASSIGNED WITHOUT REGISTRATION OR WITHOUT OBTAINING AN EXEMPTION FROM SUCH REGISTRATION MISSISSIPPI CHEMICAL CORPORATION Revolving Credit Note, Series J Final Maturity June 30, 1997 Date of initial advance: --------------- $30,000,000 (Maximum advance) FOR VALUE RECEIVED, the undersigned MISSISSIPPI CHEMICAL CORPORATION, a Mississippi corporation (hereinafter with its successors, referred to as the "Company"), hereby promises to pay to NationsBank of Tennessee, N.A. (hereinafter referred to as the "Payee"), or its duly registered assigns, on dates set forth below, the lesser of the principal sum of THIRTY MILLION DOLLARS ($30,000,000) or the aggregate unpaid principal amount of all Revolving Credit Loans (as hereinafter defined) made by the Payee to the Company hereunder, and to pay interest from the date hereof on the principal amounts hereof from time to time outstanding at a rate or rates per annum as hereinafter set forth. Revolving Credit Agreement This Note is issued pursuant to the provisions of, inter alia, the Series J Revolving Credit Agreement (as hereinafter defined) between the Payee and the Company dated as of June 17, 1994, to which Agreement reference is hereby made for a statement of the terms and conditions under which the loans evidenced hereby were or are to be made. Definitions The following terms, as used in this Note, shall have the following meanings: "Credit Facility" means the maximum amount available to be lent by the Payee to the Company pursuant to the Series J Revolving Credit Agreement, initially, $30,000,000. "Credit Facility Reduction Notice" means a written notice by the Company to the Payee pursuant to which the Company elects to reduce the amount of the Credit Facility which reduction shall be in minimum increments of $2,500,000. "Eurodollar Business Day" means any day on which commercial banks are open for domestic and international business (including dealings in U.S. Dollar deposits) in London and New York City. "Eurodollar Interest Period" means for each LIBOR Based Rate Loan, the period during which interest at the LIBOR Based Rate, determined as provided in this Note, shall be applicable, provided, however, that each such period shall be either one (1), two (2), three (3), six (6) or twelve (12) months, which shall be measured from the date specified by the Company in each Eurodollar Rate Request for the commencement of the computation of interest at the LIBOR Based Rate, to the numerically corresponding day in the calendar month in which such period terminates; provided, however, that if there is no such numerically corresponding day in such succeeding month, such Eurodollar Interest Period shall end on the last Business Day of such succeeding month. If a Eurodollar Interest Period would otherwise end on a day which is not a Business Day, such Eurodollar Interest Period shall end on the next succeeding Business Day; provided, however, that if such next succeeding Business Day follows in a new month, such Eurodollar Interest Period shall end on the immediately preceding Business Day. The Company may not elect any Eurodollar Interest Period which ends later than the Final Maturity Date. Interest shall accrue from and including the first day of a Eurodollar Interest Period to but excluding the last day of such Eurodollar Interest Period. "Eurodollar Rate Request" means telephonic notice by the Company to be received by the Payee by 11:00 am (Nashville time) one (1) Eurodollar Business Day (or the latest Payee Business Day prior thereto if such day is not a Payee Business Day) prior to the date specified in the Eurodollar Rate Request for the commencement of the Eurodollar Interest Period, and specifying the amount of the LIBOR Based Rate Loan and the applicable Eurodollar Interest Period desired by the Company for such LIBOR Based Rate Loan. The Company shall promptly confirm such notice in writing. "Final Maturity Date" means the date all of the principal of, premium, if any and interest on the Series J Note is payable, whether by scheduled installments, acceleration or otherwise. "Fixed Rate" means a fixed rate of interest equal to the rate on U.S. Treasury Notes with comparable terms and maturities approximately equal to the Fixed Rate Interest Period plus 2.00% per annum. "Fixed Rate Interest Period" means for each Fixed Rate Loan, the period during which such loan bears interest at a Fixed Rate. If a Fixed Rate Interest Period would otherwise end on a day which is not a Business Day, such Fixed Rate Interest Period shall end on the next succeeding Business Day; provided, however, that if such next succeeding Business Day follows in a new month, such Fixed Rate Interest Period shall end on the immediately preceding Business Day. The Company may not elect any Fixed Rate Interest Period which ends later than the Final Maturity Date. Interest shall accrue from and including the first day of a Fixed Rate Interest Period to but excluding the last day of such Fixed Rate Interest Period. "Fixed Rate Request" means written notice by the Company that it elects to have all or a portion of the outstanding principal amount of this Note bear interest at a Fixed Rate, which notice shall specify the principal amount of such Fixed Rate Loan and the duration of the Fixed Rate Interest Period. "LIBOR Based Rate" means a rate per annum equal to the sum of (a) the LIBOR Rate for dollar deposits approximately equal in principal amount to the LIBOR Based Rate Loan requested in the Eurodollar Rate Request and with a maturity comparable to the Eurodollar Interest Period in question, plus (b) 1.25% for any Eurodollar Interest Period or portion thereof. "LIBOR Rate" means, with respect to any LIBOR Based Rate Loan for any Eurodollar Interest Period, the interest rate per annum for deposits in Dollars which currently appears on the Telerate Screen Page 3807 (as defined herein) (rounded up to the next 1/16 of 1% if such rate appears as a fraction smaller than 1/16 of 1%) as of 12:00 noon, Nashville time, on the day that is one (1) Eurodollar Business Day preceding the first day of the applicable Eurodollar Interest Period. If no such offered rate appears on the Telerate Screen Page 3807, the rate in respect of the applicable Eurodollar Interest Period will be the rate per annum (rounded up to the next 1/16 of 1% if such rate is a fraction smaller than 1/16 of 1%) at which deposits in Dollars are offered by the Reference Banks (as hereinafter defined) at approximately 12:00 noon, Nashville time, on the date that is one (1) Eurodollar Business Day preceding the commencement of such applicable Eurodollar Interest Period to prime banks in the London interbank market for a period of time equal to such applicable Eurodollar Interest Period in a Representative Amount (as hereinafter defined). Payee will request each of the Reference Banks to provide a quotation of its rate. If at least two such quotations are provided, the rate in respect of such applicable Eurodollar Interest Period will be the arithmetic mean of the quotations. If fewer than two quotations are provided as requested, the LIBOR Based Rate will be unavailable and such loan amount shall bear interest at the Prime Rate. "Payee Business Day" means a day on which commercial banks in Nashville, Tennessee, are not authorized or required to close. "Prime Rate" means the fluctuating reference or benchmark rate of interest that is publicly announced by NationsBank of Tennessee, N.A. as its Prime Rate to be in effect from time to time with any changes in such Prime Rate to be effective on the date of the public announcement of such change. The Prime Rate is not necessarily the lowest rate of interest charged by NationsBank of Tennessee, N.A. "Quarterly Payment Date" means the last day of each March, June, September and December commencing on the first such day following the date of the initial advance under the Series J Revolving Credit Agreement. "Reference Banks" means the principal London offices of Barclays Bank PLC, National Westminister Bank PLC, Bankers Trust International, Ltd. and Bank of Tokyo, Ltd. "Revolving Credit Loan" means a Prime Rate, LIBOR Based Rate or Fixed Rate Loan made pursuant to the Series J Revolving Credit Agreement. "Series J Revolving Credit Agreement" means the Revolving Credit Agreement between the Company and NationsBank of Tennessee, N.A., dated as of June 17, 1994, as the same is amended or supplemented. "Telerate Screen Page 3807" means the display designated as page 3807 on the Telerate Screen (or such other page as may replace page 3807 on that service for the purpose of displaying London interbank offered rates of major banks). Interest Rate All advances hereunder shall, unless the Company otherwise elects as hereinafter set forth, bear interest at the Prime Rate. The Company shall have the right at any time, on prior irrevocable written or telex notice to the Payee not later than 11:00 a.m., Nashville time, to convert any Prime Rate, Fixed Rate, or LIBOR Based Rate Loan into a Revolving Credit Loan of another type, or to continue any LIBOR Based Rate Loan for a Eurodollar Interest period or any Fixed Rate Loan for a Fixed Rate Interest Period (specifying in each case the Interest Period to be applicable thereto), subject in each instance to the following: (a) no LIBOR Based Rate Loan shall be converted at any time other than at the end of the Eurodollar Interest Period applicable thereto; (b) no Fixed Rate Loan shall be converted at any time other than at the end of the Fixed Rate Interest Period applicable thereto unless the Company also pays at the same time the prepayment penalty, if any, due hereunder as specified in the section on Prepayments; (c) each conversion shall be effected by applying the proceeds of the new LIBOR Based Rate, Fixed Rate, and/or Prime Rate Loan, as the case may be, to the Revolving Credit Loan (or portion thereof) being converted; and (d) the number of LIBOR Based Rate Loans and Fixed Rate Loans at any time outstanding shall not exceed an aggregate of five (5). Each Fixed Rate Request and/or Eurodollar Rate Request shall be irrevocable and shall refer to this Note and specify (i) the identity and principal amount of the particular Revolving Credit Loan that the Company requests be converted or continued, (ii) if such notice requests conversion, the date of such conversion (which shall be a Business Day for Fixed Rate Loans and a Eurodollar Business Day for LIBOR Based Rate Loans), and (iii) if a Revolving Credit Loan is to be converted to a LIBOR Based Rate Loan or a Fixed Rate Loan or a LIBOR Based Rate Loan or Fixed Rate Loan is to be continued, the Eurodollar or Fixed Rate Interest Period with respect thereto. In the event the Company shall not give notice to continue any LIBOR Based Rate or Fixed Rate Loan for a subsequent period, such Revolving Credit Loan (unless repaid) shall automatically be converted into a Prime Rate Loan. If the Company shall fail to specify in the request the type of borrowing or, in the case of a Fixed Rate Loan, the applicable Fixed Rate Interest Period, the Company will be deemed to have requested a Prime Rate Loan. If the Company shall fail to specify in any Eurodollar Rate Request the applicable Eurodollar Interest Period, the Company will be deemed to have selected a Eurodollar Interest Period of one (1) month's duration. Notwithstanding anything to the contrary contained above, if an Event of Default shall have occurred and be continuing, no LIBOR Based Rate or Fixed Rate Loan may be continued and no Prime Rate Loan may be converted into a Fixed Rate or LIBOR Based Rate Loan. Interest Payments All payments hereunder shall be made in lawful money of the United States of America, with interest on the whole of said principal amount remaining from time to time unpaid from the date hereof at a LIBOR Based Rate, the Prime Rate or a Fixed Rate and as provided herein, until the principal hereof shall become due and payable (whether at maturity, on a date fixed for prepayment, by acceleration or otherwise). Interest shall be computed in all cases on the basis of a 360-day year for the actual number of days elapsed. Interest shall be payable as follows: with respect to any portion of this Note bearing interest at a LIBOR Based Rate (a "LIBOR Based Rate Loan"), interest shall be payable on the last day of each applicable Eurodollar Interest Period, unless such Eurodollar Interest Period exceeds three (3) months, in which event interest shall be payable with respect to the principal amount bearing interest at such LIBOR Based Rate on each Quarterly Payment Date occurring after the first day of the Eurodollar Interest Period through the last day of such Eurodollar Interest Period, and on the last day of each Eurodollar Interest Period; with respect to any portion of this Note bearing interest at the Prime Rate (a "Prime Rate Loan"), interest shall be payable on each Quarterly Payment Date; with respect to any portion of this Note bearing interest at a Fixed Rate (a "Fixed Rate Loan"), interest shall be payable on each Quarterly Payment Date and on the last day of each Fixed Rate Interest Period, in each case commencing on the first such date following the making of such loan. Place of Payments; Default Rate The principal of, premium, if any, and interest on this Note shall be payable at the principal office of NationsBank of Tennessee, N.A., or at such other place as the registered holder may designate from time to time in writing which designation shall be made at least ten (10) days before such principal, premium or interest is due. Without limitation of any other rights of the holder, overdue payments of principal (including any overdue prepayment of principal) or premium, if any, and (to the extent permitted by applicable law) overdue payments of interest shall bear interest at the rate applicable to such overdue principal, plus two percent (2%) per annum. Maximum Rate Notwithstanding the above, in no event whatsoever shall the interest rate applicable to this Series J Note exceed the maximum amounts collectible under applicable laws in effect from time to time. If for any reason whatsoever the interest rate applicable to this Series J Note exceeds the maximum permissible rate under applicable laws in effect from time to time, then, ipso facto, the obligation to pay such interest shall be reduced to the maximum amounts collectible under applicable laws in effect from time to time, and any amounts paid to the Payee that exceed such maximum amounts shall be applied to the reduction of the principal balance of this Series J Note and/or refunded to the Company so that at no time shall the interest rate applicable to this Series J Note exceed the maximum amounts permitted from time to time by applicable law. This provision shall control every other provision herein and in any and all other agreements and instruments now existing or hereafter arising between the Company and the Payee with respect to this Series J Note. Principal Advances and Payments Subject to the provisions of the Series J Revolving Credit Agreement, the Company may request (upon one day's notice in writing) that the Payee advance an amount in increments of $1,000,000 which, when added to the amount previously requested and still unpaid, does not exceed the Credit Facility. Unless sooner paid, all outstanding principal on this Note, together with any unpaid accrued interest, shall be payable on June 30, 1997. All borrowings evidenced by this Note and all payments and prepayments of the principal hereof and interest hereon and the respective dates thereof shall be endorsed by the Payee on Schedule I attached hereto or on a form substantially similar to said Schedule I attached hereto and made a part hereof, or otherwise recorded by the Payee in its internal records; provided, however, that the failure of the Payee to make such a notation or any error in such a notation shall not in any manner affect the obligation of the Company to make the payments of principal and interest in accordance with the terms of this Note and the Series J Revolving Credit Agreement. In the event any day on which payment of principal or interest is due is not a Payee Business Day, such payment may be made on the next succeeding Payee Business Day. Change in Legality Notwithstanding anything to the contrary herein contained, if any change in any law or regulation or in interpretation thereof by any governmental authority charged with the administration or interpretation thereof shall make it unlawful for the Payee to make or maintain any LIBOR Based Rate Loan or to give effect to its obligations as contemplated in the Series J Revolving Credit Agreement, then, by written notice to the Company describing such changes, the Payee may (1) declare that LIBOR Based Rate Loans will not thereafter be made by the Payee under the Series J Revolving Credit Agreement, whereupon the Company shall be prohibited from requesting LIBOR Based Rate Loans from the Payee unless such changes are subsequently withdrawn or otherwise rendered ineffective, notice of which shall be promptly provided by the Payee to the Company; and (2) require that all outstanding LIBOR Based Rate Loans shall be converted to Prime Rate Loans, in which event (a) all such LIBOR Based Rate Loans shall be automatically converted without penalty or additional charge to the Company to Prime Rate Loans as of the effective date of such notice as set forth below and (b) all payments and prepayments of principal that would otherwise have been applied to repay the converted LIBOR Based Rate Loans shall instead be applied to repay the Prime Rate Loans resulting from the conversion of such LIBOR Based Rate Loans. For purposes of the preceding paragraph, a notice to the Company by the Payee shall be effective, if lawful, on the last day of the Eurodollar Interest Period for each respective LIBOR Based Rate Loan; in all other cases, such notice shall be effective on the later of (i) the date of receipt by the Company or (ii) the date set forth in such notice. Alternate Rate Anything herein to the contrary notwithstanding, if, prior to the determination of the LIBOR Based Rate in respect of any Eurodollar Rate Request as herein provided, Payee advises the Company in writing that (i) dollar deposits in the amount of a requested principal amount of a LIBOR Based Rate Loan are not generally available in the London Interbank Market; (ii) the rate at which such dollar deposits are being offered will not adequately and fairly reflect the cost to the Payee of making or maintaining such LIBOR Based Rate Loan during such Eurodollar Interest Period; or (iii) reasonable means do not exist for ascertaining the LIBOR Rate, any request by the Company for a LIBOR Based Rate Loan shall, until the circumstances giving rise to such notice no longer exist, be deemed to be a request for a Prime Rate Loan. Each determination by the Payee hereunder shall be conclusive absent manifest error. If at any time subsequent to the giving of such notice Payee determines that because of a change in circumstances the LIBOR Based Rate is again available, Payee shall so advise the Company and the Company shall have the option to convert the rate of interest payable hereunder from the Prime Rate to the LIBOR Based Rate by submitting a Eurodollar Rate Request to Payee and otherwise complying with the provisions of this Note with respect thereto. Prepayments The Company shall have the right to prepay (a) any Prime Rate Loan at any time, in whole or in part, and (b) each LIBOR Based Rate Loan, in whole or in part, on the last day of the applicable Eurodollar Interest Period for such loan, in each case at the prepayment price of the principal amount to be prepaid plus interest to the prepayment date, without premium or penalty; provided any prepayments shall be in principal increments of $1,000,000 or greater. The Company shall have the right at any time to prepay any Fixed Rate Loan, in whole or in part, at the redemption price of 100% of the principal amount so prepaid plus interest to the prepayment date, plus the Yield-Maintenance Premium, if any. As used herein, "Yield Maintenance Premium" shall mean an amount equal to the quotient of: (A) the product of (1) the outstanding principal amount of the Fixed Rate Loan immediately prior to prepayment, multiplied by (2) the excess of the Fixed Rate applicable thereto over the sum of two percent (2%) per annum plus the annual yield on a United States Treasury Bond having substantially the same maturity as the Fixed Rate Loan (the "Treasury Bond Yield"), as such yield is reported in The Wall Street Journal or, in the event such Treasury Bond Yield is no longer published in The Wall Street Journal, a similar publication acceptable to Payee, on the fifth (5th) business day preceding the date of prepayment and (3) the number of months remaining in the Fixed Rate Loan term; divided by (B) twelve (12). Such quotient shall be discounted to present value as of the date of prepayment by applying a discount rate equal to the Treasury Bond Yield. This Note or the installments thereof so prepaid will cease to bear interest on the specified prepayment date, provided funds for its prepayment are on deposit with the Payee or with the Trustee at that time, and this Note or such installments shall no longer be entitled to the benefit of the Indenture and shall not be deemed to be outstanding under the provisions of the Indenture. Indenture This Note is the sole note of an authorized issue of notes of the Company, as provided in the Indenture mentioned below and is herein called the "Series J Note," of the series designated "Revolving Credit Notes, Series J, Final Maturity June 30, 1997," limited to $30,000,000 in aggregate principal amount outstanding, all issued and to be issued under and equally and ratably secured by an Indenture of Mortgage, Deed of Trust, Assignment and Security Agreement dated as of September 1, 1976, among the Company, the New Orleans Bank for Cooperatives (now the National Bank for Cooperatives), John H. Farrelly, as trustee under certain deeds of trust, and Deposit Guaranty National Bank, as Trustee (said indenture, together with all indentures supplemental thereto, being herein called the "Indenture" and said corporate trustee or its successor as trustee being herein called the "Trustee"), to which Indenture reference is hereby made for a description of the property mortgaged and pledged, the nature and extent of the security, the rights and remedies and limitations of said rights and remedies of the holders of the Series J Note, and of the rights, powers, duties and immunities of the Trustee thereunder, and of the rights and obligations of the Company thereunder, and the terms and conditions upon which the Series J Note is, and will be, issued and secured. This Note is entitled to the benefits of the Indenture. By accepting this Note, each holder agrees to be bound by and subject to the provisions of the Indenture. The Indenture contains provisions permitting the Company and the Trustee, with the consent of the holders of not less than fifty-one percent (51%) of the aggregate unpaid principal amount of all Notes and of not less than fifty-one percent (51%) of the unpaid principal amount of each Series of Notes at the time outstanding except for the Series D, E and F Pollution Control Notes, the Series G Industrial Development Note, and any other Notes with respect to which the Supplemental Indenture relating to the issuance of such series of Notes provides that such series shall not have the series vote, or, if one or more but not all of the series of Notes then outstanding would be affected by such amendment, modification or alteration, of not less than fifty-one percent (51%) in aggregate unpaid principal amount of the Notes of each series so affected, evidenced as provided in the Indenture, to execute supplemental indentures adding any provision to, or changing in any manner, or eliminating any of the provisions of, the Indenture; provided however, that without the written consent of the holders of one hundred percent (100%) in aggregate unpaid principal amount of any series of Notes affected thereby at the time outstanding, no such supplemental indenture shall (1) extend the final maturity of any Note of such series or reduce the rate or extend the time of payment of interest thereon, or reduce the amount of the principal thereof, or reduce any premium payable on the prepayment thereof, or reduce the amount required to be paid as a mandatory prepayment of any Note of such series or extend the time within which any such prepayment is to be made or alter the manner in which any note of such series is selected for prepayment, or (2) affect the rights of holders of some of the Notes without similarly affecting the rights of the holders of all of the Notes at the time outstanding, or (3) create any priority with respect to Notes of any series over Notes of any other series, or (4) reduce the aforesaid percentages of the principal amount of the Notes or any series thereof required to approve any such supplemental indenture or reduce the percentage required to effectuate a waiver as referred to in the next sentence, or (5) amend Section 10.02 of the Indenture. The Indenture also provides that the holders of not less than fifty-one percent (51%) in aggregate unpaid principal amount of any or each series of Notes at the time outstanding may on behalf of the holders of all Notes of such series or all series, respectively, waive compliance with or failure to comply with certain covenants contained in the Indenture. Default If an Event of Default as defined in the Indenture shall occur and be continuing, the principal of all Notes may be declared due and payable upon the conditions and in the manner and with the effect provided in the Indenture. The Trustee or the holders of the Notes shall be entitled to recover reasonable counsel fees incurred in any action, suit or proceeding brought to enforce the Notes or the Indenture in which judgment is recovered. Registration This Note shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been signed by the Trustee under the Indenture referred to herein. Subject to the restrictions on transfer set forth in the Indenture and the Series J Revolving Credit Agreement, transfers of this Note may be registered upon a register maintained for such purpose by the Trustee, as provided in the Indenture. Prior to due presentment of this Note for registration of transfer, the Company may treat the registered holder hereof as the absolute owner of this Note for the purpose of receiving all payments of principal, premium, if any, and interest hereon and for all other purposes hereof, of the Series J Revolving Credit Agreement and of the Indenture. Liability No recourse shall be had for the payment of the principal of, or the interest on, this Note or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture or any indenture supplemental thereto, against any incorporator, officer, director or stockholder, as such, past, present or future, of the Company or of any predecessor or successor corporation, either directly or through the Company or otherwise, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty, or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released. Controlling Law This Note is made and delivered in Jackson, Mississippi, and shall be governed by the local laws of the State of Mississippi without giving effect to the conflicts of laws provisions thereof. Waiver The parties hereto, including the Company and any and all guarantors, endorsers and pledgors, hereby waive presentment, demand, notice of dishonor, protest and all other demands and notices in connection with the delivery, acceptance, performance and enforcement of this Note. IN WITNESS WHEREOF, MISSISSIPPI CHEMICAL CORPORATION has caused this Note to be signed in its corporate name by the manual or facsimile signature of its President or one of its Vice Presidents and its corporate seal to be impressed hereon or a facsimile thereof to be imprinted hereon and to be attested by a manual or facsimile signature of its Secretary or one of its Assistant Secretaries. (CORPORATE SEAL) MISSISSIPPI CHEMICAL CORPORATION By: ----------------------------- Name: Title: ATTEST: By: --------------------------- Name: Title: This is the Series J Note described in the Indenture referred to herein. DEPOSIT GUARANTY NATIONAL BANK as Trustee By: ----------------------------- Authorized Officer SCHEDULE I [FORM OF ENDORSEMENT OF SERIES J NOTE WITH RESPECT TO ADVANCES OF CREDIT FACILITY AND PAYMENTS ON ACCOUNT OF PRINCIPAL] ADVANCE OF CREDIT FACILITY AND PAYMENTS ON ACCOUNT OF PRINCIPAL
Amount of Any # of Days Amount of Credit Applicable In Credit Outstanding Unused Facility Rate Interest Maturity Interest Facility Principal Commitment Date Advanced Basis Rate Date Period Repaid Balance Balance ==== ========= ===== ======== ============ ========= ========== =========== ========== ==== ========= ===== ======== ============ ========= ========== =========== ==========
SCHEDULE A SHORT-TERM BORROWING AND FUNDED DEBT AT 5/31/94 OUTSTANDING I. FUNDED DEBT PRINCIPAL AMOUNT A. NOTES SECURED BY THE INDENTURE 1. Series A Notes issued by the Bank Note No. 6392 $12,500,000 2. Jackson County, Mississippi, Pollution Control Notes, $ 8,105,000 Series D and F 3. Yazoo County, Mississippi, Pollution Control Note, Series E, and Industrial Development Note, $ 7,400,000 Series G 4. Series H Note held by John Hancock Variable Life Insurance Company $ 3,600,000 5. Series I Note held by NationsBank of Tennessee, N.A. $ -0- TOTAL SECURED BY INDENTURE $31,605,000 B. OTHER FUNDED DEBT 1. Capitalized Lease, Farm Credit Leasing (Mississippi Phosphates $ 423,203 Corporation) 2. 9.5% Subordinated Notes due July 1, $ 3,148,200 1999 TOTAL OTHER FUNDED DEBT $ 3,571,403 TOTAL FUNDED DEBT $35,176,403 OUTSTANDING II.SHORT-TERM BORROWING PRINCIPAL AMOUNT A. Revolving commodity loan due 11/1/94 issued by the Bank under Amended and Restated Line of Credit Agreement No. 6871(B) dated 10/22/93 (not to exceed $20,000,000 at any one time $ -0- outstanding) B. Revolving seasonal working capital loan due 11/1/94 issued by the Bank under Amended and Restated Line of Credit Agreement No. 6872(B) dated 10/22/93 (not to exceed $20,000,000 at any one time outstanding) $ -0- C. Line of credit agreement dated 10/19/92 with Deposit Guaranty National Bank for up to $5,000,000 for operating capital purposes and as backup for control disbursement $ -0- D. Bankers Acceptances under Acceptance Agreement dated January 1, 1994, between Mississippi Phosphates Corporation and NationsBank of $ 3,470,000 Tennessee, N.A. E. Revolving Loan Note in favor of NationsBank of Tennessee, N.A., dated April 26, 1994, and maturing December 1, 1994 (not to exceed $5,000,000 at any one time outstanding) $ -0- TOTAL SHORT-TERM BORROWING $ 3,470,000 TOTAL SHORT-TERM BORROWING AND FUNDED DEBT $38,646,403 III. INSTRUMENTS PROVIDING FOR OR GOVERNING SHORT-TERM BORROWING AND FUNDED DEBT A. Indenture or Mortgage, Deed of Trust, Assignment and Security Agreement dated as of September 1, 1976, among the Company and New Orleans Bank for Cooperatives (now National Bank for Cooperatives) and John H. Farrelly, as trustee under certain deeds of trust, and Deposit Guaranty National Bank, as Trustee, as amended and supplemented by the First through Thirteenth Supplemental Indentures. B. Loan Agreement No. 6392 dated April 24, 1987, between the Company and the Bank, providing for a loan in the original principal amount of $35,000,000, represented by Note No. 6392 referred to as Item 1 of Part I.A of this Schedule A. C. Note Purchase Agreement dated as of December 6, 1989, among the Company and John Hancock Variable Life Insurance Company, referred to as Item 4 of Part I.A of this Schedule A. D. Revolving Credit/Term Loan Agreement dated as of August 6, 1992, between the Company and NationsBank of Tennessee, N.A., referred to as Item 5 of Part I.A of this Schedule A. E. Capitalized Lease Proposal Number DL05-60257 dated November 25, 1991, between Farm Credit Leasing Services Corporation and Mississippi Phosphates Corporation, referred to as Item 1 of Part I.B of this Schedule A. F. Indenture dated as of May 1, 1989, between the Company and Sunburst Bank, as Trustee, providing for the issuance by the Company of the Subordinated Notes referred to as Item 2 of Part I.B of this Schedule A. G. Amended and Restated Line of Credit Agreement No. 6871(B) dated October 22, 1993, between the Company and the Bank, providing for a revolving commodity loan in the maximum principal amount of $20,000,000, represented by Note No. 6871(B) referred to as Item A of Part II of this Schedule A. H. Amended and Restated Line of Credit Agreement No. 6872(B) dated October 22, 1993, between the Company and the Bank, providing for a revolving seasonal working capital loan in the maximum principal amount of $20,000,000, represented by Note No. 6872(B) referred to as Item B of Part II of this Schedule A. I. Letter agreement dated October 19, 1992, between the Company and Deposit Guaranty National Bank, providing for an unsecured line of credit of up to $5,000,000 for operating capital purposes and as backup for control disbursement, referred to as Item C of Part II of this Schedule A. J. Acceptance Agreement dated January 1, 1994, whereby Mississippi Phosphates Corporation appoints NationsBank of Tennessee, N.A., as attorney-in-fact to execute, accept and discount drafts on its behalf in an amount up to $10,000,000, referred to as Item D of Part II of this Schedule A. K. Revolving Loan Note of the Company in favor of NationsBank of Tennessee, N.A., dated April 26, 1994, and maturing December 1, 1994, in the maximum principal amount of $5,000,000. SCHEDULE B SUBSIDIARIES AND AFFILIATES SUBSIDIARIES (OTHER THAN RESTRICTED SUBSIDIARIES) Newsprint South, Inc. NSI Land Corporation Newsprint South Sales Corp. (a subsidiary of Newsprint South, Inc.) RESTRICTED SUBSIDIARIES Triad Chemical Mississippi Phosphates Corporation Mississippi Potash, Inc. Mississippi Nitrogen, Inc. AFFILIATES The Company has a 50% interest in Triad Chemical, a joint venture with First Mississippi Corporation, which is considered a Restricted Subsidiary. SCHEDULE C JUDGMENTS AND PENDING LITIGATION 1. PROPOSED DEFICIENCIES ASSESSED AGAINST MISSISSIPPI CHEMICAL CORPORATION BY THE INTERNAL REVENUE SERVICES FOR TAX YEARS ENDED JUNE 30, 1983, 1984, AND 1985 In connection with an Internal Revenue Service audit of fiscal years 1985 through 1987, the Company, on June 21, 1989, received an Examination Report which proposed adjustments totaling approximately $3,300,000 to the Company's tax liability for tax years 1983, 1984 and 1985. Interest on the proposed deficiencies would be approximately $2,920,000 through June 30, 1993. It is the Service's position that Section 277 of the Internal Revenue Code prohibits non-exempt cooperatives from carrying back losses incurred on patronage business. It is the Company's position that, as a matter of law, Section 277 does not apply to the Company. On July 9, 1990, the Company filed with the District Director of the Internal Revenue Service its protest of the proposed deficiency. The case has been placed in suspense pending further developments in a similar case, Buckeye Countymark, Tax Court Docket No. 29412-87. The Company intends to vigorously defend its position in this matter. If the Company is unsuccessful, the relevant losses may be carried forward to succeeding tax years. 2. PROPOSED DEFICIENCIES ASSESSED AGAINST MISSISSIPPI CHEMICAL CORPORATION BY THE STATE TAX COMMISSION FOR FISCAL YEARS ENDED JUNE 30, 1984 AND 1985 On October 27, 1987, the Mississippi State Tax Commission, Bureau of Audit, assessed against the Company a deficiency for the fiscal years ended June 30, 1984, and June 30, 1985, in income tax, franchise tax, penalty and interest in the amount of $470,000. Interest would apply from the date of the assessment until the matter is resolved. On January 30, 1990, the Mississippi State Tax Commission affirmed the assessment. The principal issues are (i) whether direct accounting should be used for operations of the Company in Alabama, Florida, and New Mexico, and (ii) whether the property, payroll and sales factors of the apportionment formula should be modified by excluding from the denominator of the factor the property accounted for by direct accounting. On May 23, 1990, the Company filed a Complaint against the State Tax Commission in the Chancery Court of Yazoo County, Mississippi, seeking a reversal of the Commission's order of January 30, 1990, and a determination of no assessment in income or franchise taxes for the years at issue. A three-day trial was held in May 1994, and a schedule was established for filing of written briefs by the Company and the State Tax Commission beginning July 1, 1994, and during the following 31 days. 3. POTASH LITIGATION On April 1, 1993, the first of 12 class action lawsuits was filed against the Company and other United States and Canadian potash producers. These suits were consolidated into a single action in Minnesota. In addition, other actions containing substantially similar allegations were filed in United States District Courts in Illinois and Virginia. These suits were also consolidated with the Minnesota proceeding. In these consolidated complaints, plaintiffs alleged that, beginning in 1987, the Canadian potash producers conspired to fix the price of potash sold in the United States in violation of the federal antitrust laws, specifically Section 1 of the Sherman Act. The conspiracy allegedly spread to include the United States producers named as defendants. For the violations, plaintiffs requested an injunction prohibiting the defendants from continuing the alleged conspiracy, unspecified monetary damages, and attorneys' fees. A state court action was also filed against the Company and other United States and Canadian potash producers in the Superior Court of California. Similarly, this action alleged that a price-fixing conspiracy existed among the defendants, which violated California Uniform Competition Statutes. This suit was removed to Federal Court and consolidated with the Minnesota cases. Upon motion made by defendants, the Minnesota District Court, on December 8, 1993, disqualified certain of the plaintiffs' attorneys in the consolidated action, finding the plaintiffs' claims were based on privileged information improperly or illegally disclosed to plaintiffs. The Court further ordered plaintiffs to file amended complaints, each with an affidavit stating the basis for the allegations contained therein, within 30 days of the date of its order. All of the plaintiffs have now filed amended complaints. The Company has not been named as a defendant in any of the amended Minnesota filings. In addition, the Company has been voluntarily dismissed by the plaintiffs in the California state action. The Company expects to enter into a Tolling Agreement with two of the Minnesota plaintiffs whereby the Company will agree that the running of time under any applicable statute of limitations will be tolled for the period from the date of the Tolling Agreement through September 30, 1994. 4. POTASH INVESTIGATION On November 24, 1993, the Antitrust Division of the Department of Justice served the Company with a grand jury subpoena in connection with its investigation of the allegations of price fixing by United States and Canadian potash producers set forth in section 3 above. The subpoena requests that the Company produce certain documents relating to its potash business in the United States and Canada. The Company is in the process of assembling these documents for production. 5. OTHER LEGAL PROCEEDINGS In addition to the foregoing, the Company and its subsidiaries, in the ordinary course of business, are the subject of, or a party to, other various pending or threatened legal proceedings. The Company believes that any ultimate liability arising from these actions would not have a material effect on the Trust. SCHEDULE D ERISA MATTERS 1. Listed below is each employee benefit plan (as defined in Section 3 of ERISA) maintained by the Company and/or a Restricted Subsidiary, in each case indicating the corporation(s) for whose employees' benefit the plan is maintained: (a) Mississippi Chemical Corporation Retirement Plan (formerly known as the Group Pension Plan for Employees of Mississippi Chemical Corporation); Mississippi Chemical Corporation ("MCC") Mississippi Potash, Inc. ("Potash") (b) Mississippi Chemical Corporation Thrift Plan Plus (Section 401(k)); MCC Potash (c) Self-Insured Weekly Indemnity; MCC Potash (d) Mississippi Chemical Corporation Employees Supplemental Unemployment Benefits (SUB) Plan; MCC (e) Mississippi Chemical Corporation Profit-Sharing Plan; MCC (f) Group Health Plan (formerly known as the Employee Health Protection Plan for Mississippi Chemical Corporation); MCC Mississippi Phosphates Corporation ("Phosphates") Potash Newsprint South, Inc. ("NSI") Newsprint South Sales Corp. ("NSSC") MCC Federal Credit Union ("Credit Union") (g) Mississippi Chemical Corporation Dental Plan; MCC Phosphates Potash NSI NSSC Credit Union (h) Group Life Insurance Plan for Employees of Mississippi Chemical Corporation; MCC Potash NSI NSSC Credit Union (i) Long-Term Disability Plan for Employees of Mississippi Chemical Corporation; MCC Potash NSI NSSC Credit Union (j) Group Travel Accident Policy; MCC Phosphates Potash NSI NSSC (k) Newsprint South, Inc., Retirement Plan; NSI NSSC (l) Newsprint South, Inc., Savings and Investment Plan ( Section401(k)); NSI NSSC (m) Mississippi Phosphates Corporation Section 401(k) Retirement Plan; Phosphates (n) Welfare Benefit Plan for Employees of Mississippi Phosphates Corporation; Phosphates (o) Mississippi Potash, Inc. Supplemental Unemployment Plan; Potash (p) Mississippi Potash, Inc., Profit Sharing Plan; Potash (q) Flexible Benefit Plan; MCC Potash NSI NSSC 2. The Company is a 50% owner of Triad Chemical, a joint venture of which First Mississippi Corporation is the owner of the remaining 50%. Listed below are the employee benefit plans maintained by Triad Chemical for the benefit of its employees (and, in some cases, of employees of other affiliates of Triad Chemical): (a) Pan American Group Life Insurance Policy No. 13490 for Employees of First Mississippi Corporation and Affiliated Companies; (b) Triad Chemical Self-Funded Health Care Plan #50221; (c) Pan American Group Life Insurance Policy No. 22282 for Employees of Ampro Fertilizer, Inc., Melamine Chemicals, Inc., and Triad Chemical; (d) UNUM Group Long Term Disability Insurance Policy No. 53527 for Employees of First Mississippi Corporation and Named Subsidiaries or Affiliated Companies; (e) Home Insurance Company Business Travel Accident Policy No. GTF 179741 for Employees of First Mississippi Corporation and Participating Firms; (f) Life Insurance Company of North America Supplemental AD&D Policy No. 0K818488 for Employees of First Mississippi Corporation and Affiliated or Subsidiary Organizations; (g) Retirement Plan for Employees of Triad Chemical; (h) Triad Chemical Employees 401(k) Thrift Plan; (i) Triad Chemical Health/Dependent Care Spending Accounts; (j) Triad Chemical Health Care Premium Payment Plan; (k) Community Health Network; (l) Gulf South HMO. 3. The Credit Union may be a party in interest (as defined in Section 3 of ERISA) with respect to the Company. The Credit Union maintains an SEP-IRA for the benefit of each Credit Union employee. SCHEDULE E REQUIRED CONSENTS No consents are required to be given. SCHEDULE F ENVIRONMENTAL MATTERS WITH RESPECT TO THE COMPANY AND TRIAD CHEMICAL, A RESTRICTED SUBSIDIARY, THERE ARE THE FOLLOWING JUDGMENTS AND PENDING LITIGATION ON ENVIRONMENTAL MATTERS: 1. COMBUSTION, INC., LITIGATION On July 15, 1986, the first of 17 lawsuits was filed by numerous plaintiffs in the Twenty-first Judicial District Court, Parish of Livingston, State of Louisiana, against Triad Chemical and approximately 80 to 90 other named defendants. An additional 211 parties have been added as third-party defendants. The plaintiffs' claims are based on alleged personal injuries and property damages as a result of exposure to hazardous waste from the Combustion, Inc., site in Livingston Parish, Louisiana. These cases were removed to the United States District Court for the Middle District of Louisiana, then remanded to State Court, and have now been removed once again to Federal Court. Plaintiffs have filed a motion to have the cases remanded to State Court. The plaintiffs moved for certification of a class for the purpose of consolidating the pending litigation as one class action suit, and in January 1991, a state class was certified by the District Court judge. The Louisiana First Circuit Court of Appeal affirmed the certification of the class, but reversed the definition of the class and remanded the issue to the trial court for further determination. Triad is vigorously defending its position in these proceedings and considers its defense meritorious. 2. CERCLA SITES Triad has received and responded to letters issued by the United States Environmental Protection Agency ("EPA") under Section 104 of the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") relative to the possible disposition of Triad waste at two disposal sites identified as the Combustion, Inc., site south of Baton Rouge, Louisiana, and the Cleve Reber site in Ascension Parish, Louisiana. Under CERCLA, generators of waste may be held responsible for investigation and site cleanup costs. 3. OTHER LEGAL PROCEEDINGS In addition to the foregoing, the Company and Triad Chemical are the subject of, or a party to, other various pending legal or threatened proceedings on environmental matters which the Company believes will not result in ultimate liability with a material effect on the Trust Estate. SCHEDULE G June 17, 1994 NationsBank of Tennessee, N.A. 1 NationsBank Plaza Nashville, Tennessee 37239-1697 Attn: Large Commercial Division RE: $20,000,000 PRINCIPAL AMOUNT AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN NOTE, SERIES I, FINAL MATURITY JUNE 30, 2001 AND $30,000,000 PRINCIPAL AMOUNT REVOLVING CREDIT NOTE, SERIES J, FINAL MATURITY JUNE 30, 1997 Gentlemen: I refer to the following: 1. Indenture of Mortgage, Deed of Trust, Assignment and Security Agreement dated as of September 1, 1976, among Mississippi Chemical Corporation (the "COMPANY") and New Orleans Bank for Cooperatives (now the National Bank for Cooperatives) and John H. Farrelly, as Trustee under certain deeds of trust, and Deposit Guaranty National Bank, as Trustee (the "TRUSTEE"), (the "ORIGINAL INDENTURE") as supplemented pursuant to a First Supplemental Indenture dated as of September 7, 1976, a Second Supplemental Indenture dated as of September 30, 1976, a Third Supplemental Indenture dated as of June 28, 1977, a Fourth Supplemental Indenture dated as of May 1, 1978, a Fifth Supplemental Indenture dated as of June 1, 1978, a Sixth Supplemental Indenture dated as of September 1, 1979, a Seventh Supplemental Indenture dated as of October 1, 1979, an Eighth Supplemental Indenture dated as of May 15, 1983, a Ninth Supplemental Indenture dated as of February 23, 1988, a Tenth Supplemental Indenture dated as of December 26, 1989, an Eleventh Supplemental Indenture dated as of July 16, 1990, a Twelfth Supplemental Indenture dated as of August 6, 1992, and a Thirteenth Supplemental Indenture dated as of July 16, 1993 (the Original Indenture, as supplemented by each of the above referenced Supplements is hereinafter referred to as the "INDENTURE"); 2. Series I Revolving Credit/Term Loan Agreement dated as of August 6, 1992, between the Company and NationsBank of Tennessee (now NationsBank of Tennessee, N.A., and hereinafter the "PURCHASER") pursuant to which the Company issued and sold to the Purchaser, and the Purchaser purchased from the Company, on the terms and conditions set forth in said Agreement, the Company's Revolving Credit and Term Loan Note, Series I, having a final maturity of June 30, 1999; 3. Series J Revolving Credit Agreement dated as of June 17, 1994, between the Company and the Purchaser (the "LOAN AGREEMENT") pursuant to which the Company will issue and sell to the Purchaser, and the Purchaser will purchase from the Company, on the terms and conditions set forth in said Agreement, the Company's Revolving Credit Note, Series J, having a final maturity of June 30, 1997 (the "SERIES J NOTE"); 4. the Fourteenth Supplemental Indenture dated as of even date herewith (the "FOURTEENTH SUPPLEMENTAL INDENTURE") which supplements and amends the Indenture; and 5. the Fifteenth Supplemental Indenture and Amendment to Series I Revolving Credit/Term Loan Agreement dated as of even date herewith (the "FIFTEENTH SUPPLEMENTAL INDENTURE"), pursuant to which the Company will issue and sell to the Purchaser, and the Purchaser will purchase from the Company, on the terms and conditions set forth in the Fifteenth Supplemental Indenture, the Company's amended and restated Revolving Credit and Term Loan Note, Series I, having a final maturity of June 30, 2001 (the "AMENDED AND RESTATED SERIES I NOTE") (the Indenture, as supplemented by the Fourteenth and Fifteenth Supplemental Indentures is referred to as the "INDENTURE, AS SUPPLEMENTED"). This letter is an OPINION OF COUNSEL as defined in Section 1.01 of the Indenture and is executed and delivered pursuant to Sections 2.14(c) and 10.01 of the Indenture. Except as otherwise indicated, all terms herein shall have the same meaning as in the Series I Revolving Credit/Term Loan Agreement, the Loan Agreement and the Indenture, as Supplemented. As counsel to the Company, I have reviewed the Indenture, the Fourteenth Supplemental Indenture, the Fifteenth Supplemental Indenture, the Loan Agreement and such other documents as I have considered necessary in order to render this opinion. In stating my opinion, I have assumed (i) the genuineness of the signatures of the individuals signing all documents in connection with which this opinion is rendered on behalf of the parties thereto (other than the Company), (ii) the authenticity of all documents submitted to the Company as originals, and (iii) the conformity to authentic original documents of all documents submitted to the Company as certified, conformed or photostat copies. Based upon the foregoing and subject to the further assumptions, qualifications and limitations hereinafter set forth, I am of the opinion that: 1. Assuming that the Fourteenth and Fifteenth Supplemental Indentures are the legal and valid binding obligation of the Trustee, the Fourteenth and Fifteenth Supplemental Indentures constitute the legal, valid and binding agreements of the Company enforceable against the Company in accordance with their terms. 2. The Loan Agreement has been duly authorized, executed and delivered by the Company. Assuming that the same has been duly authorized, executed and delivered by you, and that you have all requisite power and authority, corporate and otherwise, to enter into and perform your obligations under the Loan Agreement, the Loan Agreement constitutes the legal, valid and binding agreement of the Company enforceable against the Company in accordance with its terms. 3. The amended and restated Series I Note and the Series J Note have been duly authorized, executed, issued and delivered by the Company and have been duly authenticated by the Trustee. The same constitute the legal, valid and binding obligation of the Company in accordance with their terms, entitled to the benefits of the Indenture, as Supplemented. Neither the execution and delivery of the Loan Agreement, the Fourteenth and Fifteenth Supplemental Indentures, the amended and restated Series I Note, or the Series J Note, nor compliance with the provisions of any of them by the Company will conflict with or result in any breach of any of the provisions of, or constitute a default under any provision of applicable Mississippi law or the Articles of Incorporation or Bylaws of, the Company. 4. No consents, approvals or authorizations of or filings with any federal or state of Mississippi authorities are required in connection with the execution and delivery by the Company of the Loan Agreement, the amended and restated Series I Note, the Series J Note, or the Fourteenth and Fifteenth Supplemental Indentures and the performance by the Company of its obligations under any of them except for those which have been obtained or made. 5. It is not necessary, in connection with the offer, issue, sale and delivery of the amended and restated Series I Note or the Series J Note, to register either of them under the Securities Act of 1933, as amended, or to qualify the Indenture, as Supplemented, or the Loan Agreement under the Trust Indenture Act of 1939; provided, however, no opinion is expressed concerning compliance with the anti-fraud provisions of any federal or state securities laws. For the purposes of the opinion expressed in this paragraph 5, we have assumed the accuracy of the representations set forth in Sections 3.1(m) and 3.2 of the Loan Agreement and incorporated by reference into the Series I Revolving Credit/Term Loan Agreement. 6. All conditions precedent to the creation and issuance of the amended and restated Series I Note and the Series J Note and to the execution of the Fourteenth and Fifteenth Supplemental Indentures have been complied with; the Fourteenth and Fifteenth Supplemental Indentures are in proper form for execution by the Trustee; and, subject to the provisions of the Indenture, the Indenture, as Supplemented, secures the amended and restated Series I Note and the Series J Note by (i) a valid mortgage lien on all interests in the real property described therein as subject to the lien hereof and (ii) a valid security interest in the personal property described therein as subject to the lien thereof. With respect to the enforceability of any agreement referenced herein, the opinions expressed herein are subject to the following: (i) the effect of any applicable bankruptcy insolvency, reorganization, moratorium or similar law affecting creditors' rights generally; (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law); (iii) certain applicable laws or judicial decisions that may limit, impair or delay the enforceability of certain remedies, waivers or other provisions of the Loan Agreement, the Series I Revolving Credit/Term Loan Agreement as amended on the date hereof, the Fourteenth and Fifteenth Supplemental Indentures, the Series I Note and the Series J Note, but which will not, in my opinion, substantially interfere with the practical realization of the benefits intended to be conferred thereby; (iv) limitations on repossession of property without judicial process requiring that such action be taken without a breach of the peace; (v) the statutory right of redemption prior to foreclosure as set forth in Sections 89-1-59 and 75-9-506 of the Mississippi Code of 1972, as amended; and (vi) the voluntary or involuntary transfer of a debtor's rights in property or collateral, notwithstanding a provision in an agreement prohibiting any such transfer or making the transfer a default, pursuant to Section 75-9-311 of the Mississippi Code of 1972, as amended. I have made no examination of the title to the property described in the Indenture, as Supplemented, or to any restrictions in underlying ownership documents on transfer or pledge, and I express no opinion with respect to the status of title. It is my understanding that you are relying for such purposes upon the opinions of (i) Henry, Barbour & DeCell, with respect to the real property of the Company located in Yazoo County, Mississippi, (ii) Megehee, Pitcher, Tynes, Kinard & Smith, with respect to the real property of the Company and Mississippi Phosphates Corporation located in Jackson County, Mississippi, and (iii) McCormick, Forbes, Caraway & Tabor, with respect to title to real property of the Company and Mississippi Potash, Inc., located in Lea and Eddy Counties, New Mexico. This opinion is solely for your benefit, for the benefit of your special counsel, and for the benefit of Deposit Guaranty National Bank as Trustee under the Indenture in connection with the transaction referred to herein and may not be quoted or relied on by any other person or used for any other purpose or any other transaction, without my prior written consent. Respectfully submitted, MISSISSIPPI CHEMICAL CORPORATION Robert E. Jones Vice President and General Counsel REJ/lgb EX-10.4 5 EXHIBIT 10.4 PURCHASE AGREEMENT THIS AGREEMENT, is made and entered into as of the 15th day of September, 1994, to be effective on the 1st day of October, 1994 ("Effective Date"), by and between MISSISSIPPI CHEMICAL CORPORATION, a Mississippi corporation, with its principal place of business at Owen Cooper Administration Building, Highway 49E, Yazoo City, Mississippi 39194-0388 ("MCC"), and AIR PRODUCTS AND CHEMICALS, INC., a Delaware corporation, with its principal place of business at 7201 Hamilton Boulevard, Allentown, Pennsylvania 18195-1501 (collectively with its affiliates referred to as "Air Products"). WHEREAS, Air Products produces ammonium nitrate prills which it sells to agricultural users; and WHEREAS, Air Products has made a unilateral decision to continue operating its production facility but to exit the business of marketing its ammonium nitrate prills; and WHEREAS, MCC desires to purchase Air Products' ammonium nitrate prills; NOW, THEREFORE, in consideration of the mutual benefits to be derived, the parties agree as hereafter set forth. 1. DEFINITIONS 1.1 "Contract Year" shall mean initially a period beginning on October 1, 1994, and running through June 30, 1995, and shall thereafter mean a twelve (12) month period beginning July 1 of each calendar year. 1.2 "Agricultural Product" shall mean ammonium nitrate prills produced by Air Products at its Pace, Florida, facility. This Agreement envisions that the volume of Agricultural Product produced at Air Products' Pace, Florida, facility will remain the same throughout the term of this Agreement, excepting nominal and incremental production increases resulting from increases in operating efficiencies. 1.3 "Variable Netback" with respect to ammonium nitrate prills shall mean the excess of (i) subparagraph 1.3.1 over (ii) the sum of subparagraphs 1.3.2 and 1.3.3, as each of these are described below. 1.3.1 "Ammonium Nitrate Prills Revenue" shall mean the revenues realized for ammonium nitrate prills sold by MCC. 1.3.2 "Direct Costs" shall mean the weighted average per-ton costs incurred in connection with the sale of ammonium nitrate prills for such items as, including but not being limited to, discounts; freight allowances; customer truck fees; freight into storage; storage costs; bag costs; bagging charges; delivery expenses; handling charges; rail delivery allowances; weighing fees; pneumatic truck charges; direct transfer fees; special equipment fees; wharfage; railcar lease costs and other such expenses of delivery directly relating to the sale of ammonium nitrate prills by MCC as they may arise. 1.3.3 "Adjustments to Netback" shall mean any actual, projected or accrued costs incurred in the normal course of business and attributable to that month which are not Direct Costs, including but not being limited to, shrinkage projection; interest cost resulting from extended terms or slow-paying accounts; losses resulting from nonperforming accounts on all ammonium nitrate prills; emergency storage costs; losses for which there is no apparent responsible third party (examples of this include, but are not limited to, losses occurring during transit not attributable to product quality problems or any apparent problem with carrier's equipment and losses occurring during storage not attributable to product quality problems or any apparent problem in handling or storage facility); interest on ammonium nitrate prill inventory; and taxes paid by MCC which are assessed on the sale and/or distribution of ammonium nitrate prills. 1.3.3.1 It is agreed that storage costs and Adjustments to Netback when calculated on a per-ton basis may be volume sensitive over a period of time exceeding one (1) month. MCC will make every effort to accurately project such volume-sensitive costs on a monthly basis and will use this projection in the Variable Netback calculation. MCC will endeavor to estimate and adjust these costs monthly. However, at the end of each Contract Year, a final adjustment will be made based on actual costs. 1.3.3.2 Any interest costs assessed under the provisions of this paragraph shall be at Chase Manhattan's Banker's Prime Lending Rate for the relevant period. 1.3.4 In order to determine Variable Netback, the following costs shall not be subtracted as an adjustment for calculating Variable Netback: any costs which are incurred by MCC or Air Products associated with the general administration or operation of their respective facilities, including but not being limited to, costs incurred for such items as production; in-plant storage; switching charges; in-plant maintenance; general and administrative expenses; administrative staff or plant labor overhead; or taxes levied on the manufacture of ammonium nitrate prills. A sample calculation of Variable Netback is set forth in Exhibit A incorporated herein. 1.4 "Cash Cost" shall mean Air Products' projected cash cost of producing Agricultural Product (raw material and conversion) provided by Air Products to MCC for each calendar quarter, not to exceed current Price. 1.5 "Discount" shall mean the (confidential treatment has been requsted) per-ton ($confidential treatment has been requested/Ton) reduction on MCC's purchase price of Air Products' Agricultural Product plus escalation on the first (confidential treatment has been requested) per-ton ($ confidential treatment has been requested/Ton) after the end of the third Contract Year in accordance with the annual change in the United States Consumer Price Index for all urban consumers, using the period July 1, 1996, to June 30, 1997, as the base year. In no event shall the Discount fall below (confidential treatment has been requested) per-ton ($ confidential treatment has been requested/Ton). 1.6 "Price" shall mean Variable Netback calculated on a per-ton basis minus Discount. 1.7 For the purposes of this Agreement, reference to ammonium nitrate prills shall mean, in all cases, fertilizer grade prilled ammonium nitrate intended for agricultural use. 1.8 "Agreement" shall mean this Purchase Agreement and all of its Exhibits. 2. TERM 2.1 The term of this Agreement shall be a period of fifteen (15) years beginning on the Effective Date and automatically extending thereafter for additional five (5) year periods, unless terminated by notification from either party to the other party not less than one (1) year before the expiration of the initial term or one (1) year before the expiration of any five (5) year period, unless terminated sooner by either party as provided by another provision of this Agreement. 3. SALE AND PURCHASE OF AGRICULTURAL PRODUCT 3.1 Subject to the provisions of paragraph 3.4, during the term of this Agreement, Air Products shall sell to MCC, and MCC shall purchase from Air Products, all of the Agricultural Product produced by Air Products at its Pace, Florida, facility. 3.2 Upon execution of this Agreement, Air Products agrees to provide MCC with a forecast of Agricultural Product production for each month through June 30, 1995. At the end of each month thereafter, Air Products will provide a three (3) month rolling forecast. Air Products will use its reasonable efforts to produce the quantity of Agricultural Product provided in the month-end forecast for the following month. 3.3 On or before June 30 of each year, Air Products shall provide MCC with a good-faith forecast of its anticipated production of Agricultural Product in the twelve (12) month period beginning July 1. At MCC's request, Air Products will also provide an outlook as to the direction its Agricultural Product production is likely to take over the course of the next two (2) years. 3.4 On or before the first day of each calendar quarter, the parties will discuss purchases hereunder and Air Products' production estimates for the immediately following calendar quarter. In the event that MCC determines, in its sole discretion, that it will be unable to make arrangements for the marketing, in a commercially reasonable manner, of the entire production of Agricultural Product for such calendar quarter, then it shall advise Air Products of the quantity of Agricultural Product that it can efficiently market and that it will purchase from Air Products during such calendar quarter. To the extent that the production of Agricultural Product during a calendar quarter exceeds MCC's commitment to purchase Agricultural Product during such calendar quarter, MCC shall release Air Products from its obligation to sell the excess Agricultural Product during the quarter to MCC, and Air Products shall have the right to sell the excess Agricultural Product to parties other than MCC. 4. SHIPMENTS 4.1 Air Products will provide rail siding space for handling full and empty railcars at no cost to MCC. MCC acknowledges that Air Products' rail siding space is limited and is not designed for long-term storage, and will make reasonable efforts to minimize the on-site number of railcars, in no event to exceed forty (40) railcars without Air Products' specific approval. 4.2 Air Products will be responsible for the loading of Agricultural Product at the Pace, Florida, facility. MCC will be responsible for the loading of Agricultural Product at all other locations. 4.3 MCC will provide scheduling of all railcars and bulk trucks and bills of lading for all shipments, rail and truck. Air Products agrees to accommodate MCC's terminal and printer at the Pace, Florida, facility for this purpose. MCC shall also provide communication with carriers and shipment tracking. Air Products shall electronically report to MCC weights and vehicle numbers for any shipments leaving the Pace, Florida, facility not later than the next business day following the shipment. 4.4 The party responsible for loading under paragraph 4.2 shall be responsible for inspection and acceptance or rejection of any railcar or truck prior to loading. The party responsible for loading shall also be responsible for complying with all applicable laws and regulations with respect to the loading for shipment and shipment of the product. 5. DELIVERY 5.1 Title and risk of loss to Agricultural Product shall pass to MCC upon Air Products' delivery of Agricultural Product into railcar or truck of MCC or its customer at the Pace, Florida, facility. 6. PRICING AND PAYMENT 6.1 Payment to Air Products from MCC with respect to sales in any calendar month is calculated by (i) multiplying (confidential treatment has been requested) times the number of tons of Agricultural Product shipped from Pace, Florida, directly to MCC's customers and shipped from MCC's inventory to MCC's customers during the month, (ii) plus (confidential treatment has been requested) times the number of tons of Agricultural Product shipped into MCC's inventory during the month, and (iii) minus credit for the weighted average (confidential treatment has been requested) previously paid on the tons of Agricultural Product shipped from MCC's inventory to MCC's customers during the month. An example of the payment calculation is included herein as Exhibit A and Exhibit A-1. 6.2 Each month MCC shall pay for the previous month's purchases by MCC of Agricultural Product based on shipments weighed out through truck or rail from Pace, Florida. In no event shall there be more than twenty (20) railcars loaded and on Air Products' property which have not been invoiced by Air Products. MCC will provide to Air Products the data necessary for Air Products to invoice MCC as soon as practical following month-end, but not later than the twelfth (12th) day of the month. The sales to MCC for any given month will be paid to Air Products by the fifteenth (15th) day of the month following such sales. MCC will pay each invoice by electronic transfer of funds to Air Products' account in accordance with Exhibit B, which is incorporated herein. 6.3 Air Products shall provide MCC with a copy of the current calibration certificate for the truck scales on a quarterly basis, and shall provide a photocopy of the rail scale calibration certificate twice per year. 6.4 MCC shall have the obligation once every twelve (12) months during the term of this Agreement, and for twenty-four (24) months following termination, to cause its independent public accountants to audit MCC's books and records insofar as they relate to the calculation of the Variable Netback and to express an opinion of its auditors that the Variable Netback has been calculated in accordance with this Agreement. An adjustment shall be made as necessary to reflect any corrections during the previous twelve (12) months, or during the last twelve (12) months of this Agreement if terminated, as determined by the audit. 7. TAXES 7.1 Each party shall bear and pay all federal, state and local taxes based upon or measured by its net income or net worth, and all taxes, fees or other charges based upon its corporate existence or its general right to transact business. 8. TECHNOLOGY TRANSFER 8.1 MCC will provide to Air Products technical information related to the manufacture of Agricultural Product as set forth in Exhibit E hereto and to the extent necessary to allow Air Products to manufacture Agricultural Product meeting the specifications set forth in Exhibit F to this Agreement. In the event of a conflict between any provision of this Agreement and any provision of Exhibit E, "Technology Transfer," the provisions of Exhibit E will control with respect to the technology transferred from MCC to Air Products. 8.2 Air Products will undertake to adopt the technology transferred by MCC pursuant to Exhibit E, "Technology Transfer," for the purpose of achieving market compatibility between Agricultural Product and AMTRATE(R) produced by MCC. 8.3 The implementation of the technology described in Exhibit E, "Technology Transfer," is not anticipated to cost more than Five Hundred Thousand and 00/100 Dollars ($500,000.00). In the event that the cost of implementation exceeds this amount, then Air Products may choose to either expend such amounts as are necessary to install the technology or terminate this Agreement, at its sole and exclusive option. In the event that Air Products chooses to terminate the Agreement, then it shall terminate effective ninety (90) days from the date of Air Products' original notice to MCC under this paragraph 8.3. 8.4 In the event that Air Products is unable to meet the specifications set forth in Exhibit F following installation of the technology described in Exhibit E, Air Products shall have the right to install additional equipment or make such other modifications as are necessary to meet such specifications by March 30, 1995. In the event that Air Products elects not to make such installations or modifications as are necessary to meet the specifications, then MCC at its sole and exclusive option may modify the specifications or terminate this Agreement effective June 30, 1995. 8.5 During the course of this Agreement it may become necessary to make revisions in the specifications set forth as Exhibit F. In such event, MCC will notice Air Products of the proposed revisions and, for a period of ninety (90) days, will discuss with Air Products the changes necessary to effectuate such revisions. Air Products will in no event be required to install additional equipment or make modifications to meet such revised specifications; however, upon Air Products' decision not to adopt the revised specifications, MCC may, at its option, terminate this Agreement and the associated Technology Transfer effective one (1) year from the date of the original notice to Air Products of the proposed revisions under this paragraph 8.5. 9. WARRANTY 9.1 Air Products warrants it has title to Agricultural Product delivered hereunder and may properly sell the same and that such Agricultural Product shall conform to the specifications set forth in Exhibit C, which is incorporated herein until such time that MCC's proprietary coating technology is implemented. Upon the implementation of the coating technology, the specification attached as Exhibit F will be the specification for Agricultural Product and is intended to be the same specification as MCC's current production specification for AMTRATE(R). Air Products shall maintain data on any quality testing of any Agricultural Product and shall provide certificates as to quality to MCC upon reasonable request. Air Products shall retain daily production samples for ninety (90) days. MCC, at its expense, shall have the right to test the Agricultural Product for the purpose of determining compliance with the specifications. 10. STORAGE 10.1 Air Products shall make available in-plant storage for the Agricultural Product (consisting of not less than two thousand five hundred (2,500) tons of bulk ammonium nitrate storage and twenty thousand (20,000) tons of ammonium nitrate solutions storage as 100% ammonium nitrate) at no cost to MCC, and the in-plant storage costs will not be a factor in calculating Variable Netback. Likewise, MCC shall make available in-plant storage for its ammonium nitrate prills at Yazoo City, Mississippi, with no related cost factor attributable to the Variable Netback. 11. ASSIGNMENT OF CONTRACTS 11.1 In consideration for MCC's agreement to purchase Air Products' production of Agricultural Product during the term of this Agreement, Air Products agrees to use all reasonable efforts to assign to MCC, and MCC will accept assignment of, each of its contracts with its customers, (confidential treatment has been requested). In the event that any customer withholds consent to an assignment of its contract with Air Products, Air Products will withhold such tons under this Agreement as are necessary to supply Air Products' obligation to such customer under its contract with such customer and shall immediately notify the customer of Air Products' intent to terminate its contract at the earliest allowable date. 12. FORCE MAJEURE 12.1 Neither party shall be liable for any failure or delay in performance hereunder (except for the payment for Agricultural Product previously delivered hereunder) which may be due to Force Majeure. 12.1.1 For the purposes hereof, the term Force Majeure means a condition or event occurring beyond the control of the party suffering the event which prevents performance under this Agreement. Force Majeure includes, without limitation, any war (whether declared or undeclared), fire, flood, lightning, earthquake, storm, or act of God; mechanical breakdown or partial or total destruction of the manufacturing facility; any strike, lockout or other labor difficulty, civil disturbance, riot, sabotage, accident or explosion; any official order, directive or industry-wide request by any governmental authority which, in the reasonable judgment of either party makes it necessary to cease or reduce production or other performance under this Agreement; any inability to secure necessary fuel, power, equipment, transportation or raw materials, including the inability to secure any such item by reason of allocations promulgated by any governmental authority; or Air Products' operating costs for producing Agricultural Product exceeds the revenues that it receives therefor. 12.2 Performance under this Agreement may be suspended during the period of any such Force Majeure. 12.2.1 The party affected by an event described herein shall, promptly upon learning of such event and ascertaining that it has or will affect its performance hereunder, give notice to the other party, stating the nature of the event, its anticipated duration and any action being taken to avoid or minimize its effect. Any Force Majeure event shall, so far as reasonably possible, be remedied with all reasonable dispatch, provided that the settlement of strikes, lockouts, industrial disputes, or disturbances shall be entirely within the discretion of the affected party. 12.2.2 Performance under this Agreement shall resume to the extent made possible by the end of the Force Majeure event. 13. EVENTS OF TERMINATION 13.1 Air Products may suspend this Agreement at any time during the initial term, or during any extension thereof, on six (6) months' notice to MCC in accordance with section 18 that it will cease production of Agricultural Product, in which case the suspension will be effective when actual production ceases. MCC may choose to terminate this Agreement, at its option, should Air Products' production of Agricultural Product not resume after a period of six (6) months. Neither party is required to submit to the provisions of section 16 regarding arbitration to exercise its options under this paragraph. 13.2 In the event that MCC is unable to earn a quarterly profit from the sale of Agricultural Product and the condition is expected to continue, MCC and Air Products shall negotiate in good faith to alleviate the hardship. In the event that the parties are unable to agree within a period of ninety (90) days on alternative arrangements which alleviate the hardship condition, the Agreement may be terminated one (1) year following the date of the original notice to Air Products of hardship under this subparagraph 13.2. Neither party is required to submit to the provisions of section 16 regarding arbitration to exercise its options under this paragraph. 13.3 Following receipt of a notice of suspension or termination under any subparagraph of this section 13, from either Air Products or MCC, MCC will make no commitment for sales of additional tons of Agricultural Product beyond the anticipated suspension or termination date of this Agreement; and Air Products hereby agrees to satisfy any Agricultural Product commitments made by MCC prior to MCC's receipt of notice of termination, up to commitments made for the current fertilizer year, but in no event less than a period of three (3) months. 14. LIABILITY 14.1 Air Products' sole liability, and MCC's sole and exclusive remedy, for Air Products' failure to deliver Agricultural Product shall be the difference between the price of such quantity of Agricultural Product under this Agreement and the higher price MCC necessarily pays to a third party to obtain product required in replacement. 14.2 Air Products' sole liability, and MCC's sole and exclusive remedy, for Air Products' failure to deliver Agricultural Product which conform to the specifications in effect under Exhibit C or Exhibit F shall be replacement by Air Products of a like quantity of conforming Agricultural Product at no additional cost to MCC and reimbursement of any commercially reasonable costs necessarily incurred by MCC in connection with the receipt, storage, handling, reshipment, or disposal of the nonconforming Agricultural Product. Any claim must be received by Air Products in writing within thirty (30) days of the receipt by MCC or MCC's customer. 14.3 From and after January 1, 1995, for claims brought by customers of MCC against Air Products where language disclaiming warranty and limiting liability as described in Exhibit D was not provided by MCC to the customer either by sales contract or by invoice subsequent to the sale, then MCC agrees to defend and indemnify Air Products with respect to such claim. The language set forth in Exhibit D is not currently in use by MCC and for purposes of transition, this paragraph 14.3 will become effective for the language to be included in all sales invoices from and after January 1, 1995, and for contracts, shall be included in each new or renewed contract between MCC and customers upon execution of any new contracts or renewal of an existing contract as they arise from and after January 1, 1995. 15. CONFIDENTIALITY 15.1 MCC acknowledges and agrees that the provisions of the 1994 Confidential Disclosure Agreement between MCC and Air Products shall govern the transfer of any confidential or proprietary business information by Air Products to MCC in connection with this Agreement or the performance of any rights or obligations contemplated hereunder. 15.2 Air Products and MCC each acknowledge and agree that the provisions of the 1994 Secrecy Agreement between MCC and Air Products shall be superseded by Exhibit E, "Technology Transfer," and that the provisions of Exhibit E shall exclusively govern the transfer of any confidential or proprietary technical information by MCC to Air Products in connection with this Agreement or the performance of any rights or obligations contemplated hereunder. Air Products and MCC each acknowledge and agree that the provisions of Exhibit H, "Secrecy Agreement," govern the transfer of any confidential or proprietary technical information by Air Products to MCC in connection with this Agreement or the performance of any rights or obligations contemplated hereunder. 16. DISPUTES 16.1 All disputes, controversies or differences between the parties arising out of, in relation to or in connection with this Agreement, or the breach thereof, which cannot be resolved through negotiations to the satisfaction of either of the parties within sixty (60) days after the date one party has notified the other party in writing of such dispute, controversy or difference, shall be resolved by binding arbitration. Both parties shall submit their respective positions with regard to the disputed matter in writing to an arbitration panel consisting of three arbitrators, one of whom shall be appointed by Air Products, one by MCC, and the third by the first two arbitrators. If the first two arbitrators cannot agree on the appointment of a third arbitrator, then such third arbitrator shall be a partner in one of the "Big Six" accounting firms not employed by Air Products or MCC or any of their respective affiliated companies (if the disputed matter is financial in nature); an engineer or similar professional familiar with operations similar to those of the Pace, Florida, facility (if the disputed matter is operational in nature); or, an attorney familiar with contracts of this kind (if the disputed matter involves an issue of contractual interpretation) appointed by the American Arbitration Association. The arbitration shall be conducted pursuant to the Commercial Arbitration Rules of the American Arbitration Association and shall be held in Jackson, Mississippi. The determination of the arbitration panel shall be final and binding on the parties hereto. Judgment upon the arbitration panel's award may be entered in any court having jurisdiction thereof. The fees and expenses of all arbitrators shall be paid equally by Air Products and MCC. 17. PUBLIC ANNOUNCEMENTS 17.1 Neither Air Products nor MCC or any of their respective affiliates shall issue or make any press release, public announcement, confirmation or other disclosure or information relating to this Agreement or the transactions contemplated hereby, except with the prior approval of the other party. 18. NOTICE 18.1 Any notice to be given under this Agreement shall be in writing and shall be delivered personally or by certified mail (postage prepaid and return receipt requested), courier or overnight delivery service (delivery charge prepaid), or by telecopy. Any notice shall be effective only if and when it is received by the addressee. For the purposes hereof, the addresses and telephone and telecopier numbers of Air Products and MCC are as follows: Air Products: Air Products and Chemicals, Inc. Attention: Corporate Secretary 7201 Hamilton Boulevard Allentown, PA 18195-1501 Telephone: 610/481-7071 Telecopier: 610/481-5765 MCC: Mississippi Chemical Corporation Attention: Corporate Secretary P. O. Box 388 Yazoo City, MS 39194-0388 Telephone: 601/746-4131 Telecopier: 601/746-9158 19. GOVERNING LAW 19.1 This Agreement shall be governed by, construed under, and enforced in accordance with the laws of the state of Mississippi. 20. ENTIRE AGREEMENT 20.1 This Agreement and its Exhibits constitute the entire understanding between the parties and supersedes all prior discussions, statements, and representations, oral or written, relating to the subject matter of this Agreement. No amendment or modification shall be valid unless in writing specifically referencing this Agreement and signed by a duly authorized representative of each party. All purchase orders or purchase acknowledgments which may be used to order or acknowledge orders for delivery of Agricultural Product shall be deemed intended for record purposes only, and any terms or conditions contained therein shall not serve to add to or modify the terms and conditions of this Agreement. 21. GENERAL PROVISIONS 21.1 MCC agrees to adhere to all existing and future site safety, hygiene and environmental regulations and policies while at the Pace, Florida, facility. 21.2 No waiver or failure to enforce any term of this Agreement shall effect or limit a party's right thereafter to enforce or compel strict compliance with every term of this Agreement. 21.3 If any provision of this Agreement is held invalid by any court of law or administrative or regulatory body, all other provisions hereof shall continue in full force and effect. 21.4 This Agreement may not be assigned by either party without the prior written consent of the other party. This Agreement shall inure to the benefit of and be binding upon the successors and, if properly assigned, the assigns of both parties. 21.5 No person not a party to this Agreement shall have any interest in or right under this Agreement as a third-party beneficiary or otherwise. IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first set forth above. MISSISSIPPI CHEMICAL CORPORATION AIR PRODUCTS AND CHEMICALS, INC. By: /s/ Charles O. Dunn By: /s/ Robert E. Gadomski President Group Vice President - Chemicals Date: September 15, 1994 Date: September 19, 1994 EXHIBIT A EXAMPLE BILLING Year To Date Ammonium Nitrate Prills Revenue $16,093,509.00 (Confidential treatment has been (Confidential requested) treatment has been requested) (Confidential treatment has been (Confidential requested) treatment has been requested) Variable Net-Back 12,968,645.37 Total Ammonium Nitrate Prill Tons 98,509 Sold (Confidential treatment has been (Confidential requested) treatment has been requested) Confidential treatment has been (Confidential requested) treatment has been requested) PRICE $122.65 Agricultural Product: YTD Tons Sold - Direct 18,000 YTD Tons Sold from Inventory 3,337 Total Tons Sold YTD 21,337 YTD Payment Due for Agricultural $2,616,983.05 Product Sold Credit for Previous Payments ($1,231,980.00) Current Month Payment 1,385,003.05 Shrinkage Monthly (3,173.85) A. Exhibit A - 1 Interest Monthly (1,312.37) B. Exhibit A - 1 Payment for Tons Sold $1,380,516.83 Payment for tons Shipped to $317,385.00 C. Exhibit A - 1 Inventory Credit for Tons Sold from Inventory ($157,239.25) D. Exhibit A - 1 Payment Due for Agricultural Product $1,540,662.58
EXHIBIT A - 1 EXAMPLE INVENTORY CALCULATION TONS Albany Montgomery Total BEGINNING INVENTORY: MCC Product 3,619 1,664 5,283 Agricultural Product 381 665 1,046 4,000 2,329 6,329 SHIPMENTS TO INVENTORY: MCC product 3,000 1,500 4,500 Agricultural Product 1,900 800 2,700 4,900 2,300 7,200 TOTAL TONS AVAILABLE MCC product 6,619 74.37% 3,164 68.35% 9,783 Agricultural Product 2,281 25.63% 1,465 31.65% 3,746 8,900 4,629 13,529 SALES FROM INVENTORY MCC product 1,885 74.37% 1,487 68.35% 3,372 Agricultural Product 649 25.63% 688 31.65% 1,337 2,534 2,175 4,709 ENDING INVENTORY MCC product 4,734 74.37% 1,677 68.35% 6,411 Agricultural Product 1,632 25.63% 777 31.65% 2,409 6,366 2,454 8,820 DOLLAR VALUE; AGRICULTURAL PRODUCT Total BEGINNING $ VALUE: $44,828.46 $78,303.75 $123,132.21 SHIPMENTS TO INVENTORY $223,345.00 $94,040.00 C. $317,385.00 VALUE AVAILABLE FOR SALE $268,173.46 $172,343.75 $440,517.21 SALES FROM INVENTORY $76,302.93 $80,936.32 D. $157,239.25 ENDING INVENTORY VALUE $191,874.24 $91,406.28(1) $283,280.52 PER TON AGRICULTURAL PRODUCT INVENTORY Total BEGINNING INVENTORY VALUE $117.66 $117.75 $117.72 SHIPMENTS TO INVENTORY Cash Cost $117.55 $117.55 Price 122.65 122.65 Lesser of Cash Cost and $117.55 $117.55 $117.55 Price VALUE AVAILABLE FOR SALE 117.57 117.64 $117.60 VALUE SHIPPED FROM 117.57 117.64 $117.60 INVENTORY ENDING INVENTORY VALUE $117.57 $117.64 $117.60 SHRINKAGE CALCULATION Total Shipments to Inventory $223,345.00 $94,040.00 $317,385.00 Shrinkage Factor 1.00% 1.00% Shrinkage $2,233.45 $940.40 A. $3,173.85 INTEREST CALCULATION Total Chase Manhattan Prime 7.75% Beginning Inventory $44,828.46 $78,303.75 Ending Inventory 191,874.24 91,406.28 Total 236,702.70 169,710.03 Average $118,351.35 $84,855.02 Total Interest $764.35 $548.02 B. $1,312.37 (1) Figures may not total as ending inventory value represents Per Ton Value Times Rounded Ton Figure
EXHIBIT B ELECTRONIC TRADE PAYMENTS 1. Company Name and Address Air Products and Chemicals, Inc. 7201 Hamilton Boulevard Allentown, PA 18915-1501 2. Company I.D. Number (IRS) 231274455 (IRS Taxpayer Number and (DUNS) 00-300-1070 Company DUNS Number) 3. Depository Bank Name and Address Mellon Bank, N.A. Mellon Bank Center Pittsburgh, PA 15258-0001 4. Depository Bank Transit 043000261 Routing Number 5. Depository Bank Operations Janice L. Pottmeyer Contact Name and Telephone Number 412/234-2489 6. Account Name Air Products and Chemicals, Inc. 7. Account Number 115-1265 8. Type of Transaction We Want Deposited CTP [x] CT X [ ] to Your Account 9. Company Contact Name and Ellen D. Appell, Treasury Telephone Number 610/481-7659 EXHIBIT C PRODUCT SPECIFICATION FOR AMMONIUM NITRATE PRILLS PRODUCED AT PACE, FLORIDA The properties listed below are for material sampled at the Finished Product Belt COMPOSITION PROPERTY UNITS MINIMUM MAXIMUM ANALYTICAL METHOD Total Nitrogen % 34.0 --- SD-131 Ammonium Nitrate % 97.2 --- SD-131 Magnesium % 1.6 2.0 501.13 Nitrate Total Moisture % --- 0.45 501.12 pH SU 6.0 7.0 501.14 Amines-Oil ppm 300.0 400.0 501.09 Coating PHYSICAL CHARACTERISTICS Mesh Particle Size (U.S. Standard Mesh) Range, % Distribution +6 0-1 +8 10-25 +10 25-35 +12 35-50 +14 5-10 -14 0-2 Unpacked Bulk Density 60-63 lb/cu.ft. Angle of Repose 25-28 degrees Appearance near-white prills EXHIBIT D LIMITATION OF LIABILITY AND DISCLAIMER OF WARRANTY A. SELLER AND MANUFACTURER MAKE NO WARRANTY, EXPRESS OR IMPLIED, EXCEPT THAT THE PRODUCT IS OF THE QUALITY SET FORTH IN MCC'S APPLICABLE PUBLISHED SPECIFICATIONS (IF ANY). THE AFORESAID WARRANTY RUNS ONLY TO THE BUYER. SELLER AND MANUFACTURER WARRANT NEITHER THE RESULTS TO BE OBTAINED FROM USE OF THE PRODUCT, ITS MERCHANTABILITY, NOR ITS FITNESS FOR ANY PARTICULAR PURPOSE. B. The quantity of Product is deemed to be the quantity determined at the time of shipment by shipper's scale weights or marine survey, whichever is applicable. C. Seller and Manufacturer disclaim all risk and liability directly or indirectly related to unloading, discharge, storage, handling, use (whether alone, in combination with other substances or in the operation of any process), and/or sale of the Product, and directly or indirectly arising out of compliance or noncompliance with the laws, ordinances, and regulations of any governmental entity or agency. Without limiting the generality of the foregoing, Seller and Manufacturer expressly disclaim liability for the failure of discharge or unloading implements or material used by the Buyer (whether or not supplied by Seller or Manufacturer) and for the infringement of patent or other proprietary rights. D. Any technical advice or assistance furnished Buyer, whether before or after delivery of the Product, for use in connection with unloading, discharge, handling, storage, shipment, processing or use of product, or in connection with the design or operation of any machinery or equipment related thereto, will be without charge and without warranty; Buyer shall accept such technical advice or assistance at Buyer's sole risk. E. In no event shall Seller or Manufacturer be liable to Buyer for loss of profits or for consequential, special or indirect damages resulting from delay in or failure of performance hereunder or in any way related hereto. In no event shall Seller or Manufacturer be liable to Buyer or any other party in connection with any claim related to or arising out of this sale, including for negligence, in an amount exceeding so much of the purchase price as is applicable to that portion of the Product with respect to which such claim relates. Failure to give notice of a claim with respect to the Product within ten (10) days after the occurrence upon which such claim is founded shall constitute a waiver by Buyer of such claim. F. No consent to, waiver of or excuse from a breach hereunder, whether express or implied, shall constitute a consent to, waiver of, or excuse from any prior, concurrent or subsequent breach of the same or any other term or provision. EXHIBIT E TECHNOLOGY TRANSFER The parties to the Agreement to which this Exhibit E is annexed agree that MCC will provide to Air Products sufficient information to allow Air Products to manufacture prilled ammonium nitrate in accordance with the Agreement and with MCC specifications for the product known by the trade name AMTRATE(R), the specifications for which are found at Exhibit F to the Agreement. SECTION 1. DEFINITIONS. For purposes of this Exhibit E: (a) "Product" means fertilizer grade prilled ammonium nitrate to be manufactured by Air Products to MCC's specifications for AMTRATE(R). (b) "MCC Coating Technology" means the know-how, process and apparatus for production and application of a coating agent for Product using MCC Information and Supplemental MCC Information. (c) "Territory" means Air Products' Pace, Florida, facility. (d) "Effective Date" is the effective date of the Agreement to which this Exhibit E is annexed. (e) "MCC Information" means designs, technical experience, data and know-how for the design and operation of ammonium nitrate plants and other valuable information conveyed to Air Products during the Term of the Agreement relating to (i) processes for producing particulate ammonium nitrate, including all steps undertaken from the preparation of the feedstock through the treatment of the end product; (ii) product specifications and additives designed to improve the physical properties of the particulate product; and (iii) processes for the production and use of a coating agent which is described in U.S. Patent 4,521,239. (f) "Supplemental MCC Information" means the inventions, specifications, production data, specialized know-how, skill and other secret and confidential technical information relating to the manufacture of ammonium nitrate which is owned or controlled by MCC or under which MCC has the royalty-free right to license others and which MCC acquires and conveys to Air Products during the Term of the Agreement. (g) "Term of the Agreement" means the period during which the Agreement to which this Exhibit E is annexed is in effect. SECTION 2. THE GRANT. (a) For the Term of the Agreement and upon the conditions hereinafter more specifically set forth, MCC hereby grants to Air Products, under said MCC Information and Supplemental MCC Information, the nonexclusive right to manufacture the Product in the Territory. (b) Except as MCC and Air Products may hereafter agree in writing, Air Products shall have no right (i) to permit or subcontract others to use the MCC Information or Supplemental MCC Information, or (ii) to disclose to or permit or sublicense others to use the MCC Information or Supplemental MCC Information, or (iii) to use the MCC Information or Supplemental MCC Information in connection with the manufacture, use or sale of ammonium nitrate prills other than under the terms of the Agreement. SECTION 3. DUTIES OF MCC. Any translation of MCC Information or Supplemental MCC Information or conversion of any MCC Information or Supplemental MCC Information from one numeric system to another shall be performed by Air Products at its own expense. Nothing contained herein shall be construed as requiring MCC to perform any act in conflict with the laws of the Untied States of America pertaining to the export of technical information or data. (a) MCC shall provide basic engineering information in sufficient detail and scope to allow Air Products to design, procure and construct additions and modifications to the Air Products facilities as needed to allow Air Products to manufacture Product. (b) MCC shall review and comment on engineering drawings and design documents prepared by Air Products in response to (a) above. (c) MCC shall provide operating instructions, laboratory procedures for required quality control testing, and specifications and vendor data for procurement of raw materials for use of the MCC Coating Technology. (d) MCC shall assist Air Products in a hazards review of the MCC Coating Technology prior to implementation by Air Products. (e) MCC shall, at Air Products' request, perform periodic inspections of construction in progress at the Air Products facility. (f) MCC shall, at Air Products' request, provide on-site consultation at Air Products' facility during commissioning and start-up for the purpose of assisting Air Products in the proper manufacture of the Product. MCC shall advise Air Products of any additional modifications, additions or adjustments necessary to facilitate manufacture of the Product. (g) MCC shall provide quality testing in MCC's laboratories and test facilities as MCC may deem appropriate in assessing whether Product manufactured by Air Products meets MCC's standards for AMTRATE(R), using samples provided by Air Products at the request of MCC. SECTION 4. DUTIES OF AIR PRODUCTS. (a) Promptly after receipt of the basic engineering information from MCC, Air Products shall proceed with all reasonable diligence to design, procure and install additions and modifications as needed to allow Air Products to begin manufacture of the Product provided, however, that at no time shall Air Products be compelled to install any additions or modifications or otherwise engage in any action which is in conflict with Air Products' safety, health or environmental standards or policies. (b) Air Products shall provide MCC a schedule for performance of the Air Products' duties and report progress against the same. (c) Air Products shall provide engineering design documents and drawings for MCC review and comment and shall make a good-faith effort to revise the design as recommended by MCC. (d) Air Products shall train Air Products personnel in accordance with operating instructions and quality control procedures provided by MCC and shall ensure that said instructions and procedures are followed. (e) Air Products shall provide samples for testing as reasonably requested by MCC. (f) Air Products shall proceed with all due diligence to achieve successful manufacture of the Product at the earliest reasonable time. (g) Air Products will buy raw materials for preparation of the coating agent only from MCC-approved vendors. (h) Air Products will cooperate with MCC on the specifications and sourcing of raw materials other than those defined in paragraph (g) above as necessary to assure compatibility of Product with MCC's AMTRATE(R). SECTION 5. PROTECTION AND OWNERSHIP OF MCC INFORMATION AND SUPPLEMENTAL MCC INFORMATION. (a) All MCC Information and Supplemental MCC Information furnished to Air Products hereunder remains the property of MCC. (b) Air Products agrees to keep confidential all MCC Information and Supplemental MCC Information provided to Air Products in tangible form and labeled "Confidential MCC." Air Products may not, without written consent from MCC, communicate or allow to be communicated any MCC Information or Supplemental MCC Information to anyone except to its officers, employees, and agents, and only to such extent as may be necessary for the proper manufacture and sale of the Product in accordance with the Agreement and this Exhibit E. (i) Air Products will cause said agents and employees to sign confidentiality agreements in conformance with Air Products' current policy and procedure, attached as Exhibit G. (ii) Air Products shall assist in prosecution of any civil or criminal action brought against any former Air Products agent or employee in the event of breach of such secrecy obligations. (c) If necessary to share information with any third party in order to practice MCC Information or Supplemental MCC Information, Air Products must bind the third party with a secrecy agreement no less stringent than this Exhibit E. Air Products shall assist in the prosecution of any civil or criminal action brought against any third party in the event of a breach of such secrecy obligations. (d) Except as needed to practice MCC Information or Supplemental MCC Information for manufacture of Product, Air Products will not, without the prior written consent of MCC, use, reproduce or copy, or permit the use, reproduction or copying of any of said drawings, prints, data and other documents. Air Products agrees that any reproduction, notes, summaries or similar documents relating to the MCC Information or Supplemental MCC Information supplied hereunder immediately upon their creation will be marked "Confidential MCC," will be covered by the terms of this Exhibit E and will be returned to MCC pursuant to paragraph 10(c). (e) The obligations and restrictions imposed by Section 5(b) above shall not apply with respect to MCC Information and Supplemental MCC Information: (i) which at the time of disclosure is in the public domain; (ii) which after disclosure is published or otherwise becomes part of the public domain through no fault of Air Products; (iii) which Air Products can show was in its possession at the time of disclosure and is not under an ongoing obligation of confidentiality to MCC or its affiliates or to a third party; or (iv) which Air Products can show was received by it after the time of disclosure hereunder from a third party who did not require Air Products to hold it in confidence and who did not acquire it, directly or indirectly, from MCC or its affiliates under an obligation of confidence. (f) It is further agreed and understood that even if relieved of the obligation of confidentiality by the exceptions recited above in Section 5(e), or exceptions as may otherwise be permitted by this Exhibit E, Air Products shall not disclose or cause or permit to be disclosed, to any party any correlation or identity which may exist between any part of the MCC Information or Supplemental MCC Information and any other information available or made available to Air Products from any other source. (g) For the purposes of the foregoing paragraphs, disclosures made to Air Products under or in connection with this Agreement which are specific, e.g., as to engineering and design practices and techniques, equipment, products, operating conditions, etc., shall not be deemed to be within the exceptions stated in Section 5(e) merely because individual features are known to the public or in the possession of Air Products. In addition, any combination of features shall not be deemed to be within the foregoing exceptions merely because individual features are known to the public or in Air Products' possession, but only if the combination itself and its principal of operation are generally known to the public or in the possession of Air Products. SECTION 6. PROTECTION OF INDUSTRIAL PROPERTY. (a) Air Products expressly acknowledges and agrees that, except in the Territory and to the extent of the grant set forth in Section 2(a) hereof, it does not acquire under the Agreement or this Exhibit E any rights in or to the use of the MCC Information and Supplemental MCC Information anywhere in the world. (b) Air Products further undertakes that it may not at any time contest anywhere in the world ownership of any of the MCC Information and Supplemental MCC Information rights of MCC. SECTION 7. COSTS AND EXPENSES. (a) MCC shall bear all costs and expenses incurred in discharging its duties pursuant to Section 3 of this Exhibit E. (b) Air Products shall bear all costs and expenses incurred in discharging its duties pursuant to Section 4 of this Exhibit E plus all costs and expenses incurred in the manufacture of the Product. SECTION 8. INDEMNIFICATION AND RELEASE. (a) MCC shall indemnify Air Products and hold it harmless against and from any liability, claims or damages and expenses whatsoever in any way arising out of a claim for misappropriation of trade secrets or infringement of a patent owned or exclusively licensed by a third party by virtue of Air Products' manufacture of Product. (b) Nothing contained in the Agreement or this Exhibit E shall be construed as: (i) requiring the filing by MCC of any patent application, the securing of any patent or any patent in force after the maintaining of any patent in force after the Effective Date; (ii) conferring by implication, estoppel or otherwise upon Air Products any license or other right under any patent except rights expressly granted hereunder to Air Products. (c) Air Products shall indemnify MCC for (i) third-party claims for injury or property damage occurring at Air Product's Pace, Florida, facility which arise in connection with Air Products' procurement, construction, and operations relating to manufacture of Product; provided, however, that this indemnification obligation shall not apply where such claim arises as a consequence of the practice of MCC Information or Supplemental MCC Information; and (ii) vendor demands for payment in connection with Air Products' implementation of MCC Information or Supplemental MCC Information; provided, however, that this Indemnification obligation shall not apply where such demand arises as a consequence of MCC's unauthorized commitments to such vendor. SECTION 9. IMPROVEMENT. (a) Air Products may not conduct any research into MCC Coating Technology except that Air Products may conduct necessary safety studies relating to MCC Coating Technology. (b) Air Products may not patent or otherwise disclose any inventions or improvements made or acquired by Air Products applicable to MCC Information or Supplemental MCC Information, and the same shall be fully disclosed by Air Products to MCC and shall be the property of MCC without obligation of any type or kind to Air Products. SECTION 10. EFFECT OF TERMINATION. Upon termination or expiration of the Agreement, Air Products promises: (a) to cease all manufacture and sale of Product; (b) to cease the use of all MCC Information and Supplemental MCC Information; (c) to return to MCC all documents free of charge which have been retained by Air Products (including but not limited to any reproductions, notes or summaries) relating to the MCC Information and Supplemental MCC Information provided by MCC; and (d) to disable to the extent necessary to render it unusable, all equipment installed to facilitate the application of MCC Information and Supplemental MCC Information. Air Products' obligations of confidentiality shall survive the termination of the Agreement and this Exhibit E and shall expire the later of the year 2014 or fifteen (15) years after termination of the Agreement. SECTION 11. NONASSIGNABILITY. This Exhibit E and each and every covenant, term and condition herein is binding upon and inures to the benefit of the parties hereto and their respective successors, but neither this Exhibit E nor any rights hereunder may be assigned or sublicensed, directly or indirectly, voluntarily or by operation of law, by Air Products without first receiving the prior written consent of MCC. SECTION 12. UNENFORCEABLE TERMS. In the event any term or provision of this Exhibit E shall for any reason be declared invalid by order of any court or administrative or regulatory body, MCC, in its sole discretion, shall have the right to either terminate the Agreement by giving at least one (1) year's prior notice to Air Products or declare by notice to Air Products that such invalidity, illegality or unenforceability shall not affect any other term or provision hereof. In the latter event, this Exhibit E shall be interpreted and construed as if such term or provision had never been contained herein to the extent the same shall have been held invalid. [MCC CONFIDENTIAL -- THIS EXHIBIT IS NOT TO BE COPIED OR DISTRIBUTED TO OR VIEWED BY ANYONE WHO IS NOT A PARTY TO A SECRECY AGREEMENT WITH MCC OR AIR PRODUCTS] EXHIBIT F Product Specifications for Agricultural Product Following Installation of MCC Technology set forth in Exhibit E (Confidential treatment has been requested) EXHIBIT G 1. Employee Patent, Copyright and Confidential Information Agreement 2. Security Statement For Termination of Employment 3. Certificate of Air Products' Policy and Procedures Regarding the Maintenance of Confidential Information and Trade Secrets EMPLOYEE PATENT, COPYRIGHT AND CONFIDENTIAL INFORMATION AGREEMENT In consideration of my employment by Air Products and Chemicals, Inc., its divisions, affiliates and subsidiaries (all, collectively, referred to hereinafter as the Company), I agree that I will: A. Communicate to the Company promptly and fully in writing, in such format as the Company may deem appropriate, all inventions made or conceived by me whether alone or jointly with others from my time of entering the Company's employee until I leave, and as requested, to assign to the Company those of such inventions which (1) relate to a field of business, research or investigation in which the Company has an interest, or (2) result from, or are suggested by, any work which I may do for or on behalf of the Company; B. Make and maintain adequate permanent records of all such inventions, in the form of memoranda, notebook entries, drawings, print-outs, or reports relating thereto, in keeping with then current Company procedures. I agree that these records, as well as the inventions themselves, shall be and remain the property of the Company at all times; C. Cooperate with and assist the Company and its nominees, at their sole expense, during my employment and thereafter, in securing and protecting patent rights in which I am a named inventor or other similar rights in the United States and foreign countries. In this connection I specifically agree to execute all papers which the Company deems necessary to protect its interests including the execution of assignments of invention and to give evidence and testimony, as may be necessary, to secure and enforce the Company's rights; D. Except as the Company may otherwise authorize in writing, not use or disclose to others, reproduce or copy at any time, except as my Company duties may require, either during or subsequent to my employment, any private information of the Company or of others as to whom the Company has an obligation of confidentiality which may come to my attention or be developed by me during the course of my employment other than information which is or becomes public knowledge in a lawful manner; E. Upon termination of my employment with the Company, deliver to it all records, data and memoranda of any nature which are in my possession or control and which relate to my employment or the activities of the Company, including, for example, notebooks, diaries, reports, photographs, films, manuals and computer software media. F. Following termination of my employment, honor and abide by my continuing obligation of confidentiality. I agree that, in any situation which arises and involves a question of my freedom to disclose particular information to a subsequent employer or anyone else, I will contact the Company in writing and elicit its opinion on my freedom to make such a disclosure. It is also agreed that: G. All creative works which I produce during my employment and which relate to the Company's business or technology shall be considered to have been prepared for the Company as a part of and in the course of my employment. Any such work shall be owned by the Company regardless of whether it would otherwise be considered a work made for hire. Such works shall include, among other things, computer programs and documentation, non-dramatic library works (e.g., professional papers and journal articles), visual arts (e.g., pictorial, graphic and three-dimensional), sound recordings, motion pictures and other audiovisual works. H. Nothing in this agreement shall bind me or the Company to any specific period of service or employment, nor shall the termination of such employment in any way affect the obligations assumed by me herein. Further, this agreement replaces any and all prior agreements or understandings between me and the Company concerning these subjects; I. This agreement shall bind my heirs, executors, and administrators, and shall inure to the benefit of the successors and assigns of the Company. J. I will not disclose to any other employee of the Company any information as to which I owe a continuing obligation of confidentiality to a previous employer or client. Any inventions, patented or unpatented, which were made or conceived by me prior to my employment are excluded from the operation of this agreement, and I warrant that there are no such inventions, other than those listed by me in the space provided on the back of this document. (L.S.) ---------------------------------------- Signature of the Employee WITNESS: DATED: (List invention information on the back of this agreement.) Form 4000 (REV. 3/94) SECURITY STATEMENT FOR TERMINATION OF EMPLOYMENT I, , make the ----------------------------------------------------------------- following statement to Air Products and Chemicals, Inc., its divisions, affiliates and subsidiaries (hereinafter referred to as Air Products) with the understanding and intent that my statement will be used by Air Products in carrying out its duty to protect the security of Classified Information respecting the national defense of the United States. As to such Classified Information: 1. I {a. [ ] have (complete items 2, 3, 4)b. [ ] have not (skip items 2, 3, 4)} knowingly had access to such Classified Information during my employment by Air Products. 2. I {a. [ ] do b. [ ] do not} now have in my possession or custody or control any document or other thing containing or incorporating Classified Information, or other matter classified ``CONFIDENTIAL''or higher to which I obtained access during my employment. All such material that I may have had in my possession has been returned by me. 3. I {a. [ ] am b. [ ] am not} retaining or taking away with me from my place of employment any document or thing containing or incorporating Classified Information, or other matter classified ``CONFIDENTIAL''or higher to which I obtained access during my employment, in any manner whatsoever. 4. I {a. [ ] shall b. [ ] shall not} hereafter in any manner reveal or divulge to any person any Classified Information of which I have gained knowledge during my employment, except as may be hereafter authorized by the Department of Defense. If any of statements 2, 3, or 4 is completed with selection `a,'' attach a full explanation of the circumstances, including the names of any persons authorizing the particular handling of the Classified Information. If the employee refuses to sign the statement, a full explanation of the circumstances of the refusal shall be attached hereto. In either event, the matter shall be brought immediately to the attention of the Security Officer, prior to the departure of the employee if possible. With respect to any of statements 1, 2, 3, or 4 above answered affirmatively, the employee is advised that the penal provisions of the Espionage Laws, (Title 18, U.S. Code, Section 793, 794, 795, 796, 797, 798), provide that one who unlawfully retains or discloses Classified Information is subject to severe criminal penalties and that the making of a false statement pertaining to Classified Information in this document may be punished as a felony under Title 18, U.S. Code. Further, with respect to other information which is covered by my Employee Patent, Copyright, and Confidential Information Agreement with Air Products, I recognize the property right which Air Products has in its private Company Information, whether or not classified with a security marking and in whatever form recorded. In terminating my employment with Air Products, except as authorized under circumstances explained in the statement attached, I have returned and accounted for all material and copies, of whatever kind, containing Company Information, received or prepared by me in connection with my employment, except for information which is available to the public generally, and I have retained no copies, reproductions or excerpts of such material whether written, printed, photographed or otherwise encoded or stored. Each of the above statements is true to the best of my knowledge and belief. Witness: Signed: Title: Date: NOTE: This form when completely filled out will be filed in the employee's personnel folder. CERTIFICATE OF AIR PRODUCTS' POLICY AND PROCEDURES REGARDING THE MAINTENANCE OF CONFIDENTIAL INFORMATION AND TRADE SECRETS I, Plant Manager of Air Products and Chemicals, Inc., do hereby certify that the following is a true and accurate summary of Air Products and Chemicals, Inc.'s, policy and procedure regarding the maintenance of confidential information and trade secrets: The Air Products - Escambia Quality Management System is based on written procedures and specifications which define the steps required to process customer orders from receipt, through delivery of product and services. In the event proprietary information is to be disclosed to vendors, executed confidentiality agreements are required in advance of requests for quotations. Quality Management documentation is strictly controlled to ensure that only the appropriate, current and approved version of all documentation is available at the point of use. Additional copies can by made available when required only when they are identified as noncontrolled. Policies, procedures, specifications and work instructions affecting the Air Products - Escambia Quality Management System are reviewed and approved by identified and authorized persons prior to issue. Any revisions to the documentation are controlled by the same review and approval process, and the obsolete versions are removed from service. Changes to the documentation are recorded so the holders of the documents may be made aware of the nature of the revision. IN WITNESS WHEREOF, I have hereunto set my hand this 14th day of September, 1994. /s/ Brian A. Gebbia Plant Manager EXHIBIT H SECRECY AGREEMENT The parties to the Agreement to which this Exhibit H is annexed agree as follows: Air Products possesses technical Information, technical experience, data and know-how for the operation of an ammonium nitrate plant at its Pace, Florida, facility and possesses other valuable AP Information relating to the production of coated particulate ammonium nitrate (all of the foregoing hereinafter referred to as "AP Information"). Air Products considers the AP Information to be proprietary to Air Products and of significant commercial value. Air Products is willing to disclose such AP Information to MCC via documents, discussions and visits to its Pace, Florida, facility for the sole purpose of implementing the MCC Coating Technology, the MCC Information and Supplemental MCC Information (as those terms are defined in Exhibit E to the Purchase Agreement) and as necessary to facilitate the modifications to the Pace, Florida, facility required to enable the use of the MCC Coating Technology, MCC Information and Supplemental MCC Information. MCC neither anticipates the need for nor expects to receive any AP Information; however, in the event that it becomes necessary for MCC to receive such AP Information and if the disclosure of the AP Information satisfies the provisions of paragraph 5 of this Secrecy Agreement with respect to advance notice and acceptance, then MCC will be bound by the terms of this Secrecy Agreement. IN CONSIDERATION THEREOF, it is agreed as follows: 1. MCC will not, without Air Products' consent, use or disclose to any other person, firm or corporation any of the AP Information disclosed, and MCC further agrees to require its employees and any others who, of necessity, shall be given access to, or receive disclosure of, any of said AP Information to maintain the same in confidence. 2. AP Information as used herein does not include technical AP Information, data, designs, drawings or other material which: (a) MCC can show was in its possession at the time of disclosure and was not acquired, directly or indirectly, from Air Products; or (b) is acquired by MCC from others who have no confidential commitment to Air Products with respect to same; or (c) becomes, through no fault of MCC, a part of the public domain by publication or otherwise. 3. Disclosures of AP Information by Air Products made to MCC under or in connection with this Secrecy Agreement which are specific, e.g., as to engineering and design practices and techniques, equipment, products, operating conditions, compositions, formulations, etc., shall not be deemed to be within the exceptions stated in paragraph 2 hereof merely because individual features are known to the public or in the possession of MCC. In addition, any combination of features shall not be deemed to be within the exceptions stated in paragraph 2 hereof merely because individual features are known to the public or are in MCC's possession, but only if the combination itself and its principle of operation are generally known to the public or is in the possession of MCC. 4. Except as may otherwise by permitted by this Secrecy Agreement, MCC shall not disclose, or cause or permit to be disclosed, to any party not subject to this Secrecy Agreement any correlation or identity which may exist between any part of AP Information acquired by MCC pursuant to or in connection with this Secrecy Agreement and any other AP Information available or made available to MCC from any other source. 5. Any disclosure of AP Information which is considered confidential howsoever communicated whether orally, visually, in writing or by other means shall be covered by this Secrecy Agreement, provided Air Products identified such disclosures as confidential in advance of the communication and, if such disclosure is communicated orally or visually, to summarize and confirm the confidential nature of such communication in writing within ninety (90) days of communication. 6. All drawings, prints, data and other documents disclosing such AP Information to MCC shall remain the property of Air Products and shall be deemed loaned to MCC only for the limited purposes specified above, and MCC will not, without the prior written consent of Air Products, use, reproduce or copy, or permit the use, reproduction or copying of any of said drawings, prints, data and other documents. MCC shall return AP Information to Air Products upon request, and MCC may not retain any copies of any documents containing such AP Information except that one copy may be retained in MCC's Legal Department files for archival purposes. 7. Nothing contained in this Secrecy Agreement or in any disclosure hereunder made by Air Products shall be construed to grant to MCC any license or other rights in or to the AP Information so disclosed or under any patent or patent application relating thereto. 8. This Secrecy Agreement shall not be modified other than in writing and shall be construed under the laws of the state of Mississippi. 9. This Secrecy Agreement expires in 2014. EX-10.5 6 EXHIBIT 10.5 AMENDMENT NO. 1 TO PURCHASE AGREEMENT THIS Amendment No. 1 to Purchase Agreement, by and between Mississippi Chemical Corporation ("MCC") and Air Products and Chemicals, Inc. ("Air Products"), is entered into as of the 31st day of May, 1995. WITNESSETH: WHEREAS, MCC and Air Products are parties to a Purchase Agreement ("Agreement") dated September 15, 1994, which became effective October 1, 1994; and WHEREAS, MCC and Air Products wish to modify certain provisions of that Agreement. NOW, THEREFORE, intending to be legally bound thereby, the parties agree as hereafter set forth. Paragraph 8.4 is hereby amended by deleting the paragraph in its entirety and inserting the following paragraph in its stead: In the event that Air Products is unable to meet the specifications set forth in Exhibit F following installation of the technology described in Exhibit E, Air Products shall have the right to install additional equipment or make such other modifications as are necessary to meet such specifications by December 31, 1995. In the event that Air Products elects not to make such installations or modifications as are necessary to meet the specifications, then MCC at its sole and exclusive option may modify the specifications or terminate this Agreement effective March 31, 1996. Except as amended hereby, all other terms and conditions of the Purchase Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 1 to Purchase Agreement as of the date and year first written above, this Amendment to be effective as of May 31, 1995. MISSISSIPPI CHEMICAL CORPORATION By: /s/ Charles O. Dunn President AIR PRODUCTS AND CHEMICALS, INC. By: /s/ V. A. Bonanni Vice President and General Manager EX-10.7 7 EXHIBIT 10.7 AMENDMENT OF AGREEMENT This Amendment of Agreement ("Amendment") is effective as of the 1st day of August, 1994, between MISSISSIPPI PHOSPHATES CORPORATION ("MPC") and ATLANTIC FERTILIZER & CHEMICAL CORPORATION ("AFC"). WHEREAS, MPC and AFC are parties to that certain Agreement effective as of October 1, 1991, whereby MPC appointed AFC as its exclusive distributor for DAP produced at the Pascagoula Plant; and WHEREAS, MPC and AFC desire to amend the Agreement as hereinafter set forth; NOW, THEREFORE, MPC and AFC hereby agree as follows: Article XI, paragraph 11.1 of the Agreement is hereby amended by deleting the first sentence thereof and by inserting in its place the following: Subject to MPC's right of early termination, in accordance with the provisions of paragraphs 2.3 and 7.3 above, and paragraphs 11.2, 11.3, and 13.1 below, the primary term of this Agreement shall commence on November 1, 1991, and shall end on June 30, 2003. IN WITNESS WHEREOF, MPC and AFC have caused this Amendment of Agreement to be executed in duplicate originals as of the date first above written. ATLANTIC FERTILIZER & CHEMICAL MISSISSIPPI PHOSPHATES CORPORATION CORPORATION By: /s/ James Cattano By: /s/ Charles O. Dunn President President EX-10.10 8 EXHIBIT 10.10 AMENDMENT NO. 3 OF AGREEMENT This Amendment No. 3 of Agreement ("Amendment No. 2") is effective as of January 1, 1995, between OFFICE CHERIFIEN DES PHOSPHATES ("OCP") and MISSISSIPPI PHOSPHATES CORPORATION ("MPC"). WHEREAS, MPC and OCP are parties to that certain Agreement with an Effective Date of September 15, 1991, for the sale and purchase of all MPC's requirements of phosphate rock at its Pascagoula Plant ("Agreement"); and WHEREAS, the Agreement has heretofore been amended by Amendment No. 1 effective as of July 1st, 1992, and Amendment No. 2 effective as of July 1st, 1993; and WHEREAS, OCP and MPC desire to further amend the Agreement as hereinafter set forth; NOW, THEREFORE, MPC and OCP hereby agree as follows: 1. Article IX of the Agreement is hereby amended by deleting the first paragraph thereof in its entirety and inserting in its place the following: In the event that MPC sells to a purchaser all or substantially all of the assets of the Pascagoula Plant, OCP shall be entitled to receive fifty percent (50%) of the excess of (i) the difference between (x) the purchase price payable by the purchaser of all or substantially all of the assets of the Pascagoula Plant and (y) the "fair market value" (determined in accordance with the provisions of Article XII) of the 1995 Unloading System Project, as described and defined in Exhibit E hereto, determined pursuant to Article XII hereof over (ii) the difference between (a) the then current book value of the assets to be purchased and (b) the then current book value of the 1995 Unloading System Project. 2. The Agreement is hereby amended by adding thereto a new Article XII which shall read in its entirety as follows: ARTICLE XII If the purchase and sale of phosphate rock hereunder is to be discontinued as a result of a sale by MPC of substantially all of the assets of the Pascagoula Plant, then MPC shall pay to 0CP an amount of money determined by multiplying (i) the "fair market value" (determined in accordance with the further provisions of this Article XII) of the "1995 Unloading Systyem Project" times (ii) a fraction, the numerator of which is the total of all principal payments made with respect to the indebtedness incurred by MPC to finance the 1995 Unloading System Project prior to the discontinuance of the purchase and sale of phosphate rock hereunder, and the denominator of which is the total aggregate principal amount of the indebtedness incurred by MPC to finance the 1995 Unloading System Project. The fair market value of the 1995 Unloading System Project shall be determined based on good-faith negotiations between the parties hereto; provided, however, if the parties are unable to reach agreement on the fair market value of the 1995 Unloading System Project within thirty (30) days following the day MPC first advises OCP that the purchase and sale of phosphate rock hereunder is to be discontinued as a result of a sale of the Pascagoula Plant, each party shall promptly select an independent appraiser to determine on their behalf such fair market value. The two appraisers so selected shall render their determinations within forty-five (45) days after the day MPC first advises OCP that the purchase and sale of phosphate rock hereunder is to be discontinued as a result of a sale of the Pascagoula Plant, and the arithmetic average of their respective determinations shall be the fair market value of the 1995 Unloading System Project for purposes of this Article XII and shall be final and binding on both parties. The fair market value of the 1995 Unloading System Project, whether the same shall be determined by negotiations of by the appraisers, shall be determined on the basis of, and shall be an amount equal to, the proportionate share of the fair market value of the Pascagoula Plant (determined in the same manner and at the same time that the fair market value of the 1995 Unloading System Project is determined) which is directly attributable to and comprised of the 1995 Unloading System Project. 3. The Agreement is hereby amended by deleting the current Exhibit B and inserting in lieu thereof the revised Exhibit B which is attached as Schedule 1 to this Amendment No. 3. 4. The Agreement is hereby amended by adding thereto Exhibit E which is attached as Schedule 2 to this Amendment No. 3. 5. Except as specifically set forth in this Amendment No. 3, all of the terms and conditions of the Agreement, as heretofore amended, shall continue in full force and effect. 6. All capitalized terms used in this Amendment No. 3 and not otherwise defined herein shall have the meanings set forth in the Agreement. IN WITNESS WHEREOF, MPC and OCP have caused this Amendment No. 3 to be duly executed as of the first day of January 1995. MADE OUT IN DUPLICATE ON FEBRUARY 22ND, 1995 MISSISSIPPI PHOSPHATES CORPORATION OFFICE CHERIFIEN DES PHOSPHATES By: /s/ Charles O. DUNN By: /s/ Mohamed FETTAH President Director-General SCHEDULE 1 TO AMENDMENT NO. 3 OF AGREEMENT EXHIBIT B (Confidential treatment has been requested) with respect to each Contract Year shall be determined by dividing (i) the difference between (x) the sum of (a) (confidential treatment has been requested) and (b) the total of all payments of principal and interest made during such Contract Year with respect to indebtedness incurred by MPC to finance the cost of the 1995 Unloading System Project and (y) the total aggregate dollar amount of all reductions to the (confidential treatment has been requested) during such Contract Year calculated under paragraph 13 of the Sale Contract Addendum for the first Contract Year dated as of October 9, 1991, by (ii) the number of (confidential treatment has been requested) hereunder during such Contract Year. The determination of (confidential treatment has been requested) for each Contract Year shall be made as soon as practicable, but not later than thirty (30) days after the end of each Contract Year. SCHEDULE 2 TO AMENDMENT NO. 3 OF AGREEMENT EXHIBIT E THE 1995 UNLOADING SYSTEM PROJECT The 1995 Unloading System Project shall consist of all of the new equipment and facilities and all improvements and modifications to the existing phosphate rock unloading system at the Pascagoula Plant which are assembled, constructed and installed in order to enable the Pascagoula Plant to receive deliveries of phosphate rock from "PANAMAX" class vessels. The proposed installation includes two (2) Timstar continuous unloading devices, each designed for an instantaneous unloading rate of six hundred (600) tons per hour. The proposed installation shall also include such additional improvements to the existing dock area as are required in connection with the 1995 Unloading System Project. It is anticipated that the 1995 Unloading System Project shall be acquired and all work in connection therewith shall be performed during the Contract Year ending June 30, 1995. The estimated cost of the 1995 Unloading System Project is Four Million Dollars ($4,000,000). It is expected that MPC will finance the 1995 Unloading System Project with monies borrowed from MCC or from a commercial bank. The principal sum of such indebtedness shall be repaid in twenty (20) equal consecutive quarterly installments beginning on the first day of the calendar quarter following completion of the 1995 Unloading System Project. Accrued interest on such indebtedness shall be paid on the same dates as principal payments. EX-10.11 9 EXHIBIT 10.11 AMENDMENT NO. 2 OF AGREEMENT This Amendment No. 2 of Agreement ("Amendment No. 2") is effective as of July 1st, 1993, between OFFICE CHERIFIEN DES PHOSPHATES ("OCP") and MISSISSIPPI PHOSPHATES CORPORATION ("MPC"). WHEREAS, MPC and OCP are parties to that certain Agreement with an Effective Date of September 15, 1991, for the sale and purchase of all MPC's requirements of phosphate rock at its Pascagoula Plant ("Agreement"); and WHEREAS, the Agreement has heretofore been amended by Amendment No. 1 effective as of July 1st, 1992; and WHEREAS, OCP and MPC desire to further amend the Agreement as hereinafter set forth; NOW, THEREFORE, MPC and OCP hereby agree as follows: 1. Article I of the Agreement is hereby amended by changing the second sentence of the first paragraph thereof to read in its entirety as follows: "the term of this Agreement shall commence on the Effective Date and shall continue until June 30, 2003". 2. Article III of the Agreement is hereby amended by deleting the first five lines thereof and by inserting in their place the following: "On or before the first day of each Contract Year, the parties will execute a Sale Contract Addendum with respect to such Contract Year which shall contain the following;" 3. Article III of the Agreement is hereby further amended by adding the word "Estimated" before the words "Base Price" in the first line of Subarticle a. 4. Article III of the Agreement is hereby further amended by adding after the word "Agreement" in the second line of the second paragraph, the words "and the Exhibits thereto." 5. Article IV of the Agreement is hereby amended by changing the definition of "Base Price" as set forth on page 4 to read in its entirety as follows: "Base Price" shall be an amount per metric ton equal to the difference between (i) the (confidential treatment has been requested) as defined in and determined pursuant to Exhibit A hereto and (ii) (confidential treatment has been requested) as defined in and determined pursuant to Exhibit B hereto". 6. Article IV of the Agreement is hereby further amended by adding thereto the following new paragraph immediately after the definition of Sales, General and Administrative Expense: "In the determination of Net Margins (Losses), there shall not be included any revenues or any gains or losses on hedging transactions involving diammonium phosphate and/or anhydrous ammonia futures contracts". 7. Article IV of the Agreement is hereby further amended by inserting the following language immediately after the first sentence of the last paragraph hereof: "If the actual Purchase Price for a Contract Year exceeds the Estimated Base Price (as defined in Article VI) that MPC paid OCP for phosphate rock delivered in said Contract Year, OCP shall promptly issue MPC a debit memo for the difference for each metric ton of phosphate rock delivered during such Contract Year. If the Purchase Price for such Contract Year is less than the Estimated Base Price that MPC paid to OCP for phosphate rock delivered in said Contract Year, OCP shall promptly issue MPC a credit memo for the difference for each metric ton of phosphate rock delivered to MPC during such Contract Year. Such debit or credit memo shall be paid in accordance with the provisions of Article VI hereof". 8. Article VI of the Agreement is hereby amended by deleting the second paragraph thereof and inserting in its place the following paragraph: "OCP shall invoice MPC for each shipment as of the date of the bill of lading. Such invoice shall be priced at the "Estimated Base Price" which shall be an amount per metric ton equal to the difference between (i) the (confidential treatment has been requested) as defined in and determined pursuant to Exhibit C hereto and (ii) (confidential treatment has been requested) as defined in and determined pursuant to Exhibit D hereto. 9. Article VI of the Agreement is hereby further amended by deleting the first sentence of the last paragraph thereof and by inserting in its place the following sentence: "All payments of debit or credit memos issued pursuant to the last paragraph of Article IV hereof shall be made within ten (10) days following the issuance of such debit or credit memos in accordance with Article IV hereof". 10. The Agreement is amended by attaching thereto Exhibits A, B, C, and D, which are attached as Schedules 1, 2, 3 and 4, respectively, to this Amendment No. 2. 11. Except as specifically set forth in this Amendment No. 2, all of the terms and conditions of the Agreement, as heretofore amended, shall continue in full force and effect. 12. All capitalized terms used in this Amendment No. 2 and not otherwise defined herein shall have the meanings set forth in the Agreement and in its Addendum No. 1. IN WITNESS WHEREOF, MPC and OCP have caused this Amendment No. 2 to be duly executed as of the date first hereinabove written. MADE OUT IN DUPLICATE ON MARCH 21ST, 1994 MISSISSIPPI PHOSPHATES CORPORATION, OFFICE CHERIFIEN DES PHOSPHATES, By: /s/ Charles O. DUNN By: /s/ Mohamed FETTAH President General Manager SCHEDULE 1 TO AMENDMENT NO. 2 OF AGREEMENT EXHIBIT A The (confidential treatment has been requested) per metric ton of rock with respect to each Contract Year shall be determined in accordance with the following: 1) It is intended by parties that, subject to the adjustments described in paragraph (2) below, the (confidential treatment has been requested) shall be an amount equal to the cash cost per metric ton on a dry basis of phosphate rock incurred by the (confidential treatment has been requested). 2) In order to equalize the above (confidential treatment has been requested) against phosphate rock delivered by OCP to MPC hereunder, such (confidential treatment has been requested) shall be adjusted for BPL content on a rise/fall basis of (confidential treatment has been requested) per metric ton per unit (proportionately for fractions) of dry basis BPL content above or below 68% BPL. Such (confidential treatment has been requested) shall also be adjusted to reflect reduced sulfur consumption (confidential treatment has been requested). This adjustment shall be calculated based on a differential sulfur usage factor of (confidential treatment has been requested) hereunder and a (confidential treatment has been requested) during the Contract Year. 3) Not later than ten (10) days after each Contract Year, MPC and OCP shall meet and shall attempt to determine by agreement the (confidential treatment has been requested). If no agreement is reached prior to such tenth day after the end of the Contract Year, each party shall, on or before such tenth day after the end of the Contract Year, appoint an individual or firm knowledgeable about the phosphate industry to determine on its behalf such (confidential treatment has been requested). Within twenty (20) days after the end of the Contract Year, the two appointed industry consultants shall meet and attempt to agree on such (confidential treatment has been requested). If no agreement is reached prior to such twentieth day after the end of such Contract Year, then, on or before such twentieth day after the end of the Contract Year, the two appointed industry consultants shall jointly appoint a third industry consultant. Prior to thirty (30) days after the end of such Contract Year, the three industry consultants shall meet to determine such (confidential treatment has been requested). If no two consultants reach the same decision, then the mathematical average of the two closest determinations shall constitute the decision of the three consultants. The decision of the consultants reached in accordance with the foregoing shall be final and binding on MPC and OCP. Each party shall be responsible for paying the fees and expenses of the industry consultant appointed by it, and the parties shall share equally the fees and expenses of any third industry consultant appointed. SCHEDULE 2 TO AMENDMENT NO. 2 OF AGREEMENT EXHIBIT B (Confidential treatment has been requested) with respect to each Contract Year shall be determined by dividing (i) the difference between (x) (confidential treatment has been requested) and (y) the total aggregate dollar amount of all reductions to the (confidential treatment has been requested) during such Contract Year calculated under paragraph 13 of the Sale Contract Addendum for the first Contract Year dated as of October 9, 1991, by (ii) the number of (confidential treatment has been requested) hereunder during such Contract Year. The determination of (confidential treatment has been requested) for each Contract Year shall be made as soon as practicable, but not later than thirty (30) days after the end of each Contract Year. SCHEDULE 3 TO AMENDMENT NO. 2 OF AGREEMENT EXHIBIT C At least (10) days prior to the first day of each Contract Year, MPC and OCP shall meet to determine by mutual agreement the (confidential treatment has been requested) for such Contract Year. SCHEDULE 4 TO AMENDMENT NO. 2 OF AGREEMENT EXHIBIT D At least (10) days prior to the first day of each Contract Year, MPC and OCP shall meet to determine by mutual agreement (confidential treatment has been requested) for the Contract Year. EX-10.12 10 EXHIBIT 10.12 AMENDMENT NO. 1 OF AGREEMENT This Amendment No. 1 of Agreement ("Amendment No. 1") is effective as of July 1, 1992, between OFFICE CHERIFIEN DES PHOSPHATES ("OCP") and MISSISSIPPI PHOSPHATES CORPORATION ("MPC"). WHEREAS, MPC and OCP are parties to that certain Agreement with an Effective Date of September 15, 1991, for the sale and purchase of all of MPC's requirements of phosphate rock at its Pascagoula Plant ("Agreement"); and WHEREAS, OCP and MPC desire to amend the Agreement as hereinafter set forth; NOW, THEREFORE, MPC and OCP hereby agree as follows: 1. Article IV of the Agreement is hereby amended by changing the second sentence of the definition of "Sales, General and Administrative Expense" as set forth on page 5 to read in its entirety as follows: Subject to the adjustments hereafter described, expenses shall include an annual payment of (confidential treatment has been requested) to MCC for certain services to be provided by MCC to MPC. and by inserting the following immediately thereafter: The annual payment by MPC to MCC for services shall be reduced by (confidential treatment has been requested) with respect to the Contract Year commencing on July 1, 1992. Threafter, with respect to subsequent Contract Year(s), the annual payment(s) may be increased by amounts not exceeding (confidential treatment has been requested) in the aggregate. Payment of any such increases in the annual payment(s) to MCC for services and payments of the `Deferred Portion'' (as defined in Addendum No. 1 to Sale Contract Addendum No. 2) shall be made in the same amounts and at the same time. 2. Except as specifically set forth in this Amendment, all of the terms and conditions of the Agreement shall continue in full force and effect. 3. All capitalized terms used in this Amendment and not otherwise defined herein shall have the meanings set forth in the Agreement. IN WITNESS WHEREOF, MPC and OCP have caused this Amendment to be duly executed as of the 12 day of April, 1993. MISSISSIPPI PHOSPHATES CORPORATION OFFICE CHERIFIEN DES PHOSPHATES By: /s/ C. E. McCraw By: /s/ Mohamed Fettah Vice President of Operations General Manager EX-10.13 11 EXHIBIT 10.13 GAS SALES AGREEMENT This Gas Sales Agreement ("Agreement"), made and entered into as of the 13th day of July, 1995, by and between SONAT MARKETING COMPANY, a Delaware corporation ("Seller") and MISSISSIPPI CHEMICAL CORPORATION, a Mississippi corporation ("Buyer"). WITNESSETH: WHEREAS, Seller desires to sell and deliver to Buyer, and Buyer desires to purchase and receive from Seller, natural gas in the quantities and on the terms and conditions set forth herein; NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, Seller and Buyer agree as follows: ARTICLE I DEFINITIONS 1.1 The term "gas" shall mean natural gas consisting primarily of methane. 1.2 The term "day" shall mean a period commencing at 7:00 a.m. Central time and extending until 7:00 a.m. Central time on the following day or any other twenty-four (24) hour period mutually agreeable to the parties. The date of a day shall be that of its beginning. 1.3 The term "business day" shall mean a day commencing on Monday through Friday of any week of the year, excluding holidays recognized by Seller's transporter. 1.4 The term "month" shall mean a period of time commencing on the first day of a calendar month and ending on the first day of the next calendar month. 1.5 The term "year" shall mean a period of time commencing on the first day of a calendar year and ending on the first day of the next calendar year. 1.6 The term "Btu" shall mean a British thermal unit measured at an absolute pressure of 14.73 psi at 60.F on a dry basis. 1.7 The term "MMBtu" shall mean one million (1,000,000) British thermal units. 1.8 The term "Index Price" shall mean, for each month during the term hereof, the price of gas as reported in the first issue for such month of the periodical, Inside F.E.R.C.'s Gas Market Report, under the heading "Prices of Spot Gas Delivered to Pipelines-Southern Natural Gas Company/Louisiana." In the event Inside F.E.R.C.'s Gas Market Report should cease publication, the parties shall negotiate in good faith to define a substitute index. If no agreement on a substitute index is reached within ten (10) days after negotiations to determine a substitute index have commenced, then either party may, by written notice ("Arbitration Notice") to the other party require that the matter of the selection of a substitute index be submitted to arbitration. If the parties are unable to agree upon a single arbitrator within ten (10) days after the date of the Arbitration Notice, they shall jointly apply to the American Arbitration Association for the purpose of appointing an independent arbitrator. The independent arbitrator shall identify a substitute index which shall regularly quote the spot market price of gas delivered into the facilities of Southern Natural Gas Company in Louisiana. The decision of the arbitrator regarding the substitute index shall be final and binding on the parties. ARTICLE II QUANTITY 2.1 Commencing on January 1, 1996, and continuing through the entire term hereof, Seller agrees to sell and deliver to Buyer on each day the quantity of gas requested by Buyer up to fifty-five thousand (55,000) MMBtu's per day, and Buyer agrees to purchase and receive from Seller on each day a minimum of twenty-five thousand (25,000) MMBtu's per day. 2.2 At least ten (10) business days prior to the first day of each month, Buyer shall advise Seller of the daily quantity of gas that Buyer requests during such month ("Buyer's Nomination"). Buyer shall use reasonable efforts to take quantities of gas hereunder at, as nearly as practicable, a uniform rate of flow. 2.3 Seller shall immediately notify Buyer of any notice received from its transporter that indicates the existence of any imbalance or other circumstances which may give rise to a penalty in connection with gas deliveries hereunder. The parties agree to cooperate in taking such action as may be necessary to ensure that penalties are avoided or minimized as much as possible. If, on any day, Buyer shall take a quantity of gas which exceeds the greater of (i) one hundred ten percent (110%) of Buyer's Nomination or (ii) the sum of (x) Buyer's Nomination and (y) four thousand (4,000) MMBtu's (such excess shall be hereinafter referred to as "Excess Gas"), Buyer shall be liable for and shall remit payment to Seller in accordance with Article X (Billing and Payment) of this Agreement for any scheduling imbalance or other transportation-related penalties, cash-out cost fees, forfeitures or charges imposed upon Seller by Seller's transporter which are directly attributable to Buyer's taking Excess Gas; provided, however, except with respect to periods when "limitation notices" applicable to firm shippers have been issued pursuant to the prevailing F.E.R.C. Gas Tariff of Southern Natural Gas Company, Buyer shall in no event be liable to Seller for penalties or other charges in excess of Ten Cents (10 cents) per MMBtu of Excess Gas. During periods when limitation notices applicable to firm shippers have been issued pursuant to the prevailing F.E.R.C. Gas Tariff of Southern Natural Gas Company, Buyer shall reimburse Seller for any penalties imposed upon Seller by Southern Natural Gas Company as a direct result of Buyer's either taking deliveries of gas or failing to take deliveries of gas in violation of such limitation notice, provided that Seller shall have promptly notified Buyer of the issuance of such limitation notice and provided further that Seller was unable to avoid such penalties through its then-prevailing pooling arrangements. In no case, shall Buyer's responsibility for penalties during periods when limitation notices have been issued exceed those that Buyer would have been liable for if Buyer had contracted with Southern Natural Gas Company for fifty-five thousand (55,000) MMBtu's per day of firm transportation. ARTICLE III POINT OF DELIVERY 3.1 The "Primary Delivery Point" for the sale and purchase of gas under this Agreement shall be at the existing interconnection between the pipeline facilities of Southern Natural Gas Company and Buyer's Yazoo City, Mississippi, plant ("Buyer's Plant"). 3.2 Title to gas delivered hereunder shall pass from Seller to Buyer at the point of delivery. As between Buyer and Seller, Seller shall be deemed to be in exclusive control and possession of gas until such gas has been delivered to Buyer at the point of delivery and Seller shall be responsible for any losses, damages, injuries, claims and liabilities arising out of the gas. Buyer shall be deemed to be in exclusive control and possession of gas after it has been delivered to Buyer at the point of delivery and Buyer shall be responsible for any losses, damages, injuries, claims and liabilities arising out of the gas. 3.3 The parties recognize that, from time to time, it may be advantageous to Seller if deliveries of gas to Buyer hereunder are made at the interconnection between the pipeline facilities of Koch Gateway Pipeline Company ("Koch") and the pipeline facilities of Shell Western E&P Inc., which connect the Rankin County, Mississippi, gas processing plant of Shell Western E&P Inc. and Buyer's Plant (the "Alternate Delivery Point"). Buyer is willing to accept deliveries at the Alternate Delivery Point unless Buyer determines, in its sole discretion, that the delivery and receipt of gas at the Alternate Delivery Point would be detrimental to Buyer or to the operations of any third party whose operations may be directly affected by the delivery and receipt of gas hereunder at the Alternate Delivery Point. During periods when Seller is delivering to Buyer at the Alternate Delivery Point, the terms of this Agreement shall continue in full force and effect except the point of delivery shall be the Alternate Delivery Point and the price determined in accordance with Article IV hereof shall be reduced by Buyer's cost of transporting gas from the Alternate Delivery Point to Buyer's Plant. ARTICLE IV PRICE The price payable by Buyer to Seller for each MMBtu of gas sold hereunder during each month shall be the sum of (i) the Index Price per MMBtu for such month, (ii) (confidential treatment has been requested) per MMBtu, and (iii) a fuel charge per MMBtu which shall be determined by multiplying (x) the then-applicable percentage (currently 1.5%) of fuel retention for forward-haul, firm transportation service from the most proximate source of gas available to Seller (Production Zone or Zone 1) for delivery hereunder to the point of delivery as set forth in the prevailing F.E.R.C. Gas Tariff of Southern Natural Gas Company times (y) the Index Price for such month. ARTICLE V QUALITY The quality of the gas shall be the quality prevailing from time to time at the point of delivery. Buyer and Seller expressly recognize that gas which conforms to the quality specifications of the F.E.R.C. Gas Tariff of Southern Natural Gas Company (Koch, if deliveries are made at the Alternate Delivery Point) may be unsuitable for use in Buyer's Plant. Therefore, Buyer shall have the right to refuse to accept delivery of any gas tendered for delivery hereunder, the quality of which Buyer reasonably determines would be detrimental to the operation of Buyer's Plant. ARTICLE VI PRESSURE All gas delivered for sale hereunder shall be delivered to Buyer at the pressure prevailing from time to time at the point of delivery. ARTICLE VII GAS MEASUREMENT The measurement of gas delivered hereunder shall be in accordance with the prevailing F.E.R.C. Gas Tariff of Southern Natural Gas Company (Koch, if deliveries are made at the Alternate Delivery Point). ARTICLE VIII TERM This Agreement shall become effective on the date hereinabove first written and shall remain in full force and effect for a primary term which ends on January 1, 2000. This Agreement shall be automatically extended for renewal terms of one (1) year each until canceled by either party by written notice to the other party given not later than six (6) months prior to the end of the primary term or any renewal term hereof. ARTICLE IX LIABILITY 9.1 As between the parties hereto, Buyer and Seller shall be responsible for the installation, operation and maintenance of their respective facilities, and each party agrees to indemnify and hold harmless the other party from and against any and all claims, demands, actions, suits, costs damages, expenses, compensation, or liabilities of every kind or character, either direct or consequential, at law or in equity, for or on account of damage or destruction of property or injury or death of persons, resulting from or arising out of, or in connection with the installation, operation, or maintenance of said facilities and equipment. 9.2 Notwithstanding anything to the contrary contained herein, in no event shall either party be liable or otherwise responsible to the other party for any consequential, incidental or punitive damages, or for lost profits, arising out of or relating to any action in contract or in tort, at law or in equity, based upon transactions pursuant to this Agreement, or the performance or breach thereof, or associated activities of either party. ARTICLE X BILLING AND PAYMENT 10.1 On or before the tenth (10th) day of each calendar month or within ten (10) days after the date of a billing statement from Seller (or its designee), whichever is the later, Buyer shall make payment of the amount due for all gas delivered during the preceding calendar month, as well as any payment pursuant to Article 2.2 hereof by electronic funds transfer to Seller's Account Number 69756619 at AmSouth Bank N.A., Birmingham, Alabama, ABA Routing Number 0620-0001-9. The billing statement shall be based on Buyer's Nominations, which shall be subject to adjustments by Seller on subsequent billing statements, if necessary. 10.2 Should Buyer fail to pay an amount when due, interest thereon shall accrue at an annual rate of interest equal to the lesser of (i) two percent (2%) above the prime interest rate set by the Chase Manhattan Bank (NA), or (ii) the maximum rate allowed by the applicable law, from the date when due until paid. The provisions herein for accrual of interest, however, shall not apply if such party's failure to pay is the result of a bona fide dispute, provided that such party has, within the period provided for payment, notified the other party of the existence of and basis for such dispute and has paid all amounts under this Agreement not in dispute. Should it be necessary for Seller to bring legal action to enforce its right to payment, Buyer shall pay all expenses and costs thereof including court costs and attorneys' fees. 10.3 Each party shall have the right at reasonable hours to examine the charts, if any, measurement data, books and records of the other party to the extent necessary to verify the accuracy of any statements, charge or computation hereunder. If such examination reveals an error or inaccuracy, the necessary adjustment shall be promptly made; provided, however that all such statements, charges and computations shall be deemed correct unless objected to within two (2) years after the date of such statements, charges, and computations. 10.4 Notwithstanding anything to the contrary contained herein, the parties to this Agreement recognize that there may be mutual obligations between the parties arising from this Agreement and from independent agreements that the parties may enter into from time to time. In addition to the rights of recoupment and setoff (offset) existing at law and equity, the parties hereto expressly agree and provide that the rights of recoupment and setoff (offset) are, by the terms of this Agreement, available to each party hereto. ARTICLE XI FINANCIAL RESPONSIBILITY Should either party reasonably and in good faith determine that the creditworthiness or financial responsibility of the other party has become unsatisfactory, such party shall be entitled to require satisfactory security before further deliveries or receipts are made. In the event either party shall (i) make an assignment or any general arrangement for the benefit of creditors; (ii) default in the payment or performance of any obligation to the other party under this Agreement; (iii) file a petition or otherwise commence, authorize, or acquiesce in the commencement of a proceeding or cause under any bankruptcy or similar law for the protection of creditors or have such petition filed or proceeding commenced against it; (iv) otherwise become bankrupt or insolvent (however evidenced); (v) be unable to pay its debts as they fall due; or (vi) fail to give adequate security for or assurance of its ability to perform its further obligations under this Agreement within seventy-two (72) hours of a reasonable request by the other party, then the other party shall, upon written notice, have the right to withhold or suspend deliveries or receipts or terminate this Agreement effective three (3) days from the date of such notice, or the beginning of the next month, whichever is earlier, in addition to any and all other remedies available hereunder or pursuant to law. ARTICLE XII WARRANTY OF TITLE AND INDEMNIFICATION Seller warrants the title to all gas delivered hereunder. Seller further represents and warrants that it will pay and satisfy, or make provision for the payment and satisfaction of, any and all claims of every nature whatsoever in, to or in respect of gas delivered hereunder; and Seller hereby agrees to defend at its cost, and when notified by Buyer to indemnify Buyer against, all suits, judgments, claims, demands, causes of action, costs, losses and expenses arising out of or in any way connected with any claims to the gas delivered hereunder. ARTICLE XIII FORCE MAJEURE In the event of either party hereto being rendered unable, wholly or in part, by force majeure to carry out its obligations under this Agreement, other than to make payments due hereunder, it is agreed that the obligations of the party giving such notice, so far as they are affected by such force majeure, shall be suspended during the continuation of any inability so caused but for no longer period; and such cause shall as far as possible be remedied with all reasonable dispatch; provided, however, that no party hereto shall be required against its will to adjust any labor dispute. The term "force majeure" shall mean acts of God, strikes, lockouts, or other industrial disturbances, acts of the public enemy, wars, blockades, insurrections, riots, epidemics, landslides, lightning, earthquakes, fires, storms, floods, washouts, arrests and restraints of governments and people, orders or requirements of any government, civil disturbances, explosions, breakage or accident to machinery or lines of pipe, the necessity for maintenance of or making repairs or alterations to machinery or lines of pipe, freezing of wells or lines of pipe, partial or entire failure of wells, scheduled shutdowns of Buyer's Plant for maintenance or repairs not exceeding twenty-one (21) days in any year, and any other causes, whether of the kind herein enumerated or otherwise, not within the control of the party claiming suspension and which by the exercise of due diligence such party is unable to prevent or overcome; such terms shall likewise include the inability of either party to acquire, or delays on the part of such party in acquiring at reasonable cost and by the exercise of reasonable diligence, servitudes, rights-of-way grants, permits, permissions, licenses, materials or supplies which are required to enable such party to fulfill its obligations hereunder. ARTICLE XIV TAXES In addition to the price payable under Article III of this Agreement, Buyer agrees to reimburse Seller for any sales, use, utility, city license or similar tax imposed by any taxing authority upon the sale or use by Buyer of the gas sold pursuant to this Agreement. In the event that Buyer is exempt from the payment of any such tax, Buyer shall, upon Seller's request, provide evidence of such exemption in a form satisfactory to Seller. Absent such documentation, Buyer shall be responsible for such tax as set forth herein. Seller shall pay or cause to be paid any royalty payments, severance or other taxes due or levied on the production or transportation of the gas prior to the point of delivery and shall indemnify and hold Buyer harmless from any liability or obligation for the payment of same. ARTICLE XV MISCELLANEOUS 15.1 This Agreement shall be subject to all present and future applicable laws, rules, orders and regulations of any federal, state, or local governmental authority having jurisdiction over the parties, their facilities, or the transactions contemplated. 15.2 No waiver by either party of any default of the other party under this Agreement shall operate as a waiver of any future default, whether of like or different character or nature. 15.3 The headings throughout this Agreement are inserted for reference purposes only and shall not be construed or considered in interpreting the terms and provisions of any article. 15.4 This Agreement shall be interpreted and construed in accordance with the laws of the state of Alabama. 15.5 Any notice, request, demand or statement provided for in this Agreement shall be in writing and deemed given when delivered by hand or deposited in the U.S. mail, postage prepaid, directed to the following post office addresses: BUYER: Mississippi Chemical Corporation Attn.: Corporate Secretary P.O. Box 388 Yazoo City, MS 39194 SELLER: Notices: Sonat Marketing Company Attn.: Ranny Kittinger P.O. Box 2563 Birmingham, AL 35202 Billing: Sonat Marketing Company Attn.: Allen Carter P.O. Box 2563 Birmingham, AL 35202 or at such other address as either party may, from time to time, designate; provided, however, any dispatching notice of the quantities of gas to be delivered and purchased hereunder shall be given by telephone. 15.6 The terms and conditions of this Agreement shall remain confidential and neither party shall disclose such terms and conditions to any third party absent the express written permission of the other party except where necessary to comply with regulatory reporting requirements. 15.7 This Agreement shall not be construed to create any third-party beneficiary relationship in favor of anyone not a party to this Agreement. In addition, the parties waive and disclaim any third-party beneficiary status as to any of the contracts of the other party. 15.8 This Agreement shall be binding upon and inure to the benefit of, and be enforceable by, the parties hereto and their respective representatives, successors, and assigns; provided, however, that this Agreement may not be assigned in whole or in part, by either party without the prior written consent of the other party, which shall not be unreasonably withheld. IN WITNESS WHEREOF, the parties hereto have executed this Agreement in duplicate originals as of the date hereinabove first written. BUYER: ATTEST: MISSISSIPPI CHEMICAL CORPORATION By: /s/ Rosalyn B. Glascoe By: /s/ Charles O. Dunn Corporate Secretary President SELLER: ATTEST: SONAT MARKETING COMPANY By: /s/ Myra W. McAbee By: /s/ K. R. Kittinger, Jr. Assistant Secretary Vice President EX-13 12 EXHIBIT 13 Mississippi Chemical Corporation Financial Highlights (In thousands, except per share data) Fiscal Year Ended June 30, 1995 1994 1993 1992 1991 INCOME STATEMENT DATA: Net sales $388,154 $309,360 $289,125 $239,657 $214,990 Operating income $ 80,969 $ 37,905 $ 29,180 $ 40,804 $ 54,973 Income from continuing operations before cumulative effect of change in accounting principle $ 52,230 $ 26,912 $ 22,681 $ 31,349 $ 48,037 Net income $ 52,230 $ 36,523 $ 4,790 $ 13,003 $ 39,384 Income from continuing operations assuming conversion from a cooperative to a regular business corporation as of July 1, 1990 (1) n/a $ 21,415 $ 17,533 $ 22,821 $ 33,999 Earnings per share (2) $ 2.34 $ 1.10 $ 0.92 $ 1.23 $ 1.90 Weighted average common shares outstanding (3) 22,365 19,454 19,035 18,521 17,885 June 30, 1995 1994 1993 1992 1991 BALANCE SHEET DATA: Working capital $ 70,790 $ 34,931 $ 22,802 $ 35,225 $ 54,926 Total assets $302,215 $298,430 $296,053 $303,158 $287,835 Long-term debt, excluding long-term debt due within one year $ 2,478 $ 57,217 $ 52,357 $ 59,333 $ 67,489 Shareholders' equity $227,307 $142,956 $119,574 $128,195 $138,762 Cash dividends declared per common share (4) $ 0.16 $ - $ - $ - $ - (1) For 1994, 1993, 1992 and 1991, the Company operated as a cooperative and realized deductions for income taxes for amounts paid in cash as patronage refunds to its shareholder-members. If the conversion from a cooperative to a regular business corporation had occurred as of July 1, 1990, income taxes would have been increased by the following approximate amounts: $5.5 million, $5.1 million, $8.5 million and $14.0 million for fiscal 1994, 1993, 1992 and 1991, respectively. (2) For 1994, 1993, 1992 and 1991, earnings per share reflect the reorganization of the Company from a cooperative to a regular business corporation as if it had occurred July 1, 1990, and is based on income from continuing operations. (3) For 1994, 1993, 1992 and 1991, weighted average common shares outstanding reflect the reorganization of the Company from a cooperative to a regular business corporation as if it had occurred July 1, 1990. (4) For 1994, 1993, 1992 and 1991, the Company operated as a cooperative and paid cash patronage refunds in lieu of cash dividends.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL The Company's results of operations have historically been influenced by a number of factors beyond the Company's control which have, at times, had a significant effect on the Company's operating results. Fertilizer demand and prices are highly dependent upon conditions in the agricultural industry and can be affected by a variety of factors, including planted acreage, United States government agricultural policies (including subsidy and acreage set-aside programs), projected grain stocks, weather and changes in agricultural production methods. The Company's results can be affected by such factors as the relative value of the U.S. dollar, foreign agricultural policies (in particular the policies of the governments of India and China regarding subsidies of fertilizer imports), and the hard currency demands of countries such as the former Soviet Union ("FSU"). In fiscal 1995, fertilizer industry conditions improved significantly as strong demand and prices for all products prevailed throughout much of the year. Nitrogen fertilizer prices responded favorably to the reduced negative impact of exports from the FSU, where nitrogen producers have historically benefited from subsidized natural gas and transportation. As part of the continuing transition to a free-market economy, government subsidies in the FSU have been reduced or eliminated, and export prices have risen in response to increased production and transportation costs. During the year, prices for nitrogen products reached their highest levels in 15 years. The U.S. nitrogen industry also benefited from favorable natural gas prices. During fiscal 1995, the phosphate fertilizer market reacted positively to strong export demand, principally from China and India and to declining exports from the FSU. Diammonium phosphate ("DAP") prices reached their highest levels since the late 1980s. Potash prices remained stable throughout fiscal 1995. Although weather conditions adversely affected fertilizer movement late in the year, market fundamentals remain strong, and the outlook for the upcoming fiscal year is positive. Current low grain inventories and increasing grain consumption should translate into strong fertilizer usage for fiscal 1996. Many industry analysts also predict a continuation of soft natural gas prices. The Company realized a significant improvement in results of operations in fiscal 1995 with net sales increasing 25.5% to $388.2 million from $309.4 million in 1994 and operating income increasing 113.6% to $81.0 million from $37.9 million in 1994. Reflecting improved market conditions, the Company realized substantially higher prices for nitrogen products and DAP in fiscal 1995. The average sales price per ton of nitrogen fertilizer increased to $138 in fiscal 1995 from $122 in fiscal 1994. For fiscal 1995, the average sales price of DAP was $165 per ton as compared to $131 per ton for fiscal 1994. The average sales price of potash in fiscal 1995 was $77 per ton as compared to $73 per ton for fiscal 1994. Effective July 1, 1994, the Company converted from a cooperative (the "Cooperative") to a regular business corporation. The substantial majority of the Cooperative's sales of nitrogen fertilizers were made to its shareholders who purchased such products pursuant to preferred patronage rights based on their stock ownership and who received patronage refunds with respect to such purchases based on the difference between the sales price and the cost of manufacturing, distributing and selling the product. Although the Company no longer grants preferred patronage rights or pays patronage refunds, the Company has retained the majority of its customer base and nitrogen fertilizer sales volumes and profitability have not been nor are they expected to be adversely affected by the conversion. CHANGE IN ACCOUNTING PRINCIPLE. Effective July 1, 1993, the Company adopted SFAS No. 109, "Accounting for Income Taxes." The cumulative effect of this change in accounting principle decreased fiscal 1994 income by $6.1 million. RESULTS OF OPERATIONS Following are summaries of the Company's sales results by product categories: Fiscal Year Ended June 30 --------------------------- 1995 1994 1993 -------- -------- -------- (in thousands) Net Sales: Nitrogen $240,692 $199,918 $189,127 DAP 117,495 83,367 78,906 Potash 27,433 24,084 20,149 Other 2,534 1,991 943 -------- -------- -------- Net Sales $388,154 $309,360 $289,125 ======== ======== ======== Fiscal Year Ended June 30 --------------------------- 1995 1994 1993 -------- ------- ------- (in thousands) Tons Sold: Nitrogen 1,748 1,643 1,602 DAP 713 638 692 Potash 357 330 283 Fiscal Year Ended June 30 ---------------------------- 1995 1994 1993 -------- ------- ------- Average Price Per Ton: Nitrogen $ 138 $ 122 $ 118 DAP $ 165 $ 131 $ 114 Potash $ 77 $ 73 $ 71
FISCAL 1995 COMPARED TO FISCAL 1994 NET SALES. Net sales increased 25.5% from $309.4 million for fiscal 1994 to $388.2 million for fiscal 1995, primarily as a result of higher sales prices and increased sales volumes for nitrogen and DAP fertilizers. Nitrogen fertilizer sales increased 20.4% as a result of a 6.4% increase in tons sold and a 12.8% increase in prices. In fiscal 1995, the Company agreed to purchase the ammonium nitrate fertilizer (up to approximately 240,000 tons per year) produced by Air Products and Chemicals, Inc. at its Pace, Florida, manufacturing facility. The Company purchased 143,674 tons of ammonium nitrate from Air Products during fiscal 1995. The Pace ammonium nitrate facility has suspended production due to sustained high ammonia prices. Subject to future changes in the price relationship between ammonia and ammonium nitrate, the Company does not anticipate purchasing material quantities of ammonium nitrate from Air Products during fiscal 1996. Sales of DAP increased 40.9% as a result of a 26.1% increase in prices and an 11.8% increase in tons sold. Potash sales increased 13.9% as a result of an 8.2% increase in tons sold and a 5.2% increase in prices. COST OF PRODUCTS SOLD. Cost of products sold increased from $216.2 million for fiscal 1994 to $254.6 million for fiscal 1995. As a percentage of net sales, cost of products sold decreased from 69.9% in fiscal 1994 to 65.6% in fiscal 1995. This decrease reflects increases in sales prices for all products and a reduction in the production cost per ton for nitrogen fertilizers and potash offset by increases in the production cost per ton of DAP. During the current fiscal year, the Company incurred higher costs related to its nitrogen products due to increased purchases of finished products. Nitrogen fertilizer production cost per ton decreased due to lower prices paid for natural gas during the current year and lower maintenance and labor costs due to a scheduled biennial maintenance turnaround at the Company's Yazoo City facility during the prior year. DAP costs per ton increased during fiscal 1995 as a result of higher raw material costs, primarily for ammonia and sulfur. Phosphate rock costs also increased during the year due to the operation of the Company's phosphate rock supply contract which bases the price of phosphate rock on the phosphate rock costs incurred by certain domestic phosphate producers and on the financial performance of the Company's phosphate operations. Potash production costs per ton decreased as a result of increased production volume during the current fiscal year resulting from an expansion which was completed in May 1994. This expansion increased potash production capacity from approximately 300,000 tons to approximately 420,000 tons per year. SELLING EXPENSES. Selling expenses decreased from $29.3 million for fiscal 1994, to $29.2 million for fiscal 1995. As a percentage of net sales, selling expenses decreased from 9.5% in fiscal 1994 to 7.5% in fiscal 1995. Factors contributing to this decrease were increased sales prices for all products and an increase in DAP sales which bore no delivery expense. Also, the Company sold more of its nitrogen products directly from production facilities, thereby eliminating delivery and storage expense on those sales. GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses increased from $19.9 million for fiscal 1994, to $23.3 million for fiscal 1995. This increase was primarily due to increased expenses related to the purchase of a new computer system and an increase in the Company's reserve for uncollectible accounts. As a percentage of net sales, general and administrative expenses decreased from 6.4% in fiscal 1994 to 6.0% in fiscal 1995. This decrease was primarily the result of increased sales prices for all products. OPERATING INCOME. As a result of the above factors, operating income increased from $37.9 million for fiscal 1994, to $81.0 million for fiscal 1995, a 113.6% increase. INTEREST, NET. Net interest decreased from $4.0 million for fiscal 1994, to $52,000 for fiscal 1995. This decrease is primarily a reflection of lower levels of borrowings due to the repayment of debt from the proceeds of a stock offering in August 1994. The Company also had higher earnings due to higher levels of investments and higher rates earned on these investments during fiscal 1995. INCOME TAX EXPENSE. Income tax expense increased from $6.0 million for fiscal 1994, to $29.2 million for fiscal 1995. The Company's effective tax rate increased significantly in the current fiscal year as a result of the conversion from a cooperative to a regular business corporation on July 1, 1994. As a cooperative, earnings on business done with shareholders were distributed to shareholders as patronage refunds which were deductible for income tax purposes. INCOME FROM CONTINUING OPERATIONS BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE. As a result of the foregoing, income from continuing operations before the cumulative effect of a change in accounting principle increased from $26.9 million for fiscal 1994, to $52.2 million for fiscal 1995. FISCAL 1994 COMPARED TO FISCAL 1993 NET SALES. Net sales increased 7.0% from $289.1 million for fiscal 1993, to $309.4 million for fiscal 1994, primarily as a result of higher sales prices for nitrogen and DAP fertilizers and increased sales volumes of potash. Nitrogen fertilizer sales increased 5.7% as a result of a 2.6% increase in tons sold and a 3.1% increase in prices. Sales of DAP increased 5.7% as a result of a 14.6% increase in prices offset by a 7.8% decrease in tons sold. Potash sales increased 19.5% as a result of a 16.5% increase in tons sold and a 2.6% increase in prices. COST OF PRODUCTS SOLD. Cost of products sold increased from $212.5 million for fiscal 1993, to $216.2 million for fiscal 1994. As a percentage of net sales, cost of products sold decreased from 73.5% to 69.9%. This decrease reflects an increase in the cost per ton of nitrogen fertilizers, offset by decreases in the cost per ton of both DAP and potash. Nitrogen fertilizer costs increased partially as a result of increased maintenance and labor costs related to a scheduled biennial maintenance turnaround at the Company's Yazoo City nitrogen production facility during September 1993. Also contributing to the increase in costs were higher natural gas costs and increased depreciation expense related to a new nitric acid plant at Yazoo City which began operating in January 1993. DAP costs per ton declined as a result of lower raw material costs. Potash production costs per ton decreased as a result of increased production volume for fiscal 1994. During fiscal 1994, the Company recorded a non-cash charge of $6.1 million relating to the estimated cost of the closure of the gypsum disposal facility located at its Pascagoula facility. This charge related to the portion of the disposal facility utilized to date and it is estimated that future charges of approximately $3.0 million will be accrued over the estimated six-year remaining life of the facility. SELLING EXPENSES. Selling expenses increased from $28.9 million for fiscal 1993, to $29.3 million for fiscal 1994, reflecting higher sales volumes. As a percentage of net sales, however, selling expenses decreased from 10.0% to 9.5% primarily as a result of lower delivery costs per ton. GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses increased from $18.6 million for fiscal 1993, to $19.9 million for fiscal 1994, primarily as a result of increases in legal fees and information processing costs. General and administrative expenses were 6.4% of net sales in fiscal 1993 and 1994. OPERATING INCOME. As a result of the above factors, operating income increased from $29.2 million for fiscal 1993, to $37.9 million for fiscal 1994. Before the effect of the non-cash charge for gypsum disposal costs, operating income for fiscal 1994 was $44.0 million, a 50.7% increase over fiscal 1993. INTEREST, NET. Net interest increased from $3.6 million for fiscal 1993, to $4.0 million for fiscal 1994, reflecting a $1.0 million decrease in capitalized interest related to the construction of a new nitric acid plant at the Yazoo City facility in fiscal 1993. Also increasing net interest expense in the current period was lower interest income due to lower levels of cash. Partially offsetting this increase were lower levels of borrowings and lower interest rates paid. RESTRUCTURING. Fiscal 1994 results include $1.4 million of Reorganization expenses. INCOME TAX EXPENSE. Income tax expense increased from $3.7 million for fiscal 1993, to $6.0 million for fiscal 1994. The increase in income tax expense in the current year was due to increased non-member income. INCOME FROM CONTINUING OPERATIONS BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE. As a result of the foregoing, income from continuing operations before the cumulative effect of a change in accounting principle increased from $22.7 million for fiscal 1993, to $26.9 million for fiscal 1994. Before the effect of the non-cash charge for gypsum disposal costs and the restructuring expense, income from continuing operations before cumulative effect of a change in accounting principle for the period was $34.4 million. EFFECT OF REORGANIZATION. If the Company had not operated as a cooperative, income taxes would have been $11.5 million for fiscal 1994, and $8.8 million for fiscal 1993. Income from continuing operations before cumulative effect of a change in accounting principle assuming conversion from a cooperative to a regular business corporation would have been $21.4 million for fiscal 1994, and $17.5 million for fiscal 1993. Before the effect of the non- cash charge for gypsum disposal costs and the restructuring expense, income from continuing operations before the cumulative effect of the change in accounting principle would have been $28.9 million for the period. LIQUIDITY AND CAPITAL RESOURCES At June 30, 1995, the Company had cash and cash equivalents of $29.6 million, compared to $23.2 million at June 30, 1994, an increase of $6.4 million. At June 30, 1994, cash and cash equivalents had increased to $23.2 million from $22.0 million at June 30, 1993, an increase of $1.2 million. OPERATING ACTIVITIES. For fiscal 1995 and fiscal 1994, net cash provided by operating activities was $78.7 million and $39.8 million, respectively. INVESTING ACTIVITIES. Net cash used by investing activities was $26.9 million, $25.4 million and $29.6 million, respectively, for fiscal 1995, 1994 and 1993, primarily reflecting capital expenditures in those periods. In addition to capital expenditures, cash flows from investing activities for the three years combined included an aggregate of $17.4 million in payments required under a newsprint purchase contract with Newsprint South, Inc. ("NSI"). As a result of the disposition of NSI, the Company is no longer obligated to make these payments. Also included in cash flows from investing activities for fiscal 1994 was $10.8 million in payments made to settle certain obligations in connection with the disposition of NSI. Capital expenditures were $22.3 million during fiscal 1995. These expenditures were for improvements and modifications to the Company's facilities, including approximately $3.3 million for the purchase of a new computer system, approximately $7.1 million for an emission control system for the ammonium nitrate prill towers at the Yazoo City nitrogen production facility, and approximately $3.8 million for a phosphate rock unloading system at the Pascagoula DAP facility. FINANCING ACTIVITIES. Net cash used by financing activities was $45.4 million, $13.2 million, and $36.2 million, respectively, for fiscal 1995, 1994 and 1993. During fiscal 1995, the amounts provided by financing activities included $47.4 million in proceeds received from a stock offering in August 1994. These proceeds were subsequently used to prepay approximately $29.0 million of the Company's long-term debt and a portion of the Company's revolving credit facility. The Company also paid $5.7 million to its shareholders related to the reorganization of the Company, $3.7 million in cash dividends and $4.8 million to purchase treasury stock. In addition, the Company paid $14.8 million in cash patronage refunds related to fiscal 1994, when the Company operated as a cooperative. For fiscal 1994 and 1993, the amounts used by financing activities included cash patronage payments of $13.4 million and $22.5 million, respectively. During fiscal 1994, the Company prepaid $12.2 million of long-term debt with the National Bank for Cooperatives ("CoBank") which had maturities through fiscal 1998. During fiscal 1993, the Company prepaid $8.9 million of 9.5% secured notes which had maturities scheduled through fiscal 1997. In addition, the Company paid $11.2 million and $10.9 million, respectively, on long-term debt that matured during fiscal 1995 and 1994. The Company and its subsidiaries have commitments for short-term borrowings up to $20.0 million, which includes $15.0 million from NationsBank. At June 30, 1995, there were no short-term borrowings outstanding on these commitments as compared to $7.0 million and $4.6 million for fiscal 1994 and 1993, respectively. In addition to its short-term lines, the Company also has a $50.0 million long-term revolving credit facility with NationsBank that bears interest at the prime rate or for fixed periods at interest rates related to the London Interbank Offered Rates or U.S. Treasury notes. At June 30, 1995, there was no balance outstanding on this facility. The amounts borrowed under the Company's credit lines vary based on the Company's seasonal requirements. The maximum combined amount outstanding under the short-term lines and the revolving credit facility at any month-end for fiscal 1995 was $16.2 million. In December 1994, the Company signed a letter of intent with Farmland Industries to enter into a 50-50 joint venture to construct and operate a 1,900 short-ton-per-day anhydrous ammonia plant to be located near La Brea, Trinidad. The project is expected to cost approximately $330 million. It is anticipated that a substantial portion of the cost will be financed on a nonrecourse project basis. The Company's equity contribution will be financed with internally generated cash flows and available lines of credit. The Company believes that existing cash, cash generated from operations, and available lines of credit will be sufficient to satisfy its financing needs for the foreseeable future. QUARTERLY RESULTS The usage of fertilizer is highly seasonal, and the Company's quarterly results reflect the fact that in the Company's markets significantly more fertilizer is purchased in the spring. Significant portions of the Company's net sales and operating income are generated in the last four months of the Company's fiscal year (March through June). Since interim period operating results reflect the seasonal nature of the Company's business, they are not indicative of results expected for the full fiscal year. In addition, quarterly results can vary significantly from one year to the next primarily as a result of weather-related shifts in planting schedules and purchase patterns. The Company incurs substantial expenditures for fixed costs throughout the year and substantial expenditures for inventory in advance of the spring planting season. The following table presents selected unaudited quarterly results of operations for fiscal 1995 and fiscal 1994. (In thousands, except per share data) Year Ending June 30, 1995 ---------------------------------------- 1st Q 2nd Q 3rd Q 4th Q ---------------------------------------- Net sales $ 72,751 $ 83,713 $ 114,677 $ 117,013 Operating income $ 10,876 $ 16,129 $ 27,457 $ 26,507 Income from continuing operations $ 5,776 $ 10,439 $ 17,198 $ 18,817 Earnings per share (1) $ 0.27 $ 0.46 $ 0.75 $ 0.82 Weighted average common shares outstanding 21,125 22,920 22,934 22,855 Dividends paid per share $ - $ - $ 0.08 $ 0.08 Common stock price range - high $ 19.25 $ 19.00 $ 19.88 $ 20.13 - low $ 15.00 $ 14.75 $ 16.50 $ 15.38 Year Ending June 30, 1994 ---------------------------------------- 1st Q 2nd Q 3rd Q 4th Q ---------------------------------------- Net sales $ 45,220 $ 61,105 $ 104,158 $ 98,877 Operating income (2) $ 2,071 $ 4,044 $ 11,707 $ 20,083 Income from continuing operations before cumulative effect of change in accounting principle $ 799 $ 1,660 $ 9,467 $ 14,986 Income from continuing operations assuming conversion to a regular business corporation (3) $ 639 $ 1,878 $ 7,235 $ 11,663 Earnings per share (4) $ 0.03 $ 0.10 $ 0.37 $ 0.60 (1) For 1995, quarterly amounts do not add to the annual earnings per share because of changes in the number of outstanding shares during the year. (2) Includes a non-cash charge of $5.9 million in the third quarter of fiscal 1994 relating to the estimated cost of the gypsum disposal facility at the Company's Pascagoula facility. The fourth quarter of fiscal 1994 also includes a restructuring charge of $1.4 million. (3) During fiscal 1994, the Company operated as a cooperative and realized deductions for income taxes for amounts paid in cash as patronage refunds to its shareholder-members. This reflects the Company's quarterly results for 1994 as if it had operated as a regular business corporation in that year. (4) For 1994, earnings per share reflect the reorganization of the Company from a cooperative to a regular business corporation effective July 1, 1994. Weighted average shares outstanding for each of the quarters in fiscal 1994 is assumed to be equal to the weighted average shares outstanding for the year of 19,454,354.
The Company's common stock is listed on the NASDAQ Stock Market's National Market (the "Nasdaq Market") under the symbol "MISS." As of June 30, 1995, shareholders of record numbered approximately 11,785. DISCONTINUED OPERATIONS On June 30, 1994, the Company disposed of a majority of its interest in NSI. This action was taken due to substantial losses incurred to date by NSI and the expectation of continuing losses. The transaction involved a transfer by the Company of 70% of its economic interest in NSI to various individuals designated by the lessor of the newsprint facility leveraged lease. The Company did not retain any voting interest in NSI. The disposition of NSI allows the Company to focus its attention on its core fertilizer business. Under the terms of the transaction, the Company paid $19.0 million to NSI in various forms including capital contributions, payments in liquidation of the Company's obligations under a newsprint purchase contract and certain tax- compensating payments pursuant to a tax-sharing agreement. Prior loans in the amount of approximately $13.7 million made by the Company to NSI pursuant to a newsprint purchase contract between the Company and NSI were converted to capital. Pursuant to the transaction, the Company also purchased from NSI its CoBank common stock for $4.0 million. This stock is scheduled for redemption at the face amount by CoBank during the next four years. Subsequent to this transaction, the Company is accounting for its continuing interest in NSI using the cost method of accounting for investments. In connection therewith, the Company wrote up to zero its negative investment in NSI of $39.7 million as it will have no continuing obligation to fund any of NSI's future losses. MISSISSIPPI CHEMICAL CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS FOR THE FISCAL YEARS ENDED JUNE 30, 1995, 1994 AND 1993 TOGETHER WITH AUDITORS' REPORT Report of Independent Public Accountants To the Board of Directors and the Shareholders of Mississippi Chemical Corporation: We have audited the accompanying consolidated balance sheets of Mississippi Chemical Corporation (a Mississippi corporation) and subsidiaries as of June 30, 1995 and 1994, and the related consolidated statements of income, shareholders' equity and cash flows for the three years ended June 30, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Mississippi Chemical Corporation and subsidiaries as of June 30, 1995 and 1994, and the results of their operations and their cash flows for the three years ended June 30, 1995, in conformity with generally accepted accounting principles. As further explained in Note 1 to the consolidated financial statements as of July 1, 1993, the Company has given cumulative effect to the change in accounting for income taxes under Statement of Financial Accounting Standards No. 109. Memphis, Tennessee, Arthur Andersen LLP July 28, 1995. MISSISSIPPI CHEMICAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands) June 30 -------------------------- ASSETS 1995 1994 CURRENT ASSETS: --------- ---------- Cash and cash equivalents $ 29,617 $ 23,219 Accounts receivable (less allowances of $1,000 and $500) 30,424 28,659 Inventories 50,315 33,990 Prepaid expenses and other current assets 3,012 3,981 Deferred income taxes 1,929 9,682 -------- --------- Total current assets 115,297 99,531 INVESTMENTS AND OTHER ASSETS: Investments 4,087 7,441 Other 10,275 9,813 -------- --------- Total investments and other assets 14,362 17,254 PROPERTIES HELD FOR SALE 52,919 66,928 PROPERTY, PLANT AND EQUIPMENT, at cost, less accumulated depreciation, depletion and amortization 119,637 114,717 -------- -------- $302,215 $298,430 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Long-term debt due within one year $ 775 $ 2,948 Notes payable - 7,030 Accounts payable 31,520 28,569 Accrued liabilities 8,799 8,325 Income taxes payable 3,413 2,972 Patronage refunds payable - 14,756 -------- -------- Total current liabilities 44,507 64,600 LONG-TERM DEBT 2,478 57,217 OTHER LONG-TERM LIABILITIES AND DEFERRED CREDITS 15,167 24,704 DEFERRED INCOME TAXES 12,756 8,953 COMMITMENTS AND CONTINGENCIES (see Notes 8 and 13) SHAREHOLDERS' EQUITY 227,307 142,956 -------- -------- $302,215 $298,430 ======== ========
The accompanying notes to consolidated financial statements are an integral part of these balance sheets. MISSISSIPPI CHEMICAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Dollars in thousands, except per share data) Year Ended June 30 ------------------------------------ 1995 1994 1993 -------- --------- -------- NET SALES $388,154 $309,360 $289,125 OPERATING EXPENSES: Cost of products sold 254,629 216,204 212,452 Provision for closure of gypsum disposal area - 6,055 - Selling 29,212 29,339 28,940 General and administrative 23,344 19,857 18,553 -------- -------- -------- 307,185 271,455 259,945 -------- -------- -------- OPERATING INCOME 80,969 37,905 29,180 Other (Expense) Income: Interest, net (52) (3,991) (3,569) Restructuring - (1,402) - Other 491 421 767 -------- -------- -------- INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 81,408 32,933 26,378 INCOME TAX EXPENSE 29,178 6,021 3,697 -------- -------- -------- INCOME FROM CONTINUING OPERATIONS BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 52,230 26,912 22,681 DISCONTINUED OPERATIONS: Loss from discontinued operations (less applicable income tax credits of $5,314 and $4,555 for fiscal 1994 and 1993) - (23,987) (17,891) Gain on disposal of discontinued operations (including applicable income tax credits of $4,030) - 39,747 - CUMULATIVE EFFECT TO JULY 1, 1993 OF CHANGE IN ACCOUNTING FOR INCOME TAXES - (6,149) - -------- -------- -------- NET INCOME $ 52,230 $ 36,523 $ 4,790 ======== ======== ======== EARNINGS PER SHARE (see Note 1) $ 2.34 ========
The accompanying notes to consolidated financial statements are an integral part of these financial statements. MISSISSIPPI CHEMICAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Dollars in thousands) Cooperative Additional Capital Retained Common Common Paid-in Equity Earnings Treasury Stock Stock Capital Credits (Deficit) Stock Total ---------- ------ ----------- ------- --------- -------- -------- Balances, June 30, 1992 $ 27,835 $ - $ 65,381 $ 62,352 $(27,373) $ - $128,195 Net income - - - - 4,790 - 4,790 Cash patronage - - - - (13,820) - (13,820) Stock issued 100 - 315 - - - 415 Stock retired (2) - (4) - - - (6) -------- ------- -------- -------- -------- ------- -------- Balances, June 30, 1993 27,933 - 65,692 62,352 (36,403) - 119,574 Net income - - - - 36,523 - 36,523 Cash patronage - - - - (14,756) - (14,756) Stock issued 459 - 1,156 - - - 1,615 -------- ------- -------- -------- ------- ------- -------- Balances, June 30, 1994 28,392 - 66,848 62,352 (14,636) - 142,956 Conversion of cooperative stock (26,375) 155 26,220 - - - - Conversion of capital equity credits and allocated surplus accounts - 41 42,723 (62,352) 19,588 - - Redemptions (2,017) (1) (4,095) - - - (6,113) -------- ------- ------- -------- ------- ------- -------- Subtotal - 195 131,696 - 4,952 - 136,843 Stock issued - 34 46,636 - - - 46,670 Cash dividends paid - - - - (3,662) - (3,662) Net income - - - - 52,230 - 52,230 Treasury stock purchased - - - - - (4,774) (4,774) -------- ----- -------- -------- ------- ------- -------- Balances, June 30, 1995 $ - $ 229 $178,332 $ - $53,520 $(4,774)$227,307 ======== ===== ======== ======== ======= ======= ========
The accompanying notes to consolidated financial statements are an integral part of these financial statements. MISSISSIPPI CHEMICAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) Year Ended June 30 ---------------------------- 1995 1994 1993 -------- -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 52,230 $ 36,523 $ 4,790 Loss from discontinued operations - 23,987 17,891 Gain on disposal of discontinued operations - (39,747) - -------- -------- -------- Net income from continuing operations 52,230 20,763 22,681 Reconciliation of net income from continuing operations to net cash provided by operating activities: Depreciation, depletion and amortization 17,058 16,967 14,444 Net change in operating assets and liabilities (3,241) (5,820) 2,702 Deferred income taxes 11,556 3,302 - Deferred raw material cost - 23 1,977 Accrual for closure of gypsum disposal area 562 6,055 - Other 555 (1,478) (655) -------- -------- -------- NET CASH PROVIDED BY OPERATING ACTIVITIES 78,720 39,812 41,149 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property, plant and equipment (22,305) (11,232) (26,448) Payments for newsprint contract obligations (8,751) (4,338) (4,350) Proceeds received from option holder 3,000 - - Disposition of Newsprint South, Inc. - (10,848) - Other 1,132 1,039 1,189 -------- -------- -------- NET CASH USED BY INVESTING ACTIVITIES (26,924) (25,379) (29,609) CASH FLOWS FROM FINANCING ACTIVITIES: Debt payments (118,567) (162,183) (111,606) Debt proceeds 54,625 161,160 97,933 Cash patronage paid (14,756) (13,405) (22,480) Proceeds from issuance of common stock 47,401 1,200 - Cash dividends paid (3,662) - - Conversion of common stock (5,665) - - Purchase of treasury stock (4,774) - - -------- -------- -------- NET CASH USED BY FINANCING ACTIVITIES (45,398) (13,228) (36,153) -------- -------- -------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 6,398 1,205 (24,613) CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 23,219 22,014 46,627 -------- -------- -------- CASH AND CASH EQUIVALENTS - END OF PERIOD $ 29,617 $ 23,219 $ 22,014 ======== ======== ========
The accompanying notes to consolidated financial statements are an integral part of these financial statements. MISSISSIPPI CHEMICAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1995 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Basis of Financial Statements The accompanying consolidated financial statements include the accounts of Mississippi Chemical Corporation, its subsidiaries and its proportionate share of the assets and liabilities of Triad Chemical, a 50%-owned, unincorporated joint venture (collectively, the "Company"). All material intercompany transactions and balances have been eliminated. Prior to July 1, 1994, Mississippi Chemical Corporation was organized and operated as a cooperative to manufacture and distribute chemical fertilizer primarily to its shareholder-members. On July 1, 1994, Mississippi Chemical Corporation converted from a cooperative to a regular business corporation (see Note 2). The Company is a major producer and supplier of nitrogen fertilizers in the southern United States. The Company also manufactures phosphate and potash fertilizers, making it a full product line fertilizer supplier. The Company sells its nitrogen and potash fertilizer products to farmers, fertilizer dealers and distributors primarily for use in the southern farming regions of the United States and areas served by the Mississippi River system. The Company's phosphate fertilizers are sold primarily in international markets. The Company has the right to withdraw, at cost, approximately one-half of the production of the Triad facilities and is obligated to withdraw certain minimum quantities as specified by the Products Withdrawal Agreement. The venture's assets constitute approximately 2.6% of total assets at June 30, 1995 and 1994. On June 30, 1994, the Company disposed of a majority of its interest in its newsprint manufacturing subsidiary, Newsprint South, Inc. ("NSI") (see Note 18). Inventories Inventories are stated at the lower of cost or market. Cost has been determined under an average cost method for finished products and raw materials and under a moving average method for replacement parts. Investments The Company's investments consist of an investment in the National Bank for Cooperatives (`CoBank'') and a 50-50 joint venture with Farmland Industries (see Note 13). The investment in CoBank is stated at its net present value determined by applying a discount factor to an assumed redemption schedule. The value of this investment will be realized over a period of approximately four years as CoBank redeems its equity in the normal course of its operations. Properties Held for Sale Assets are classified as properties held for sale if the Company is actively engaged in trying to dispose of the assets. These assets are valued at the lower of cost or net realizable value. Property, Plant and Equipment Depreciation of property, plant and equipment is provided over the estimated useful lives of the related assets using primarily the declining- balance method. Depletion of mineral properties is provided using the units-of- production method. Interest costs attributable to major construction and other projects under development are capitalized in the appropriate property account and amortized over the life of the related asset. Income Taxes During fiscal 1995, the Company operated as a regular business corporation; therefore, the provision for income taxes was based on earnings reported in the financial statements. For fiscal 1994 and 1993, the provision for income taxes was based on all income not distributed to patrons as patronage refunds since the Company operated as a cooperative in those years. In February 1992, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 109, "Accounting for Income Taxes," which the Company adopted effective July 1, 1993. The cumulative effect of this change in accounting principle decreased net income by $6,149,000 for fiscal 1994. Hedging Activities The Company enters into futures contracts to protect against price fluctuations of natural gas. At the time the futures contracts are closed and the related natural gas is purchased, the Company records a gain or loss from the change in market value of such contracts. Earnings Per Share Earnings per share is computed on the basis of the weighted average number of common shares outstanding during the period plus dilutive common share equivalents arising from stock options using the treasury stock method. Shares used in the calculation were 22,365,246 shares for the year ended June 30, 1995. Fully diluted earnings per share are not significantly different from primary earnings per share and, accordingly, are not presented. Earnings per share for fiscal 1994 and 1993 are not meaningful and are not presented since the Company operated as a cooperative in those years. Reclassifications The Company has reclassified certain prior year information to conform with the current year's presentation. NOTE 2 - EFFECTS OF REORGANIZATION: The Company operated as a cooperative during fiscal years 1994 and 1993. On June 28, 1994, the shareholder-members of the Company voted to adopt a plan of reorganization (the "Reorganization") which became effective July 1, 1994. Pursuant to the Reorganization, the Company was merged into a newly created, wholly owned subsidiary ("New Company") which is a noncooperative Mississippi business corporation. In the merger, the common stock of the Company was converted into New Company common stock and/or cash. In addition, holders of Capital Equity Credits and Allocated Surplus Accounts of the Company were offered the right to exchange those interests for New Company common stock. Pursuant to the Reorganization, New Company changed its name to Mississippi Chemical Corporation. NOTE 3 - INVENTORIES: Inventories consisted of the following: (Dollars in thousands) June 30 ---------------------- 1995 1994 ------- ------- Finished products $19,817 $ 7,518 Raw materials and supplies 6,740 2,851 Replacement parts 23,758 23,621 ------- ------- $50,315 $33,990 ======= =======
NOTE 4 - PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment consisted of the following: (Dollars in thousands) June 30 ----------------------- 1995 1994 -------- -------- Mineral properties $ 18,574 $ 18,574 Land 8,079 8,092 Buildings 22,345 23,089 Machinery and equipment 321,511 311,698 Construction in progress 13,822 5,539 -------- -------- 384,331 366,992 Less accumulated depreciation, depletion and amortization (264,694) (252,275) -------- -------- $119,637 $114,717 ======== ========
NOTE 5 - CREDIT AGREEMENTS AND LONG-TERM DEBT: The Company has commitments from various banks which allow the Company to borrow up to $20,000,000 on a short-term basis. There were no outstanding borrowings under these commitments at June 30, 1995. At June 30, 1994, outstanding borrowings under these commitments were $7,030,000 with a weighted average interest rate of 5.45%. In addition to its short-term lines, the Company also has a $50,000,000 long- term revolving credit facility with NationsBank Corporation (`NationsBank'') that bears interest at the prime rate or for fixed periods at interest rates related to the London Interbank Offered Rates or U.S. Treasury notes. There were no outstanding borrowings under this commitment at June 30, 1995. At June 30, 1994, outstanding borrowings under this commitment were $25,000,000. Long-term debt consisted of the following: (Dollars in thousands) June 30 -------------------- 1995 1994 ------- ------- Note payable to financial institution (9.97%) $ 3,000 $ 3,600 Capitalized lease obligations - 15,917 NationsBank Revolving Facility - 25,000 CoBank Term Loan - 12,500 Subordinated debentures - 3,148 Other 253 - ------- ------- 3,253 60,165 Long-term debt due within one year (775) (2,948) ------- ------- $ 2,478 $57,217 ======= =======
Substantially all of the assets of the Company are pledged as collateral under various loan and lease agreements. The various loan agreements have covenants that require, among other things, that the Company maintain specified levels of tangible assets to long- term debt, long-term debt to equity and current assets to current liabilities. The Company is in compliance with all covenants under its various loan agreements. Maturities of long-term debt are as follows: (Dollars in thousands) Year Ending June 30 1996 $ 775 1997 678 1998 600 1999 600 2000 600 ------- $ 3,253 =======
NOTE 6 - SHAREHOLDERS' EQUITY: At June 30, 1995, the Company had 100,000,000 authorized shares of common stock at a par value of $0.01. Common stock issued and outstanding consisted of the following: Cooperative Common Common Stock Stock ----------- ---------- Shares outstanding, June 30, 1992 4,063,713 - Retirements (122) - Issues 6,634 - Transfers 8,526 - ---------- ---------- Shares outstanding, June 30, 1993 4,078,751 - Issues 30,643 - Transfers 10,514 - ---------- ---------- Shares outstanding, June 30, 1994 4,119,908 - Redemptions (134,466) - Conversion of cooperative stock (3,985,442) 15,524,746 Conversion of capital equity credits and allocated surplus accounts - 4,133,628 Redemptions - (158,049) Stock issued - 3,397,928 Purchase of treasury shares - (300,000) ---------- ---------- Shares outstanding, June 30, 1995 - 22,598,253 ========== ==========
As a cooperative, the Company periodically reserved a certain percentage of earnings from business with its shareholders. These reserves were reflected in `Allocated Surplus Accounts'' as a component of retained earnings. As a cooperative, the Company also, from time to time, paid a portion of patronage refunds in the form of capital equity credits. As part of the Reorganization of the Company (see Note 2), these holders of Allocated Surplus Accounts and capital equity credits, which totaled $38,920,000 and $62,352,000 at June 30, 1994, were offered the right to exchange those interests for common shares. At June 30, 1995, substantially all of these accounts had been exchanged for common shares. On May 23, 1995, the Board of Directors authorized the repurchase of up to 1,500,000 shares of the Company's common stock in the open market or in privately negotiated transactions. During June 1995, the Company repurchased 300,000 shares of its common stock in open market transactions at prices that ranged from $15.75 to $16.00 per common share or approximately $4,774,000 in the aggregate. These treasury stock repurchases were funded from cash provided by operations. The Company's Articles of Incorporation authorize the Board of Directors, at its discretion, to issue up to 500,000 shares of Preferred Stock, par value $.01 per share. The stock is issuable in classes or series which may vary as to certain rights and preferences. As of June 30, 1995, none of these shares were outstanding. NOTE 7 - RETIREMENT PLANS: The Company maintains non-contributory defined benefit pension plans which provide benefits to a majority of its full-time employees. Under the plans, retirement benefits are primarily a function of both the average annual compensation and number of years of credited service. The plans are funded annually by the Company, subject to the full funding limitation. Net periodic pension expense includes the following components: Year Ended June 30 (Dollars in thousands) ---------------------------------- 1995 1994 1993 ----- - ------ ------ Service cost - benefits earned during the period $1,860 $1,532 $1,489 Interest cost on projected benefit obligations 4,515 4,035 3,767 Actual gain on plan assets (5,528) (3,059) (5,824) Net amortization and deferral of transition assets (459) (750) (390) Unrecognized gain (loss) on plan assets 392 (1,982) 1,176 ------ ------ ------ Net periodic pension expense (credit) $ 780 $ (224) $ 218 ====== ====== ====== The following table sets forth the plans' funded status and the amounts included in the Company's consolidated balance sheets: June 30 (Dollars in thousands) ---------------------- 1995 1994 -------- -------- Actuarial present value of benefit obligations: Vested benefit obligation $54,423 $49,017 Non-vested benefit obligation 74 56 ------- ------- Accumulated benefit obligation 54,497 49,073 Increase in benefits due to future compensation increases 11,803 11,588 ------- ------- Projected benefit obligation 66,300 60,661 Estimated fair value of plan assets 65,238 61,281 ------- ------- Plan assets (less than) in excess of projected benefit obligation (1,062) 620 Contributions after measurement date 289 303 Remaining unrecognized transition assets (3,703) (4,232) Unrecognized prior service cost 904 - Unrecognized net loss 10,732 9,850 ------- ------- Prepaid pension cost at end of period $ 7,160 $ 6,541 ======= =======
The following assumptions were used to measure net periodic pension cost for the plans for fiscal 1995, 1994 and 1993: 1995 1994 1993 ---- ---- ---- Discount rate 7.5% 7.5% 7.5% Expected long-term rate of return on assets 8.5% 8.5% 8.5% Average increase in compensation levels 5.0% 6.5% 6.5%
The plans' assets consist primarily of guaranteed investment contracts and marketable equity securities. The Company also has contributory thrift plans covering substantially all employees who have completed minimum service requirements. Company contributions totaled approximately $812,000 in 1995, $811,000 in 1994 and $670,000 in 1993. The Company has no material post-retirement benefit obligations. NOTE 8 - LEASE COMMITMENTS: The Company has commitments under operating leases for plant rolling stock items and storage warehouses. The total for these commitments was $2,900,000 at June 30, 1995. Rental expense for all operating leases was $1,332,000 for 1995, $1,218,000 for 1994 and $1,144,000 for 1993. NOTE 9 - INCOME TAXES: The following is a summary of the components of the provision for income taxes: (Dollars in thousands) Year Ended June 30 -------------------------------- 1995 1994 1993 -------- -------- -------- Current: Federal $16,245 $ 8,862 $ 3,408 State and local 1,377 223 289 ------- ------- ------- 17,622 9,085 3,697 Deferred: Federal 9,504 (3,423) - State and local 2,052 359 - ------- ------- ------- 11,556 (3,064) - ------- ------- ------- $29,178 $ 6,021 $ 3,697 ======= ======= =======
The tax effects of the significant temporary differences and tax credit carryforwards at June 30, 1995 follows: (Dollars in thousands) Current Non-current ------- ----------- Employee benefit obligations $ 1,230 $ - Reserve for bad debts 380 - Employee retirement 71 904 Accrual for closure of gypsum disposal area - 2,514 Investment in CoBank - 499 Capital loss carryforwards - 253 Other 248 205 ------- --------- Deferred tax assets 1,929 4,375 Depreciation and amortization - (14,217) Pension - (2,914) ------- --------- Deferred tax liabilities - (17,131) ------- --------- Net deferred tax asset (liability) $ 1,929 $ (12,756) ======= =========
A reconciliation, as of June 30, of the benefit for income taxes and the effective tax rate with the amount computed by applying the statutory federal income tax rate follows: (Dollars in thousands) 1995 1994 1993 ----------------- --------------- ----------------- % of % of % of Earnings Earnings Earnings Before Before Before Amount Taxes Amount Taxes Amount Taxes ------- -------- ------- ------- ------- ------ Income taxes computed at statutory rate $28,493 35.0% $11,427 34.7% $ 8,969 34.0% Increase (decrease) in taxes resulting from: State taxes, net 3,429 4.2 (582) (1.8) 194 0.7 Deduction for cash patronage refunds - - (5,017) (15.2) (4,873)(18.5) Alternative minimum tax (2,822) (3.5) - - - - Other, net 78 0.1 193 0.6 (435) (1.6) ------- ----- ------ ----- ------ ---- 29,178 35.8 6,021 18.3 3,855 14.6 Non-deductible loss of subsidiaries - - - - (158) (0.6) ------- ----- ------- ----- ------- ---- $29,178 35.8% $ 6,021 18.3% $ 3,697 14.0% ======= ===== ======= ===== ======= ====
In connection with its audits of the Company for fiscal years 1985 through 1987, the Internal Revenue Service proposed adjustments to the Company's tax liability related to Section 277 of the Internal Revenue Code which the Internal Revenue Service contended prohibits non-exempt cooperatives from carrying back losses incurred on patronage business. The Company took the position that, as a matter of law, Section 277 did not apply to the Company. During fiscal 1995, the Internal Revenue Service advised that the loss carrybacks filed by the Company for fiscal years 1986 and 1987 would be allowed. NOTE 10 - RAW MATERIAL CONTRACTS: Mississippi Phosphates Corporation ("MPC"), a wholly owned subsidiary of the Company, has entered into a contract to purchase from a third party its full requirement of phosphate rock. The contract will expire on June 30, 2003. The purchase price for phosphate rock is based on the phosphate rock costs incurred by certain domestic phosphate producers and the operating performance of MPC. NOTE 11 - MAJOR CUSTOMERS AND EXPORT SALES: Sales to the Company's three largest customers were approximately $117,495,000, $32,270,000 and $16,745,000 for 1995; $83,366,000, $33,513,000 and $13,696,000 for 1994; and $79,150,000, $32,957,000 and $13,860,000 for 1993. Export sales were less than 10% of sales in 1995, 1994 and 1993. Substantially all of MPC's sales are made to a third party which has been appointed the exclusive distributor of diammonium phosphate fertilizer produced by MPC. Sales to the distributor are recorded net of the distributor's commission. The distributor sells primarily in international markets. NOTE 12 - HEDGING ACTIVITIES: During fiscal 1995 and 1994, natural gas hedging activities resulted in average cost increases of approximately $0.52 and $0.09 per MMBTU on volumes hedged of 4,850,000 and 6,150,000 MMBTU's, respectively . At June 30, 1995, the Company had futures contracts covering a total volume of 2,340,000 MMBTU's, with some contracts extending through May 1996. As of June 30, 1995, the Company had neither received nor made any payments related to these contracts. Based on current market prices, the fair value of these contracts at June 30, 1995, was approximately $370,000. The risk associated with outstanding futures positions is directly related to increases or decreases in the prices of natural gas in relation to the contract prices. NOTE 13 - COMMITMENTS AND CONTINGENCIES: A significant portion of the Company's trade receivables are due from entities which operate in the chemical fertilizer and farm supply industry. A severe downturn in the agricultural economy could have an adverse impact on the collectibility of those receivables. During 1990, the Company entered into an agreement granting a third party the exclusive option, for a period of four years, to purchase the Company's undeveloped phosphate rock property of approximately 12,000 acres in Hardee County, Florida. As of July 12, 1994, the Company and the option holder entered into new agreements with respect to this property whereby the Company conveyed a portion of the property to the third party and granted to the third party the exclusive option to purchase the remaining portion of the property. In addition, the Company was granted a put option whereby the Company has the right and option to sell the remaining portion of the property to the third party if the third party does not exercise its option to purchase the remaining property and was granted an exclusive option to repurchase the previously conveyed portion in the event the third party does not exercise its option and the Company does not exercise its put option. The third party's option will expire on January 16, 1998. The Company's put option will expire six months after the third party's option expires, and its repurchase option will expire one year after the Company's put option expires. These properties are classified as properties held for sale at June 30, 1995 and 1994. On July 15, 1986, the first of 17 lawsuits was filed in the Twenty-first Judicial District Court, Parish of Livingston, state of Louisiana, against Triad Chemical, a 50%-owned, unincorporated joint venture, and approximately 90 other named defendants by numerous plaintiffs. The plaintiffs' claims are based on alleged personal injuries and property damages as a result of exposure to hazardous waste allegedly contributed by the defendants to the Combustion, Inc., site in Livingston Parish, Louisiana. Triad Chemical recently agreed with the Plaintiffs' Steering Committee in the case to settle the tort claims against it as part of a group settlement by certain main defendant companies. Triad's share of the group settlement is $600,000. Preliminary settlement documents have been filed with the court and procedures are currently underway to obtain the necessary court approval of the settlement as required in a class action suit. In September 1994, the Company and Air Products and Chemicals, Inc. ("Air Products") concluded arrangements whereby the Company agreed to purchase all of the ammonium nitrate fertilizer (approximately 240,000 tons per year) produced at Air Products' Pace, Florida, facility during the fifteen-year term of the agreement. Approximately 143,674 tons of ammonium nitrate were purchased in fiscal 1995. During late fiscal 1995, production of ammonium nitrate at Pace was suspended. In December 1994, the Company signed a letter of intent with Farmland Industries, Inc., to enter into a 50-50 joint venture to construct and operate a 1,900 short-ton-per-day anhydrous ammonia plant to be located near La Brea, The Republic of Trinidad and Tobago. The project is expected to cost approximately $330 million. Startup of the facility is scheduled for 1998. The Company intends to use the majority of its portion of the production from the new facility, expected to be in excess of 300,000 tons per year, primarily as a raw material for upgrading into finished fertilizer products at its existing facilities. The Company is accounting for this investment using the equity method. Additionally, the Company, in the ordinary course of its business, is the subject of, or a party to, other various pending or threatened legal actions. The Company believes that any ultimate liability arising from these actions will not have a significant impact on the financial position or the future earnings of the Company. NOTE 14 - SUPPLEMENTAL CASH FLOW INFORMATION: The Company considers its holdings of highly liquid money market debt securities to be cash equivalents if the securities mature within 90 days from the date of acquisition. These short-term investments were $27,587,000 and $21,500,000 at June 30, 1995 and 1994, respectively. The (decrease) increase in cash due to the changes in operating assets and liabilities consisted of the following: (Dollars in thousands) June 30 ------------------------------------ 1995 1994 1993 -------- -------- -------- Accounts receivable $ 9,095 $(2,265) $(2,052) Inventories (16,325) 754 740 Prepaid expenses and other current assets 569 (295) 1,949 Accounts payable 2,505 (6,407) 3,764 Accrued interest - (284) (483) Accrued liabilities 915 2,677 (1,216) ------- ------- ------- $(3,241) $(5,820) $ 2,702 ======= ======= =======
During fiscal 1995, the Company had net payments of income taxes of $16,675,000. During fiscal 1994 and 1993, the Company had net refunds of $149,000 and $180,000, respectively. Payments of interest (net of amounts capitalized) were $2,415,000 in 1995, $4,705,000 in 1994 and $5,266,000 in 1993. Supplemental disclosures regarding non-cash financing and investing activities include the following: (Dollars in thousands) Year Ended June 30 ------------------------------- 1995 1994 1993 ------- ------- ------- Conveyance of phosphate rock property $14,000 $ - $ - Conversion of capital equity credits $62,352 $ - $ - Conversion of cooperative stock $26,375 $ - $ - Capital expenditures made from restricted funds $ - $ 1,000 $ 1,000 Net option proceeds deposited in restricted funds $ - $ 1,000 $ 1,000 Note payable converted to long-term debt $ - $ - $10,000
NOTE 15 - OTHER LONG-TERM LIABILITIES AND DEFERRED CREDITS: Other long-term liabilities and deferred credits are comprised of the following: (Dollars in thousands) June 30 ---------------------- 1995 1994 ------- ------- Option proceeds $ 2,967 $13,967 Accrual for closure of gypsum disposal area 6,617 6,055 Other 5,583 4,682 ------- ------- $15,167 $24,704 ======= =======
During fiscal 1994, MPC charged to earnings $6,055,000 relating to the estimated cost of the future closure of the phosphogypsum disposal facility located at Pascagoula, Mississippi. During fiscal 1995, MPC recorded additional charges of $562,000. The total amount of the accrual, $6,617,000, relates to the portion of the disposal facility utilized to date. In future years, MPC expects to record additional charges of approximately $2,438,000 related to the future closure of the facility. These charges will be accrued over the estimated five-year remaining life of the facility. NOTE 16 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS: The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value: Cash and Cash Equivalents The carrying amounts approximate fair value because of the short maturity of those instruments. Accounts Receivable and Payable The carrying amounts approximate fair value because of the short settlement periods of these instruments. Long-Term Debt The fair value of the Company's long-term debt is estimated based on the current rates offered to the Company for debt of the same remaining maturities. The estimated fair value of the Company's long-term debt instruments at June 30, 1995, is $3,399,000. The carrying amount of the long-term debt, including current maturities, at June 30, 1995, is $3,253,000. NOTE 17 - INTEREST EXPENSE, NET: Interest expense, net of interest income, consisted of the following: (Dollars in thousands) Year Ended June 30 --------------------------------- 1995 1994 1993 -------- -------- -------- Interest expense $ 2,021 $ 4,655 $ 5,994 Interest capitalized (231) (2) (1,027) Interest income (1,738) (662) (1,398) ------- ------- ------- $ 52 $ 3,991 $ 3,569 ======= ======= =======
NOTE 18 - DISCONTINUED OPERATIONS: On June 30, 1994, the Company disposed of a majority of its interest in NSI. This action was taken due to substantial losses incurred to date by NSI and the expectation of continuing losses. The transaction involved a transfer by the Company of 70% of its economic interest in NSI to various individuals designated by the lessor of the newsprint facility leveraged lease. The Company did not retain any voting interest in NSI. Under the terms of the transaction, the Company paid $19,000,000 to NSI in various forms including capital contributions, payments in liquidation of the Company's obligations under a newsprint purchase contract and certain tax- compensating payments pursuant to a tax-sharing agreement. Prior loans in the amount of approximately $13,700,000 made by the Company to NSI pursuant to a newsprint purchase contract between the Company and NSI were converted to capital. Pursuant to the transaction, the Company also purchased from NSI its CoBank common stock for $4,000,000. This stock is scheduled for redemption at the face amount by CoBank during the next four years. The disposition of NSI allows the Company to focus its attention on its core fertilizer business. Prior to the disposition, the Company had consolidated the financial results of NSI which had a capital deficit of $39,747,000 at the time of disposition. Since the Company had no further obligations with respect to NSI, the previously recorded deficit was eliminated which resulted in a gain on disposition of $39,747,000. Subsequent to the disposition, the remaining 30% economic interest will be accounted for at cost which was zero at June 30, 1995 and 1994. To facilitate analysis, the accompanying summarized financial information of NSI for fiscal 1994 and 1993 was as follows: (Dollars in thousands) BALANCE SHEET: 1994 -------- Current Assets $ 27,735 ======== Total Assets $ 49,950 ======== Current Liabilities $ 33,551 ======== Total Liabilities $ 95,301 ======== Net Deficit $(45,351) ======== STATEMENTS OF OPERATIONS: 1994 1993 -------- -------- Net Sales $ 94,617 $ 96,963 ======== ======== Net Loss $(23,987) $(17,891) ======== ========
EX-21 13 EXHIBIT 21 SUBSIDIARIES OF THE COMPANY The Company and its subsidiaries as of September 29, 1995, are as follows: STATE OF PERCENTAGE OF VOTING NAME OF COMPANY INCORPORATION SECURITIES OWNED Mississippi Phosphates Corporation Delaware 100% Mississippi Potash, Inc. Mississippi 100% NSI Land Corporation Delaware 100% Farmland MissChem Limited Trinidad 50% EX-23 14 EXHIBIT 23 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this Form 10-K of our report dated July 28, 1995 included in the Mississippi Chemical Corporation 1995 Annual Report to Shareholders. It should be noted that we have not audited any financial statements of the Company subsequent to June 30, 1995 or performed any audit procedures subsequent to the date of our report. /s/ Arthur Andersen LLP Memphis, Tennessee September 26, 1995. EX-27 15
5 This schedule contains summary financial information extracted from the Company's 1995 Annual Report to shareholders and is qualified in its entirety to such Annual Report. YEAR JUN-30-1995 JUN-30-1995 29,617 0 31,424 1,000 50,315 115,297 384,331 264,694 302,215 44,507 0 229 0 0 227,078 302,215 388,154 388,645 254,629 307,185 0 500 52 81,408 29,178 52,230 0 0 0 52,230 2.34 0
-----END PRIVACY-ENHANCED MESSAGE-----