-----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, B+4zZMSjCU5rdurhPA5epczCGlNrlRKR2dUE3862t6YbbDlIPoKGmPGv5bttOy1Z tLurjE1FMhdLQbEAkjKN+A== 0000820626-00-000002.txt : 20000329 0000820626-00-000002.hdr.sgml : 20000329 ACCESSION NUMBER: 0000820626-00-000002 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 19 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000328 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IMC GLOBAL INC CENTRAL INDEX KEY: 0000820626 STANDARD INDUSTRIAL CLASSIFICATION: AGRICULTURE CHEMICALS [2870] IRS NUMBER: 363492467 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 001-09759 FILM NUMBER: 581169 BUSINESS ADDRESS: STREET 1: 2100 SANDERS RD CITY: NORTHBROOK STATE: IL ZIP: 60062 BUSINESS PHONE: 8472729200 MAIL ADDRESS: STREET 1: 2345 WAUKEGAN ROAD - SUITE E-200 CITY: BANNOCKBURN STATE: IL ZIP: 60015-5516 FORMER COMPANY: FORMER CONFORMED NAME: IMC FERTILIZER GROUP INC DATE OF NAME CHANGE: 19920703 10-K 1 FOR YEAR ENDED 12/31/99 =========================================================================== SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the year ended December 31, 1999 Commission file number 1-9759 IMC GLOBAL INC. (Exact name of Registrant as specified in its charter) Delaware 36-3492467 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2100 Sanders Road 60062 Northbrook, Illinois (Zip Code) (Address of principal executive offices) Registrant's telephone number, including area code: (847) 272-9200 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered - ------------------- ----------------------------------------- Common Stock, par value $1 per share New York and Chicago Stock Exchanges Preferred Share Purchase Rights New York and Chicago Stock Exchanges Warrants to Purchase Common Stock New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: NONE Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------- ------- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] State the aggregate market value of the voting stock held by non-affiliates of the Registrant: $1,820,529,072 as of February 15, 2000. Market value is based on the February 15, 2000 closing price of Registrant's common stock as reported on the New York Stock Exchange Composite Transactions for such date. APPLICABLE ONLY TO CORPORATE REGISTRANTS: Indicate the number of shares outstanding of each of the Registrant's classes of common stock: 114,477,296 shares, excluding 10,686,276 treasury shares as of March 15, 2000. DOCUMENTS INCORPORATED BY REFERENCE 1. Portions of the Registrant's Annual Report to Shareholders for the year ended December 31, 1999 (Parts I, Item 1 and Part II, Items 6, 7, 7a and 8) 2. Portions of the Registrant's definitive proxy statement dated March 17, 2000 issued in conjunction with the Annual Meeting of Stockholders (Part III, Items 10, 11, 12 and 13) =========================================================================== 1999 FORM 10-K CONTENTS Item Page - ---------------------------------------------------------------------- Part I: 1. Business Company Profile 1 Business Unit Information 2 Factors Affecting Demand 12 Other Matters 12 Executive Officers of the Registrant 13 2. Properties 14 3. Legal Proceedings 15 4. Submission of Matters to a Vote of Security Holders 16 Part II: 5. Market for the Registrant's Common Stock and Related 16 Stockholder Matters 6. Selected Financial Data 17 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 17 7a. Quantitative and Qualitative Disclosures about 17 Market Risk 8. Financial Statements and Supplementary Data 17 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 17 Part III: 10. Directors and Executive Officers of the Registrant 17 11. Executive Compensation 17 12. Security Ownership of Certain Beneficial Owners and 17 Management 13. Certain Relationships and Related Transactions 18 Part IV: 14. Exhibits, Financial Statement Schedules and Reports 18 on Form 8-K Signatures 24 PART I. Item 1.Business.(1) COMPANY PROFILE IMC Global Inc. (Company or IMC) is one of the world's leading producers and distributors of crop nutrients to the international agricultural community and one of the foremost manufacturers and distributors of animal feed ingredients to the worldwide industry. The Company mines, processes and distributes potash in the United States and Canada and is the majority joint venture partner in IMC- Agrico Company (IMC-Agrico), a leading producer, marketer and distributor of phosphate crop nutrients and animal feed ingredients. The Company also mines, processes and distributes salt products in the United States, Canada and Europe to the following markets: water conditioning, agricultural, industrial, consumer deicing and food and road deicing salt. The Company's current operational structure consists of four continuing business units corresponding to its major product lines, as follows: IMC Phosphates (Phosphates), IMC Potash (Potash), IMC Salt (Salt) and IMC Feed Ingredients (Feed Ingredients). As a result of the planned divestiture of IMC Chemicals (Chemicals), all financial information for Chemicals is reflected as discontinued operations. In early 2000, the Company decided to explore strategic options, including divestiture or a joint venture, for the Salt business unit and a production facility located in Ogden, Utah. IMC and Phosphate Resource Partners Limited Partnership (PLP), have a 56.5 percent and 43.5 percent, respectively, direct economic interest in IMC-Agrico over the term of the joint venture. IMC owns 51.6 percent of the outstanding PLP limited partnership units. As a result, the Company's total interest in IMC-Agrico is approximately 78.9 percent. The three major nutrients required for plant growth are phosphorus, contained in phosphate rock; potassium, contained in potash; and nitrogen. Phosphorus plays a key role in the photosynthesis process. Potassium is an important regulator of plants' physiological functions. Nitrogen is an essential element for most organic compounds in plants. These elements occur naturally in the soil but need to be replaced as crops remove them from the soil. Currently, no viable substitutes exist to replace the role of phosphate, potash and nitrogen in the development and maintenance of high-yield crops. Salt serves several high volume applications where there is either no substitute or no economical substitute. It is an essential nutrient for animal health and is used universally as a food seasoning, as a food preservative and as an additive to livestock feed products. It also is the primary material used to provide safe highways, walkways and parking lots. It is used extensively in manufacturing many chemicals where it is the most economical source of both sodium and chlorine. Another large volume application is for both industrial and consumer water conditioning where it removes other minerals and hence "softens" or conditions water. The Company believes that it is one of the most efficient North American producers of concentrated phosphates, potash, animal feed ingredients and salt. IMC's business strategy focuses on maintaining and growing its leading position as a crop nutrient and animal feed producer and distributor through extensive customer service, efficient distribution and transportation as well as supplying products worldwide at competitive prices, largely by capitalizing on economies of scale and state-of-the-art technology to reduce costs. For additional information on the Company's business structure, see Note 4, "Discontinued Operations," Note 5, "Other Divestitures," Note 6, "Acquisitions" and Note 18, "Subsequent Events," of Notes to Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data," of this Annual Report on Form 10-K, which is incorporated herein by reference. BUSINESS UNIT INFORMATION The amounts and relative proportions of net sales and operating earnings contributed by the business units of the Company have varied from year to year and may continue to do so in the future as a result of changing business, economic, competitive and weather conditions as well as technological developments. In 1999, the Company implemented a Company-wide rightsizing program (Rightsizing Program) which was designed to simplify and focus the core businesses through a facilities optimization and asset rightsizing program. In 1998, the Company initiated a plan to improve profitability (Project Profit). The initiative of Project Profit consisted primarily of a restructuring of operations at the Phosphates business unit. For additional information on the Rightsizing Program and Project Profit, see Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," of this Annual Report on Form 10-K, which is incorporated herein by reference. The following business unit discussion should be read in conjunction with the information contained in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," and Note 17, "Operating Segments," of Notes to Consolidated Financial Statements included in Part II, Item 8, of this Annual Report on Form 10-K, which is incorporated herein by reference. Phosphates ---------- Net sales for Phosphates were $1,332.4 million, $1,572.8 million and $1,484.8 million for the years ended December 31, 1999, 1998 and 1997, respectively. Phosphates is a leading United States miner of phosphate rock, one of the primary raw materials used in the production of concentrated phosphates, with 18.0 million tons of annual capacity. Phosphates is also a leading United States producer of concentrated phosphates with an annual capacity of approximately four million tons of phosphoric acid (P2O5). P2O5 is an industry term indicating a product's phosphate content measured chemically in units of phosphorous pentoxide. Phosphates' concentrated phosphate products are marketed worldwide to crop nutrient manufacturers, distributors and retailers. Phosphates' facilities, which produce concentrated phosphates, are located in central Florida and Louisiana. Its annual capacity represents approximately 31 percent of total United States concentrated phosphate production capacity and approximately ten percent of world capacity. The Florida concentrated phosphate facilities consist of two plants: New Wales and South Pierce. The New Wales complex is the largest concentrated phosphate plant in the world with an estimated annual capacity of 1.9 million tons of phosphoric acid (P2O5 equivalent). New Wales primarily produces three forms of concentrated phosphates: diammonium phosphate (DAP), monoammonium phosphate (MAP) and merchant grade phosphoric acid. The South Pierce plant produces phosphoric acid and granular triple superphosphate (GTSP). A third facility, Nichols, which manufactured phosphoric acid, DAP and granular MAP (GMAP), was permanently closed as part of the Rightsizing Program and will be dismantled. The Louisiana concentrated phosphate facilities consist of three plants: Uncle Sam, Faustina and Taft. The Uncle Sam plant produces phosphoric acid, which is then shipped to the Faustina and Taft plants where it is used to produce DAP and GMAP. The Faustina plant manufactures phosphoric acid, DAP, GMAP and ammonia. The Taft facility manufactures DAP and GMAP. Concentrated phosphate operations are managed in order to balance Phosphates' output with customer needs. Phosphates suspended phosphoric acid production at its Faustina facility in November 1999 and suspended production at its Taft facility in July 1999 in response to reduced market demands. Summarized below are descriptions of the principal raw materials used in the production of concentrated phosphates: phosphate rock, sulphur and ammonia. Phosphate Rock All of the Company's phosphate mines and related mining operations are located in central Florida. Phosphates extracts phosphate ore through surface mining after removal of a ten to 50 foot layer of sandy overburden and then processes the ore at one of its beneficiation plants where the ore goes through washing, screening, sizing and flotation procedures designed to separate it from sands, clays and other foreign materials. In conjunction with the Rightsizing Program and Project Profit, the Company permanently closed two phosphate mines during 1999, Payne Creek and Noralyn, respectively. As a result of the permanent mine closures, Phosphates currently maintains four operational mines. The Rightsizing Program and Project Profit, as they pertain to the facilities optimization program and strategic mining plan, were developed to maximize available resources, lower the cost of producing rock and enhance the management of phosphate rock inventory. Phosphates' rock production volume was 16.4 million tons for the year ended December 31, 1999 and 20.0 million tons for each of the years ended December 31, 1998 and 1997. Anticipated production in 2000 will be less than the average of the prior three years. Although Phosphates sells phosphate rock to other crop nutrient and animal feed ingredient manufacturers, it primarily uses phosphate rock internally in the production of concentrated phosphates. Tons used internally, primarily in the manufacture of concentrated phosphates, totaled 13.4 million, 14.8 million and 14.1 million for the years ended December 31, 1999, 1998 and 1997, respectively, representing 82 percent, 74 percent and 70 percent, respectively, of total tons produced. Rock shipments to customers totaled 4.8 million, 5.0 million and 4.6 million tons for the years ended December 31, 1999, 1998 and 1997, respectively. Phosphates estimates its proven reserves to be 493.3 million tons of phosphate rock as of December 31, 1999. Phosphates controls these reserves through ownership, long-term lease, royalty or purchase option agreements. Reserve grades range from 58 percent to 78 percent bone phosphate of lime (BPL), with an average grade of 66 percent BPL. BPL is the standard industry term used to grade the quality of phosphate rock. The phosphate rock mined by Phosphates in the last three years averaged 65 percent BPL, which management believes is typical for phosphate rock mined in Florida during this period. Phosphates estimates its reserves based upon the performance of exploration core drilling as well as technical and economic analyses to determine that reserves so classified can be economically mined at market prices estimated to prevail during the next five years. Phosphates also owns or controls phosphate rock resources in the southern extension of the central Florida phosphate district (Resources). Resources are mineralized deposits that may be economically recoverable; however, additional geostatistical analyses, including further explorations, permitting and mining feasibility studies, are required before such deposits may be classified as reserves. Based upon its preliminary analyses of these Resources, Phosphates believes that these mineralized deposits differ in physical and chemical characteristics from those historically mined by Phosphates but are similar to certain of the reserves being mined in current operations. These Resources contain estimated recoverable phosphate rock of approximately 113.0 million tons. Some of these Resources are located in what may be classified as preservational wetland areas under standards set forth in current county, state and federal environmental protection laws and regulations, and consequently, the Company's ability to mine these Resources may be restricted. Sulphur A significant portion of Phosphates' sulphur requirements is provided by the sulphur subsidiary of McMoRan Exploration Company (MMR) under a supply agreement with the Company. Phosphates' remaining sulphur requirements are provided by market contracts. Additionally, in late 1999, the Company, CF Industries, Inc. and Cargill Fertilizer executed a letter of intent to form a joint venture that will remelt sulphur for use at their respective Florida phosphate fertilizer operations. Ammonia Phosphates' ammonia needs are supplied by its Faustina ammonia production facility and by world suppliers, primarily under annual and multi-year contracts. Production from the Faustina plant, which has an estimated annual capacity of 560,000 tons of anhydrous ammonia, is used internally to produce certain concentrated phosphates. Sales and Marketing Domestically, Phosphates sells its concentrated phosphates to crop nutrient manufacturers, distributors and retailers. The Company also uses concentrated phosphates internally for the production of animal feed ingredients (see Feed Ingredients). Virtually all of Phosphates' export sales of phosphate crop nutrients are marketed through the Phosphate Chemicals Export Association (PhosChem), a Webb-Pomerene Act organization, which the Company administers on behalf of itself and three other member companies. PhosChem believes that its sales represent approximately 51 percent of total United States exports of concentrated phosphates. The countries that account for the largest amount of PhosChem's sales of concentrated phosphates include China, Australia, India, Japan and Brazil. In 1999, Phosphates' exports to Asia were 44 percent of total shipments, with China representing 29 percent of those shipments. The table below shows Phosphates' shipments of concentrated phosphates in thousands of dry product tons, primarily DAP:
1999 1998 1997 Tons % Tons % Tons % ---- --- ---- --- ---- --- Domestic Customers 2,552 38 2,373 32 2,065 29 Captive, to other business units 92 1 563 8 615 9 ----- --- ----- --- ----- --- 2,644 39 2,936 40 2,680 38 Export 4,055 61 4,377 60 4,425 62 ----- --- ----- --- ----- --- Total shipments 6,699 100 7,313 100 7,105 100 ===== === ===== === ===== ===
As of December 31, 1999, Phosphates had contractual commitments from non-affiliated customers for the shipment of concentrated phosphates and phosphate rock amounting to approximately 2.7 million tons and 4.7 million tons, respectively, in 2000. Captive sales have decreased in 1999 as a result of the sale of the IMC AgriBusiness business unit (AgriBusiness) in April 1999. However, since April 1999, sales to AgriBusiness have been reflected as sales to customers. Competition Phosphates operates in a highly competitive global market. Among the competitors in the global phosphate crop nutrient market are domestic and foreign companies, as well as foreign government- supported producers. Phosphate crop nutrient producers compete primarily based on price and, to a lesser extent, product quality and innovation. Feed Ingredients ---------------- Net sales for Feed Ingredients were $173.5 million, $164.4 million and $163.5 million for the years ended December 31, 1999, 1998 and 1997, respectively. Feed Ingredients is one of the world's foremost producers and marketers of phosphate-based animal feed ingredients with a total annual capacity approaching 800,000 tons. In the fourth quarter of 1999, Feed Ingredients completed construction of an expansion of its deflourinated phosphate (Multifos(Registered Trademark)) capacity. The expansion increases capacity for Multifos(Registered Trademark) to 200,000 tons annually, which is approximately 25 percent of total capacity. The principal production facilities of Feed Ingredients are located adjacent to, and utilize raw materials from, Phosphates' concentrated phosphate complex at New Wales. Sales and Marketing Feed Ingredients supplies phosphate and potassium-based feed ingredients for poultry and livestock to markets in North America, Latin America and Asia. Feed Ingredients sources phosphate and potassium raw materials from the Company's respective production facilities. Feed Ingredients has a strong brand position in a $1.0 billion global market with products such as Biofos(Registered Trademark), Dynafos(Registered Trademark), Multifos(Registered Trademark), Dyna-K(Registered Trademark) and Dynamate(Registered Trademark). The table below shows Feed Ingredients' shipments of phosphate and potassium-based feed ingredients in thousands of tons:
1999 1998 1997 Tons % Tons % Tons % ---- --- ---- --- ---- --- Domestic 767 84 724 85 708 86 Export 147 16 129 15 116 14 --- --- --- --- --- --- Total shipments 914 100 853 100 824 100 === === === === === ===
As of December 31, 1999, Feed Ingredients had contractual commitments from non-affiliated customers for the shipment of phosphate feed and feed grade potassium products amounting to approximately 0.6 million tons in 2000. Competition Feed Ingredients operates in a competitive global market. Major integrated producers of feed phosphates and feed grade potassium are located in the United States and Europe. Many smaller producers are located in emerging markets around the world. Many of these smaller producers are not manufacturers of phosphoric acid and are required to purchase this raw material on the open market. Competition in this global market is driven by price, quality and service. Potash ------ Net sales for the Potash business unit were $692.1 million, $700.1 million and $617.4 million for the years ended December 31, 1999, 1998 and 1997, respectively. Potash mines, processes and distributes potash in the United States and Canada. The term "potash" applies generally to the common salts of potassium. Potash's products are marketed worldwide to crop nutrient manufacturers, distributors and retailers and are also used in the manufacture of mixed crop nutrients and, to a lesser extent, animal feed ingredients (see Feed Ingredients). Potash's products are also used for icemelter and water softener regenerant (see Salt). Potash also sells potash to customers for industrial use. Potash operates four potash mines in Canada as well as three potash mines and a solar evaporation facility in the United States. In early 2000, the Company decided to explore strategic options, including divestiture or a joint venture, for the solar evaporation facility. With a total capacity in excess of ten million tons of product per year, management believes that Potash is one of the leading private-enterprise potash producers in the world. In 1999, these operations accounted for approximately nine percent of world capacity on a K2O basis(2). Canadian Operations Potash's four mines in Canada produce muriate of potash exclusively and are located in the province of Saskatchewan, Canada. Two potash mines are interconnected at Esterhazy, one is located at Belle Plaine and one is located at Colonsay. The combined annual capacity of these four mines is approximately eight million tons. Esterhazy and Colonsay utilize shaft mining while Belle Plaine utilizes solution mining technology. Traditional potash shaft mining takes place underground at depths of over 3,000 feet where continuous mining machines cut out the ore face and move jagged chunks of ore to conveyor belts. The ore is then crushed, moved to storage bins and then hoisted to refineries above ground. In contrast, Potash's solution mining process involves heated water which is pumped through a "cluster" to dissolve the potash in the ore bed. A cluster consists of a series of boreholes drilled into the potash ore by a portable, all-weather, electric drilling rig. A separate distribution center at each cluster controls the brine flow. The solution containing dissolved potash and salt is pumped to a refinery where sodium chloride, a co-product of this process, is separated from the potash through the use of evaporation and crystallization techniques. Concurrently, solution is pumped into a 130 acre cooling pond where additional crystallization occurs and the resulting product is recovered via a floating dredge. Refined potash is dewatered, dried and sized. The Canadian operations produce 26 different potash products, including industrial grades, many through proprietary processes. Potash Corporation of Saskatchewan Inc. (PCS) controls several potash-producing properties located in the vicinity of Potash's Esterhazy mines. Under a long-term contract with PCS, the Company mines and refines these reserves for a fee plus a pro rata share of production costs. The specified quantities of potash to be produced for PCS may, at the option of PCS, amount to an annual maximum of 1,050,000 tons and the minimum is 500,000 tons per year. The current contract extends through June 30, 2001 and is renewable at the option of PCS for five additional five-year periods. Potash controls the rights to mine 323,070 acres of potash-bearing land in Saskatchewan. This land, of which 72,964 acres have already been mined or abandoned, contains over 4.6 billion tons of potash mineralization (calculated after estimated extraction losses) at an average grade of approximately 21 percent K2O. The Company believes that this ore is sufficient to support current operations for more than a century and will yield more than 1.4 billion tons of finished product with a K2O content of approximately 61 percent. Potash's mineral rights in Saskatchewan consist of 123,953 acres owned in fee, 175,959 acres leased from the province of Saskatchewan and 23,158 acres leased from other parties. All leases are renewable by the Company for successive terms of 21 years. Royalties, established by regulation of the province of Saskatchewan, amounted to approximately $9.1 million, $9.8 million and $8.2 million in 1999, 1998 and 1997, respectively. Since December 1985, the Company has experienced an inflow of water into one of its two interconnected potash mines at Esterhazy, Saskatchewan. As a result, the Company has incurred expenditures, certain of which, due to their nature, have been capitalized while others have been charged to expense, to control the inflow. Since the initial discovery of the inflow, the Company has been able to meet all sales obligations from production at the mines. The Company has considered alternatives to the operational methods employed at Esterhazy. However, the procedures utilized to control the water inflow have proven successful to date, and the Company currently intends to continue conventional shaft mining. Despite the relative success of these measures, there can be no assurance that the amounts required for remedial efforts will not increase in future years or that the water inflow, risk to employees or remediation costs will not increase to a level which would cause the Company to change its mining process or abandon the mines. Potash's underground mine operations are presently insured against business interruption and risk from catastrophic perils, including collapse, floods and other property damage with the exception of flood coverage at Esterhazy. Due to the ongoing water inflow problem at Esterhazy, underground operations at this facility are currently not insurable for water incursion problems. Like other potash producers' shaft mines, the Colonsay mine is also subject to the risks of inflow of water as a result of its shaft mining operations. The Saskatchewan Department of Environmental and Resource Management (Saskatchewan Department) has published regulations requiring all potash mine operators to submit facility decommissioning and reclamation plans for approval by the Saskatchewan Department and to provide assurances that the plans will be carried out when the facility is closed. See "Other Matters - Environmental Matters," for further detail. United States Operations Potash has three United States potash facilities: the Carlsbad shaft mine located in Carlsbad, New Mexico; the Hersey solution mine located in Hersey, Michigan; and the solar evaporation facility located in Ogden, Utah. The Carlsbad mine has an annual production capacity of over 1.7 million tons of finished product. The reserves are of three types: (1) sylvinite, a mixture of potassium chloride and sodium chloride, the same as the ore mined in Saskatchewan; (2) langbeinite, a double sulphate of potassium and magnesium; and (3) a mixed ore, containing both potassium chloride and langbeinite. At this time, only the sylvinite and langbeinite ores are mined. Continuous underground mining methods are utilized for 95 percent of the ore extraction with conventional underground mining methods used for the remaining five percent. In the continuous mining sections, drum type mining machines are used to cut sylvinite and langbeinite ore from the face. Mining heights are as low as four and one-half feet. In the conventional areas, a wide ore face is undercut and holes drilled to accept explosive charges. Ore from both continuous and conventional sections is loaded onto conveyors, transported to storage areas and then hoisted above ground for further processing at the refinery. Three types of potash are produced at the Carlsbad refinery: muriate of potash, which is the primary source of potassium for the crop nutrient industry; double sulphate of potash magnesia, marketed under the brand name K-Mag(Registered Trademark), containing significant amounts of sulphur, potassium and magnesium, with low levels of chloride; and sulphate of potash, supplying a high concentration of potassium with low levels of chloride. At the Carlsbad facility, potash is mined and refined from 60,364 acres of reserves that are controlled under long-term leases. These reserves contain an estimated total of 223.3 million tons of potash mineralization (calculated after estimated extraction losses) in four mining beds evaluated at thicknesses ranging from four and one- half feet to in excess of 11 feet. At average refinery rates, these ore reserves are estimated to be sufficient to yield 16.0 million tons of concentrate from sylvinite with an average grade of 60 percent K2O and 41.1 million tons of langbeinite concentrate with an average grade of approximately 22 percent K2O. At projected rates of production, management estimates that Potash's reserves of sylvinite and langbeinite are sufficient to support operations for more than 25 years and 27 years, respectively. Pursuant to potassium mineral lease arrangements with the federal government, the State of New Mexico and other third parties, the Company paid royalties of $3.4 million, $3.5 million and $3.3 million in 1999, 1998 and 1997, respectively. Potash made mine modifications and constructed a new state-of-the- art, world class langbeinite refinery at Carlsbad at a cost of approximately $77.0 million which began production during 1999. The production capacity at the Carlsbad facility was increased by 35 percent as a result of constructing the new K-Mag(Registered Trademark) processing plant. Production was discontinued at the Western Ag facility during 1999. This facility, which is adjacent to Carlsbad, was acquired in 1997. Western Ag had an annual capacity of 400,000 tons of double sulfate of potash magnesia that was marketed under the brand name K- Mag(Registered Trademark). The underground mine was connected to Carlsbad during the year with the ore directed to the new refinery. By consolidating the process operations of Western Ag and Carlsbad, substantial cost reductions were realized as well as improved process efficiency. At Hersey, Michigan, Potash operates a solution mining facility with annual potash production capacity of approximately 160,000 tons, and annual salt capacity of approximately 300,000 tons. The salt from this facility is marketed by Salt (see Salt). At Hersey, Potash's mineral rights consist of 1,093 acres owned in fee and 10,537 acres controlled under long-term leases. These lands contain an estimated 300.0 million tons of potash mineralization contained in two beds ranging in thickness from 14 to 30 feet. Management estimates that these reserves are sufficient to yield 62.0 million tons of concentrate from sylvinite with an average grade of 60 percent K2O. At current rates of production, management estimates that these reserves are sufficient to support operations for more than 300 years. The solar evaporation facility, located west of Ogden, Utah, utilizes solar energy and nearly 60,000 acres of evaporation ponds to manufacture sulfate of potash, sodium chloride (salt) and magnesium chloride from the brines of the Great Salt Lake. This facility has the capacity to annually produce approximately 450,000 tons of sulfate of potash, in excess of 300,000 tons of magnesium chloride and over one million tons of salt. Sulfate of potash and solid magnesium chloride hexahydrate for industrial applications is marketed by Potash's sales force while the salt and liquid magnesium chloride, which is primarily used for dust control, ice control and some industrial uses, is marketed by the Salt sales force (see Salt). At the Ogden facility, Potash's mineral rights consist of 1,499 acres owned in fee and 117,244 acres controlled under long- term leases with the State of Utah. The leases continue in effect so long as the salts are produced or the State of Utah receives a minimum royalty and rent. Management estimates that reserves are adequate to support current capacity for more than a century and yield more than 49.0 million tons of sulfate of potash product with a K2O content of approximately 50 percent. Sales and Marketing Potash's North American potash sales are made through Potash's sales force. North American agricultural sales are primarily to independent accounts, co-operatives and large regional fertilizer buyers while non-agricultural sales are primarily to large industrial accounts and the animal feed industry. Additionally, potash is used as an ingredient in icemelter and as a water softener regenerant. Potash is sold throughout the world, with Potash's largest amount of sales outside of North America made to China, Japan, Malaysia, Korea, Australia, New Zealand and Latin America. Potash is also used internally by the Salt business unit as a major ingredient in its icemelter products. The Salt business unit also markets potash as a water softener regenerant along with its traditional salt products (see Salt). Potash's exports from Canada, except to the United States, are made through Canpotex Limited (Canpotex), an export association of Saskatchewan potash producers. In general, Canpotex sales are allocated among the producer members based on production capacity. The Company currently supplies approximately 35 percent of Canpotex's requirements. Potash exports from Carlsbad are sold through the Company's sales force. In 1999, 83 percent of the potash produced by Potash was sold as crop nutrients, while 17 percent was sold for non-agricultural uses. The table below shows Potash's shipments of potash in thousands of tons:
1999 1998 1997 Tons % Tons % Tons % ---- --- ---- --- ---- --- Domestic Customers 4,938 61 4,623 55 5,097 57 Captive, to other business units 416 5 1,116 13 1,306 15 ----- --- ----- --- ----- --- 5,354 66 5,739 68 6,403 72 Export 2,756 34 2,663 32 2,538 28 ----- --- ----- --- ----- --- Total shipments 8,110 100 8,402 100 8,941 100 ====== === ===== === ===== ===
As of December 31, 1999, Potash had contractual commitments from non- affiliated customers for the shipment of potash amounting to approximately 2.9 million tons in 2000. Captive sales have decreased in 1999 as a result of the sale of AgriBusiness in April 1999. However, since April 1999, sales to AgriBusiness have been reflected as sales to customers. Competition Potash is a commodity available from many sources and consequently, the market is highly competitive. In addition to the Potash business unit, there are four North American producers: two in the United States and two in Canada, one of which may have greater production capacity than Potash. Through its participation in Canpotex, the Potash business unit competes outside of North America with various independent potash producers and consortia and other export organizations, including state-owned organizations. Potash's principal methods of competition, with respect to the sale of potash include: pricing; offering consistent, high-quality products and superior service; as well as developing new industrial and consumer uses for potash. Salt ---- Concurrent with the Harris Chemical Group, Inc. (Harris) acquisition in April 1998 (Harris Acquisition), the Company established the Salt business unit. Net sales for Salt were $321.7 million and $177.4 million for the year ended December 31, 1999 and the nine months ended December 31, 1998, respectively. The Salt business unit mines, produces, processes and distributes salt in North America and Europe. The products are marketed primarily in the United States, Canada and the United Kingdom. Salt is used in a variety of applications, including as a deicer for both highway and consumer use; an ingredient in the production of chemicals for paper bleaching and plastic production; a flavor enhancer and preservative in food; an ingredient and nutrient in animal feeds; and an essential component in both industrial and consumer water softeners. The demand for salt has historically remained relatively stable during economic cycles due to its relatively low cost and high value in a large variety of uses. However, demand in the highway deicing market is affected by changes in winter weather. Approximately 50 percent of Salt's annual revenues are generated from December through March when highway deicing is at its peak. Production Operations Salt has a production capacity of approximately 15.0 million tons of salt. Production activities are currently conducted at fourteen facilities, five located in the United States, seven located in Canada and two located in the United Kingdom. Summarized below are the three processing methods used to produce salt. Salt utilizes all three methods. Rock Salt Mining The Company employs a drill and blast mining technique at its rock salt mines. Mining machinery moves salt from the salt face to conveyor belts where it is then crushed and screened. Salt is then hoisted to the surface where it is loaded onto shipping vessels. Mechanical Evaporation The mechanical evaporation method involves subjecting salt-saturated brine to vacuum pressure and heat to precipitate salt. The salt brine is obtained from underground salt deposits through a series of wells. The resulting product has both a high purity and a uniform physical shape. Solar Evaporation The solar evaporation method is used in areas of the world where high salinity brines are available and where weather conditions provide for a high natural evaporation rate. The brine is pumped into a series of large open ponds where sun and wind evaporate the water and crystallize the salt, which is then mechanically harvested. United States Operations Salt's central and midwestern United States general trade customer base is served by mechanical evaporation plants in Kansas and Tennessee. Additionally, salt is produced as a co-product by Potash in its Michigan operations. The Cote Blanche, Louisiana rock salt mine serves chemical customers in the southern and western United States as well as highway deicing customers through a series of depots located along the Mississippi and Ohio Rivers. The evaporation plants, rock salt mine and co-product production have a combined annual production capacity of 3.3 million tons. Salt's solar evaporation facility located in Ogden, Utah is the largest solar salt production site in the United States. This facility principally serves the western general trade markets, but also provides salt for chemical applications and highway deicing. Production capacity is currently only limited by demand. The Company also owns and operates two salt packaging facilities in Illinois and Wisconsin which also serve customers in the central and midwestern United States as well as parts of the northeastern United States. Canadian Operations Salt is produced at seven different locations in Canada. Mechanically evaporated salt is produced at three facilities strategically located throughout Canada: Amherst, Nova Scotia in eastern Canada; Goderich, Ontario in central Canada; and Unity, Saskatchewan in western Canada. From the Goderich, Ontario rock salt mine, Salt also serves the highway deicing market in Canada and the Great Lakes region of the United States. The Company also produces salt as a co-product from its Esterhazy, Colonsay and Belle Plaine potash facilities which serve both the general trade and the highway deicing markets. The evaporation plants, the rock salt mine and other production facilities have a combined annual capacity of 7.4 million tons. United Kingdom Operations Salt's United Kingdom customer base is served by two facilities with a combined annual production capacity of 2.9 million tons. Highway deicing customers throughout the United Kingdom are served by the Winsford rock salt mine in west central England. Also, in west central England is the Weston Point mechanical evaporation plant servicing the general trade and chemical customers in the United Kingdom as well as continental Europe. Sales and Marketing The Company separates sales of salt into three major market seg ments: general trade, highway deicing and chemical. The general trade segment is Salt's largest segment and accounted for approximately 50 percent of 1999 sales. This segment includes consumer applications such as table salt, water conditioning, consumer ice control, food and meat processing, agricultural applications, including feed mixes, as well as a variety of industrial applications such as oil refining and drilling, metal processing and tanning. Salt has maintained a significant presence in the general trade business over recent years due to its strong focus on: (i) the midwestern region of the United States; (ii) all of Canada and the United Kingdom; (iii) its distribution network to the grocery trade; and (iv) its relationships with large distributors of water conditioning salt. In order to continue to expand its volume and profitability in the general trade segment, Salt has focused its efforts on improving its marketing programs. These programs include: (i) differentiating various brand names through promotional activities; (ii) developing an exclusive distributor network in the United States; and (iii) consolidating the product offerings to customers with products available from the Potash business unit. The general trade market is driven by strong customer relationships. Sales in the general trade segment occur through retail channels such as grocery; building supply and hardware stores; automotive stores; feed suppliers; as well as industrial manufacturers in various industries. Distribution in the general trade segment is channeled through a direct sales force located in various parts of Salt's service territories, who sell products to distributors, dealers and end-users. The Company also maintains a network of brokers who sell table salt, consumer deicing and water conditioning products. These brokers service wholesalers, chain grocers and retailers as well as the food service industry. Highway deicing constitutes Salt's second largest segment, accounting for approximately 40 percent of 1999 salt sales. Principal customers are states, provinces, counties, municipalities and road maintenance contractors that purchase bulk salt for ice control on public roadways. Highway salt is sold mostly via a tendered bid contract system with price, product quality and delivery being the primary market factors when purchasers are selecting a supplier. Supply contracts generally are awarded annually on the basis of tendered bids once the purchaser is assured that the minimum requirements for purity, service and delivery can be met. The bidding process eliminates the need to invest significant time and effort in marketing and advertising. Location of the source of salt and distribution outlets also play a significant role in determining a supplier. Salt's North American operations have an extensive network of approximately 80 depots for storage and distribution of highway deicing salt. The majority of these depots are located on the Great Lakes and the Mississippi River system. Winter weather variability is the most significant factor affecting salt sales for deicing applications because mild winters reduce the need for salt used in ice and snow control. Unusually mild or harsh weather can significantly affect Salt's sales and earnings. The vast majority of North American deicing sales are made in Canada and the northern United States where winter weather is generally harsher than in other parts of North America. The chemical segment accounted for approximately ten percent of Salt's 1999 salt sales. Principal customers are producers of intermediate chemical products used in pulp bleaching and plastic production that do not have a captive source of brine. Distribution into the chemical market is made primarily through long-term supply agreements, which are negotiated privately. Price, service and product quality are the major market requirements. The table below shows Salt's shipments of salt in thousands of tons:
1999 1998(a) 1997(a) Tons % Tons % Tons % ---- --- ---- --- ---- --- Domestic Customers 9,872 86 4,893 85 - - Captive, to other business units 11 - 6 - - - ------ --- ----- --- ----- --- 9,883 86 4,899 85 - - Export/Foreign 1,628 14 862 15 - - ------ --- ----- --- ----- --- Total shipments 11,511 100 5,761 100 - - ====== === ===== === ===== === (a)Acquired as part of the Harris Acquisition in April 1998.
Competition Salt has significant competition in each of the markets in which it operates. In North America, three other large, nationally recognized companies compete against Salt in production and marketing of rock, evaporated and solar salt. In addition, there are several smaller regional producers of evaporated and solar salt. In spite of the high relative cost of transportation in the distribution of salt, there are also several importers of salt. Most of these imports impact the eastern seaboard where IMC has a minimum position. In the United Kingdom, there is one other large domestic producer of evaporated salt, several small local producers as well as some imports from continental Europe. There are two other companies that produce rock salt - one in northern England and the other in Ireland. There are no significant imports of rock salt into the United Kingdom. Salt also exports salt from the United Kingdom to Scandinavia and continental Europe and competes with many other European producers. FACTORS AFFECTING DEMAND The Company's results of operations historically have reflected the effects of several external factors which are beyond the Company's control and have in the past produced significant downward and upward swings in operating results. Revenues are highly dependent upon conditions in the North American agriculture industry and can be affected by crop failure, changes in agricultural production practices, government policies and weather. Furthermore, the Company's crop nutrients business is seasonal to the extent North American farmers and agricultural enterprises purchase more crop nutrient products during the spring and fall. The Company's salt business is seasonal and it can be significantly affected by the severity of winter weather in North America and the United Kingdom. A high percentage of Salt's income is derived in the first and the fourth quarter of each year when sales of salt for deicing is the greatest. The Company's foreign operations and investments, and any future international expansion by the Company, are subject to numerous risks, including fluctuations in foreign currency exchange rates and controls; expropriation and other economic, political and regulatory policies of local governments; and laws and policies affecting foreign trade and investment. Due to economic and political factors, customer needs can change dramatically from year to year. OTHER MATTERS Environmental Matters --------------------- Information regarding environmental matters of the Company is included in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," of this Annual Report on Form 10-K, which is incorporated herein by reference. Employees --------- The Company had 8,976 employees as of December 31, 1999. The work force consisted of 2,802 salaried, 6,167 hourly and seven temporary or part-time employees. Labor Relations --------------- Within North America, the Company has 15 collective bargaining agreements with the affiliated local chapters of four international unions. As of December 31, 1999, approximately 90 percent of the hourly work force was covered under collective bargaining agreements. Two plant closure negotiations were successfully completed in 1999 at the Hutchinson, Kansas and Western Ag/Carlsbad, New Mexico facilities. Eight agreements covering 56 percent of the union hourly workforce will expire in 2000. The Company has not experienced a significant work stoppage in recent years and considers its labor relations to be good. EXECUTIVE OFFICERS OF THE REGISTRANT The ages and five-year employment history of the Company's executive officers as of March 15, 2000 was as follows: Robert F. Clark --------------- Age 57. Senior Vice President of the Company since April 1999 and President of Salt since joining the Company in April 1998 as a result of the Harris Acquisition. From 1993 to 1998 Mr. Clark served as President of Great Salt Lake Minerals, a division of Harris Chemical Group, Inc. Steven J. Demetriou ------------------- Age 41. Senior Vice President of the Company since October 1999 and President of Phosphates since June 1999, when he joined the Company. Prior to joining the Company, Mr. Demetriou served as Vice President, Global Specialty Resins and President, Cytec Asia-Pacific of Cytec Industries, Inc., a manufacturer of specialty materials, principally aerospace materials, from December 1997 to June 1999. From July 1996 to December 1997, Mr. Demetriou served as Vice President, Global Adhesives Business, for Exxon Chemical Company, a manufacturer of basic petrochemicals, including olefins and aromatics, and a supplier of specialty rubbers and of additives for fuels and lubricants. From July 1993 to July 1996, Mr. Demetriou was Director, Europe Olefins and Aromatics Marketing, for Exxon Chemical Company. E. Paul Dunn, Jr. ----------------- Age 46. Vice President and Treasurer of the Company since joining the Company in May 1998. Prior to joining the Company, Mr. Dunn served as Vice President, Finance and Information Technology for GATX Terminals Corporation, a provider of storage, handling and transportation of petroleum and chemical commodities, from 1995 to 1998. He also served as Treasurer of GATX Corporation from 1990 to 1995. C. Steven Hoffman ----------------- Age 51. Senior Vice President of the Company since 1990 and President, International since September 1998. From 1995 to August 1998, Mr. Hoffman served as Senior Vice President, International of the Company. John U. Huber ------------- Age 61. Executive Vice President of the Company since October 1999 and President of Potash since joining the Company in March 1996. Mr. Huber also served as President of IMC Phosphates from September 1998 to May 1999. Prior to joining the Company, Mr. Huber served as Executive Vice President of The Vigoro Corporation from June 1993 to March 1996. Mary Ann Hynes -------------- Age 52. Senior Vice President and General Counsel of the Company since joining the Company in July 1999. Prior to joining the Company, Ms. Hynes served as Vice President, General Counsel and Secretary of Sundstrand Corporation, a designer and manufacturer of aerospace and industrial technology-based components, from 1998 to July 1999. From 1997 to 1998 Ms. Hynes served as General Counsel and Assistant Secretary of Wolters Kluwer U.S. Corporation, the parent company of numerous technical print and electronic publishers. From 1980 to 1996 Ms. Hynes served as General Counsel of CCH Incorporated, a global provider of tax and business law information through publications and software. J. Bradford James ----------------- Age 53. Executive Vice President and Chief Financial Officer of the Company since October 1999. Mr. James served as Senior Vice President and Chief Financial Officer of the Company from February 1998 to September 1999. Prior to joining the Company in February 1998, Mr. James served as Executive Vice President of USG Corporation, a manufacturer and distributor of residential and industrial building materials, from 1995 through 1997. Stephen P. Malia ---------------- Age 45. Senior Vice President, Human Resources of the Company since joining the Company in January 2000. Prior to joining the Company, Mr. Malia served as Vice President, Human Resources-Exterior Systems Business for Owens Corning, a manufacturer of consumer and industrial building materials and composite systems, from 1997 through 1999 and Vice President, Human Resources-Planning, Staffing and Development from 1995 through 1997. Carolyn W. Merritt ------------------ Age 53. Senior Vice President, Environment, Health and Safety of the Company since August 1998. Ms. Merritt served as Vice President, Environment, Health and Safety from March 1996 to August 1998. Prior to joining the Company, Ms. Merritt served as Vice President, Environmental Affairs for The Vigoro Corporation from July 1994 to March 1996. Douglas A. Pertz ---------------- Age 45. President and Chief Executive Officer of the Company since October 1999. From October 1998 to October 1999, Mr. Pertz served as President and Chief Operating Officer of the Company. From 1995 to 1998, Mr. Pertz served as President and Chief Executive Officer and as a director of Culligan Water Technologies, Inc., a leading manufacturer and distributor of water purification and treatment products. From 1994 until January 1995, he was Corporate Vice President and Group Executive of the Danaher Corporation (Danaher), a manufacturer of products in the tool, process/environmental controls and transportation industries and was also President, Chief Executive Officer and a director of Danaher's subsidiaries, Matco Tools, a manufacturer of hand tools, and Hennessy Industries, a manufacturer of transportation equipment. Anne M. Scavone --------------- Age 36. Vice President and Controller of the Company since April 1996. Ms. Scavone served as Director, Joint Venture Finances from April 1995 to April 1996 and as Joint Venture Financial Coordinator from April 1993 to April 1995. All of the Company's executive officers are elected annually, with the terms of the officers listed above to expire in April 2000. No "family relationships," as that term is defined in Item 401(d) of Regulation S-K, exist among any of the listed officers. Item 2.Properties. Information regarding the plant and properties of the Company is included in Part I, Item 1, "Business," of this Annual Report on Form 10-K. Item 3.Legal Proceedings.(1) Potash Antitrust Litigation --------------------------- The Company was a defendant, along with other Canadian and United States potash producers, in a class action antitrust lawsuit filed in federal court in 1993. The plaintiffs alleged a price-fixing conspiracy among North American potash producers beginning in 1987 and continuing until the filing of the complaint. The class action complaint against all defendants, including the Company, was dismissed by summary judgment in January 1997. The summary judgment dismissing the case was appealed by the plaintiffs to the United States Court of Appeals for the Eighth Circuit (Court of Appeals). The Court of Appeals in a divided opinion (2 to 1) rendered its decision reversing the grant of summary judgment as to certain defendants, including the Company, and affirming as to certain other defendants. The dissent strongly disagreed with the majority opinion, stating that the majority had erred in not affirming the dismissal of the case as to all defendants. According to the dissent, all of the defendants were entitled to summary judgment. The Company, along with the other defendants remaining in the case, obtained a rehearing of the case from the entire Court of Appeals and the decision of the Court of Appeals was vacated. The case was reargued before the entire Court of Appeals on September 13, 1999, and the Court of Appeals found that the class had failed to present evidence of collusion sufficient to create a genuine issue of material fact and affirmed the dismissal of the complaint by summary judgment. In addition, in 1993 and 1994, class action antitrust lawsuits with allegations similar to those made in the federal case were filed against the Company and other Canadian and United States potash producers in state courts in Illinois and California. The Illinois case was dismissed for failure to state a claim. In the California litigation, all proceedings have been stayed pending the decision of the Court of Appeals. FTX Merger Litigation --------------------- In August 1997, five identical class action lawsuits were filed in Chancery Court in Delaware by unitholders of PLP. Each case named the same defendants and broadly alleged that Freeport-McMoRan, Inc. (FTX) and FMRP Inc. (FMRP) had breached fiduciary duties owed to the public unitholders of PLP. The Company was alleged to have aided and abetted these breaches of fiduciary duty. In November 1997, an amended class action complaint was filed with respect to all cases. The amended complaint named the same defendants and raised the same broad allegations. The defendants' moved the court to dismiss the amended complaint in November 1998, and the cases were dismissed in May 1999. In May 1998, the Company and PLP (collectively, Plaintiffs) filed a lawsuit (IMC Action) in Delaware Chancery Court against certain former directors of FTX (Director Defendants), and MMR, a former affiliate of FTX. The Plaintiffs alleged that the Director Defendants, as the directors of PLP's administrative managing general partner FTX, owed duties of loyalty to PLP and its limited partnership unitholders. The Plaintiffs further alleged that the Director Defendants breached their duties by causing PLP to enter into a series of interrelated non-arm's-length transactions with MMR. The Plaintiffs also alleged that MMR knowingly aided and abetted and conspired with the Director Defendants to breach their fiduciary duties. On behalf of the PLP public unitholders, the Plaintiffs sought to reform or rescind the contracts that PLP entered into with MMR and to recoup the monies expended as a result of PLP's participation in those agreements. On November 10, 1999, the Plaintiffs and MMR announced a settlement of the IMC Action pursuant to which MMR agreed to purchase PLP's 47.0 percent interest in the Company's multi-year oil and natural gas exploration program with MMR, which includes three producing oil and gas fields plus an inventory of exploration prospects and leases, for a total of $32.0 million. In May 1998, Jacob Gottlieb filed an action (Gottlieb Action) on behalf of himself and all other PLP unitholders against the Director Defendants, MMR and IMC asserting the same claims that IMC asserted in the IMC Action. Because IMC and PLP had already asserted these claims, in July 1998 IMC filed a motion to dismiss the Gottlieb Action. The court has not set a briefing schedule for IMC's motion to dismiss, and plaintiff has made no substantial activity in this case within the past year. IMC has recently been advised that the plaintiff intends to withdraw the complaint without prejudice. For information on environmental proceedings, see Note 16, "Contingencies," of Notes to Consolidated Financial Statements included in Part II, Item 8, of this Annual Report on Form 10-K, which is incorporated herein by reference. Other ----- In the ordinary course of its business, the Company is and will from time to time be involved in other legal proceedings of a character normally incident to its business. The Company believes that its potential liability in any such pending or threatened proceedings will not have a material adverse effect on the financial condition or results of operations of the Company. Item 4.Submission of Matters to a Vote of Security Holders. There were no matters submitted to a vote of security holders, through the solicitation of proxies or otherwise, during the three months ended December 31, 1999. PART II. Item 5.Market for the Registrant's Common Stock and Related Stockholder Matters. Common Stock Prices and Dividends
Quarter -------------------------------------- 1999 First Second Third Fourth -------------------------------------------------------------- Dividends per common share $ 0.08 $ 0.08 $ 0.08 $ 0.08 Common stock prices: High $22.313 $27.125 $20.125 $17.063 Low 18.000 17.375 14.313 12.750 Quarter --------------------------------------- 1998 First Second Third Fourth --------------------------------------------------------------- Dividends per common share $ 0.08 $ 0.08 $ 0.08 $ 0.08 Common stock prices: High $39.500 $39.125 $30.375 $27.312 Low 28.562 29.375 17.812 18.125
The Company's common stock is traded on the New York Stock Exchange and the Chicago Stock Exchange under the symbol IGL. As of March 15, 2000, the Company had 114,477,296 shares of common stock outstanding, excluding 10,686,276 treasury shares. Common stock prices are from the composite tape for New York Stock Exchange issues as reported in The Wall Street Journal. As of March 15, 2000, the number of registered holders of common stock as reported by the Company's registrar was 10,399. However, an indeterminable number of stockholders beneficially own shares of the Company's common stock through investment funds and brokers. For the year ended December 31, 1999, the Company paid cash dividends of $36.6 million. Item 6.Selected Financial Data. For information related to the years 1995 through 1999 contained under the heading "Five Year Comparison," reference is made to page 73 of the Company's 1999 Annual Report to Stockholders incorporated herein by reference. Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations. Reference is made to "Management's Discussion and Analysis of Financial Condition and Results of Operations," appearing on pages 27 through 40 of the Company's 1999 Annual Report to Stockholders incorporated herein by reference. Item 7a.Quantitative and Qualitative Disclosures about Market Risk. Reference is made to "Market Risk," of "Management's Discussion and Analysis of Financial Condition and Results of Operations," appearing on page 35 of the Company's 1999 Annual Report to Stockholders incorporated herein by reference. Item 8.Financial Statements and Supplementary Data. Reference is made to the Company's Consolidated Financial Statements and Notes thereto appearing on pages 42 through 71 of the Company's 1999 Annual Report to Stockholders, together with the report thereon of Ernst & Young LLP dated January 31, 2000, appearing on page 41 of such Annual Report and the information contained under the heading "Quarterly Results (unaudited)," appearing on page 72 of such Annual Report incorporated herein by reference. Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None. PART III. Item 10.Directors and Executive Officers of the Registrant. The information contained under the headings "The Annual Meeting-- Election of Directors" and "Beneficial Ownership of Common Stock-- Section 16(a) Beneficial Ownership Reporting Compliance," included in the Company's definitive Proxy Statement for the 2000 Annual Meeting of Stockholders and the information contained under the heading "Executive Officers of the Registrant," in Part I, Item 1, hereof is incorporated herein by reference. Item 11.Executive Compensation. The information under the heading "Policies Relating to the Board of Directors - Compensation of Directors" and "Executive Compensation," included in the Company's definitive Proxy Statement for the 2000 Annual Meeting of Stockholders is incorporated herein by reference. Item 12.Security Ownership of Certain Beneficial Owners and Management. The information under the heading "Beneficial Ownership of Common Stock," included in the Company's definitive Proxy Statement for the 2000 Annual Meeting of Stockholders is incorporated herein by reference. Item 13.Certain Relationships and Related Transactions. The information under the heading "Executive Compensation," included in the Company's definitive Proxy Statement for the 2000 Annual Meeting of Stockholders is incorporated herein by reference. PART IV. Item 14.Exhibits, Financial Statement Schedules and Reports on Form 8-K. (a) (1) Consolidated financial statements filed as part of this report are listed under Part II, Item 8, of this Annual Report on Form 10-K. (2) All schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted. (3) The exhibits listed in the following index have previously been filed with the Securities and Exchange Commission or are being filed as part of this report. Filed Incorporated with Herein by Electronic Exhibit No. Description Reference to Submission - ------------------------------------------------------------------------------ 3.i.(a) Restated Certificate of X Incorporation, as amended and restated through January 6, 1998 3.i.(b) Certificate of Designations for the Exhibit A to Series D Junior Participating Exhibit 3 to the Preferred Stock Current Report on Form 8-K dated May 27, 1999* 3.ii. Amended and Restated By-Laws Exhibit 3 to the Current Report on Form 8-K dated May 27, 1999* 3.iii. Rights Agreement dated May 27, Exhibit 4 to the 1999, with The First National Bank Current Report on of Chicago (including the Form 8-K dated Shareholder Rights Plan) May 27, 1999* 4.ii.(a) Indenture, dated as of July 17, Exhibit 4.1 to 1997, between IMC Global Inc. and the Company's The Bank of New York, relating to Report on Form 8- the issuance of 6.875% Senior K dated July 23, Debentures due July 15, 2007; 1997* 7.30% Senior Debentures due January 15, 2028; and 6.55% Senior Notes due January 15, 2005 4.ii.(b) Indenture, dated as of August 1, Exhibit 4.10 to 1998, between IMC Global Inc. and the Registration The Bank of New York, relating to Statement No. 333- the issuance of 6.625% Notes due 63503 2001; 7.40% Notes due 2002; 7.625% Notes due 2005; 6.50% Notes due 2003; and 7.375% Debentures due 2018 4.ii.(c) Amended and Restated Five-Year X Credit Agreement, dated as of December 8, 1999 among IMC Global Inc., a Delaware corporation, as borrower, the financial institutions parties thereto, and Bank of America, N.A., as Administrative Agent 10.i.(a) Agreement dated June 27, 1985, Exhibit 10.6 supplementing, amending and Amendment No. 2 continuing Potash Resource Payment to Registration Agreement dated October 15, 1979, Statement No. 33- between Mallinckrodt and the 22914 Province of Saskatchewan 10.i.(b) Mining and Processing Agreement Exhibit 10.7 to dated January 31, 1978, between Registration Potash Corporation of Saskatchewan Statement No. 33- Inc. and International Minerals & 17091 Chemical (Canada) Global Limited 10.i.(c) Memorandum of Agreement as of Exhibit 10.51 to December 21, 1990, amending Mining the Annual Report and Processing Agreement of on Form 10-K for January 31, 1978, between Potash the Fiscal Year Corporation of Saskatchewan Inc. Ended June 30, and International Minerals & 1991* Chemical (Canada) Global Limited 10.i.(d) Division of Proceeds Agreement Exhibit 10.52 to dated December 21, 1990, between the Annual Report Potash Corporation of Saskatchewan on Form 10-K for Inc. and International Minerals & the Fiscal Year Chemical (Canada) Global Limited Ended June 30, 1991 10.i.(e) Form of Partnership Agreement, Exhibit 10.29 to dated as of July 1, 1993, as the Company's further amended and restated as of Annual Report on May 26, 1995, between IMC-Agrico Form 10-K for the GP Company, Agrico Limited Fiscal Year Ended Partnership and IMC-Agrico MP June 20, 1995* Inc., including definitions 10.i.(f) Form of Parent Agreement, dated as Exhibit 10.30 to of July 1, 1993, as further the Company's amended and restated as of May 26, Annual Report on 1995, between IMC Global Form 10-K for the Operations Inc., Freeport-McMoRan Fiscal Year Ended Resource Partners, Limited June 30, 1995* Partnership, Freeport-McMoRan Inc. and IMC-Agrico Company 10.i.(g) Amendment, Waiver and Consent, Exhibit 10.31 to dated May 26, 1995, among IMC the Company's Global Inc.; IMC Global Operations Annual Report on Inc.; IMC-Agrico GP Company; IMC- Form 10-K for the Agrico MP, Inc.; IMC-Agrico Fiscal Year Ended Company; Freeport-McMoRan Inc.; June 30, 1995* Freeport-McMoRan Resource Partners, Limited Partnership; and Agrico, Limited Partnership 10.i.(h) Agreement and Plan of Complete Exhibit 10.32 to Liquidation and Dissolution, dated the Company's May 26, 1995, among IMC Global Annual Report on Operations Inc., IMC-Agrico GP Form 10-K for the Company, and IMC-Agrico MP, Inc. Fiscal Year Ended June 30, 1995* 10.i.(i) Agreement Under the Parent Exhibit 10.63 to Agreement, dated as of January 23, the Company's 1996, among IMC Global Inc.; IMC Quarterly Report Global Operations Inc.; Freeport- on Form 10-Q for McMoRan Resource Partners, Limited the Quarterly Partnership; Freeport-McMoRan Period Ended Inc.; and IMC-Agrico Company, a December 31, Delaware general partnership 1995* 10.i.(j) Amendment and Agreement Under the Exhibit 10.64 to Partnership Agreement, dated as of the Company's January 23, 1996, by and among IMC- Quarterly Report Agrico GP Company; Agrico, Limited on Form 10-Q for Partnership; IMC-Agrico MP, Inc.; the Quarterly IMC Global Operations Inc. and IMC- Period Ended Agrico Company December 31, 1995* 10.i.(k) Registration Rights Agreement Exhibit 99.6 to dated as of March 1, 1996 among the Company's IMC Global Inc. and certain former Quarterly Report stockholders of The Vigoro on Form 10-Q for Corporation the Quarterly Period Ended March 31, 1996* 10.iii.(a)** 1996 Long-Term Performance Exhibit 10.77 to Incentive Plan the Company's Quarterly Report on Form 10-Q for the Quarterly Period Ended September 30, 1996* 10.iii.(b)** 1988 Stock Option & Award Plan, as Exhibit B to amended and restated Proxy Statement dated March 25, 1999* 10.iii.(c)** 1994 Stock Option Plan for Non- Exhibit 4(a) to Employee Directors Registration Statement No. 33- 56911 10.iii.(d)** Supplemental Benefit Plan Exhibit 10.12 to Registration Statement No. 33- 17091 10.iii.(e)** Supplemental Defined Benefit Exhibit 10.7 to Executive Retirement Plan, as Registration amended through June 30, 1992 Statement No. 33- 17091 10.iii.(f)** Management Compensation and Exhibit 10.14 to Benefit Assurance Program, as the Company's amended through August 17, 1995 Annual Report on Form 10-K for the Fiscal Year Ended June 30, 1996* 10.iii.(g)** Form of Trust Agreement with Exhibit 10.33 to Wachovia Bank & Trust Co., N.A., the Company's as amended through August 15, 1991 Annual Report on Form 10-K for the Fiscal Year Ended June 30, 1992* 10.iii.(h)** Employment Agreement dated as of Exhibit 10.62 to January 29, 1998 between IMC the Company's Global Inc. and Robert E. Fowler, Annual Report on Jr. Form 10-K for the Year Ended December 31, 1997* 10.iii.(i)** Employment Agreement dated as of Exhibit 10.1 to September 15, 1998 between IMC the Company's Global Inc. and Douglas A. Pertz Quarterly Report on Form 10-Q for the Quarterly Period Ended September 30, 1998* 10.iii.(j)** 1998 Stock Option Plan for Non- Exhibit 10.7 to Employee Directors the Company's Current Report on Form 8-K dated May 14, 1998* 10.iii.(k)** Non-competition Agreement dated as Exhibit 10.81 to of August 1, 1998 between IMC the Company's Global Inc. and Robert M. Van Annual Report on Patten Form 10-K for the Year Ended December 31, 1998* 10.iii.(l)** Severance Agreement dated as of Exhibit 10.83 to August 1, 1998 between IMC Global the Company's Inc. and Robert M. Van Patten Annual Report on Form 10-K for the Year Ended December 31, 1998* 10.iii.(m)** Form of IMC Global Inc. and IMC- X Agrico MP, Inc. 1998 Defined Contribution Supplemental Executive Retirement Plan 10.iii.(n)** Form of IMC Global Inc. and IMC- X Agrico MP, Inc. 1998 Supplemental Retirement Plan, Restoration Plan and Excess Benefit Plan Trust 10.iii.(o)** Retirement Agreement dated October Exhibit 10.1 to 7, 1999 between IMC Global Inc. the Company's and Robert E. Fowler, Jr. Quarterly Report on Form 10-Q for the Quarterly Period Ended September 30, 1999* 10.iii.(p)** Form of Executive Severance X Agreement between IMC Global Inc. and S.J. Demetriou, C.S. Hoffman, M.A. Hynes, J.B. James, S.P. Malia and C.W. Merritt 10.iii.(q)** Employment Agreement dated July X 13, 1999 between IMC Global Inc. and E. Paul Dunn 10.iii.(r)** "Gross-up" Agreement dated July X 13, 1999 between IMC Global Inc. and E. Paul Dunn 10.iii.(s)** IMC Global Inc. Deferred X Compensation Plan for Non-Employee Directors 10.iii.(t)** Form of IMC Global Inc. and IMC- X Agrico MP, Inc. Restoration Plan 10.iii.(u)** IMC Global Inc. Voluntary Non- X Qualified Deferred Compensation Plan 10.iii.(v)** First amendment to the IMC Global X Inc. 1998 Restoration Plan 12 Ratio of Earnings to Fixed Charges X 13 The portions of IMC Global Inc.'s X 1999 Annual Report to Stockholders which are specifically incorporated by reference 18 Letter Regarding Change in X Accounting Principle 21 Subsidiaries of the Registrant X 23 Consent of Ernst & Young LLP, X Independent Auditors 24 Power of Attorney X 27 Financial Data Schedule X * SEC File No. 1-9759. ** Denotes management contract or compensatory plan. (b) Reports on Form 8-K. The Company filed a Current Report on Form 8-K for December 7, 1999, to report, under "Item 5, Other Events," the issuance of a press release on December 7, 1999. (c) Exhibits See exhibit index listed at Item 14(a)(3) hereof. (d) Financial statements and schedules and summarized financial information of 50 percent or less owned persons are omitted as none of such persons are individually, or in the aggregate, significant under the tests specified in Regulation S-X under Article 3.09 of general instructions to the financial statements. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. IMC GLOBAL INC. (Registrant) /s/ Douglas A. Pertz -------------------------- Douglas A. Pertz Chief Executive Officer and President Date: March 28, 2000 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated: * Chairman and Director March 28, 2000 - --------------------- Joseph P. Sullivan /s/ Douglas A. Pertz Chief Executive Officer (principal March 28, 2000 - --------------------- executive officer), President Douglas A. Pertz (principal operating officer) and Director /s/ J. Bradford James Executive Vice President and Chief March 28, 2000 - --------------------- Financial Officer (principal J. Bradford James financial officer) /s/ Anne M. Scavone Vice President and Controller March 28, 2000 - --------------------- (principal accounting officer) Anne M. Scavone * Director March 28, 2000 - --------------------- Raymond F. Bentele * Director March 28, 2000 - --------------------- Rod F. Dammeyer * Director March 28, 2000 - --------------------- James M. Davidson * Director March 28, 2000 - --------------------- Harold H. MacKay * Director March 28, 2000 - --------------------- David B. Mathis * Director March 28, 2000 - --------------------- Donald F. Mazankowski * Director March 28, 2000 - --------------------- Richard L. Thomas * Director March 28, 2000 - --------------------- Pamela B. Strobel *By: /s/ Rose Marie Williams ------------------------ Rose Marie Williams Attorney-in-fact - ------------------------------- (1)All statements, other than statements of historical fact contained within this Form 10-K constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements include, but are not limited to, the following: general business and economic conditions and governmental policies affecting the agricultural industry in localities where the Company or its customers operate; weather conditions; the impact of competitive products; pressure on prices realized by the Company for its products; constraints on supplies of raw materials used in manufacturing certain of the Company's products; capacity constraints limiting the production of certain products; difficulties or delays in the development, production, testing and marketing of products; difficulties or delays in receiving required governmental and regulatory approvals; market acceptance issues, including the failure of products to generate anticipated sales levels; difficulties in integrating acquired businesses and in realizing related cost savings and other benefits; the effects of and change in trade, monetary, environmental and fiscal policies, laws and regulations; foreign exchange rates and fluctuations in those rates; the costs and effects of legal proceedings, including environmental, and administrative proceedings involving the Company; success in implementing the Company's various initiatives including the divestiture of Chemicals and achieving successful strategic alternatives for the Salt business unit and a production facility located in Ogden, Utah; and other risk factors reported from time to time in the Company's Securities and Exchange Commission reports. (2)Since the amount of potassium in the common salts of potassium varies, the industry has established a common standard of measurement by defining a product's potassium content, or grade, in terms of equivalent percentages of potassium oxide (K2O). A K2O equivalent of 60 percent, 50 percent and 22 percent is the customary minimum standard for muriate of potash, sulphate of potash and double sulphate of potash magnesia products, respectively. EX-3.I.(A) 2 RESTATED CERTIFICATE OF INCORPORATION Exhibit 3.1.(a) CERTIFICATE OF INCORPORATION OF IMC GLOBAL INC. (as amended and restated though January 6, 1998) ARTICLE FIRST The name of the corporation is IMC Global Inc. ARTICLE SECOND The address of the registered office of the Corporation in the State of Delaware is 1209 Orange Street in the City of Wilmington, County of New Castle. The name of the registered agent of the Corporation at such address is The Corporation Trust Company. ARTICLE THIRD The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation law of the State of Delaware either alone or with others through wholly or partially owned subsidiaries, as a partner (limited or general) in any partnership, as a joint venturer in any joint venture, or otherwise. ARTICLE FOURTH The aggregate number of shares which the Corporation shall have authority to issue is 312,000,000 divided into 12,000,000 shares of Series Preferred Stock, $1.00 par value per share (hereafter called "Series Preferred Stock", and 300,000,000 shares of Common Stock, $1.00 par value per share (hereafter called "Common Stock"). All of such shares shall be issued as fully-paid and non-assessable shares, and the holders thereof shall not be liable for any further payments in respect thereto. The designations, powers, preferences and rights of the shares of each class and the qualifications, limitations or restrictions thereof shall be as follows: (a) SERIES PREFERRED STOCK The Board of Directors of the Corporation is authorized, subject to limitations prescribed by law and the provisions of this ARTICLE FOURTH, to provide for the issuance of the shares of the Series Preferred Stock in series, and by filing a certificate pursuant to the Delaware General Corporation Law, to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations or restrictions thereof. Shares of any series of Series Preferred Stock which shall be issued and thereafter acquired by the Corporation through purchase, redemption, exchange, conversion or otherwise, shall return to the status of authorized but unissued Series Preferred Stock unless otherwise provided in the resolution or resolutions of the Board of Directors. Unless otherwise provided in the resolution or resolutions of the Board of Directors providing for the issuance thereof, the number of authorized shares of stock of any such series may be increased or decreased (but not below the number of shares thereof then outstanding) by resolution or resolutions of the Board of Directors. In case the number of shares of any such series of Series Preferred Stock shall be decreased, the shares representing such decrease shall, unless otherwise provided in the resolution or resolutions of the Board of Directors providing for the issuance thereof, resume the status of authorized but unissued Series Preferred Stock, undesignated as to series. (b) COMMON STOCK 1. Dividends. Subject to the rights of each series of the Series Preferred Stock, dividends may be declared and paid or set apart for payment upon the Common Stock out of any assets or funds of the Corporation legally available for the payment of dividends. 2. Voting Rights. Except as otherwise expressly provided with respect to any series of the Series Preferred Stock, the Common Stock shall have the exclusive right to vote for the election of directors and for all other purposes, each holder of the Common Stock being entitled to one vote for each share thereof held. 3. Liquidation. Upon any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, and after the holders of the Series Preferred Stock of each series shall have been paid in full the amount to which they respectively shall be entitled, or an amount sufficient to pay the aggregate amount to which the holders of the Series Preferred Stock of each series shall be entitled shall have been deposited with a bank or trust company having its principal office in the Borough of Manhattan, The City of New York, and having capital, surplus and undivided profits of a least Twenty-Five Million Dollars ($25,000,000) as a trust fund for the benefit of the holders of such Series Preferred Stock, the remaining net assets of the Corporation shall be distributed pro rata to the holders of the Common Stock in accordance with their respective rights and interests, to the exclusion of the holders of such Series Preferred Stock. (c) GENERAL PROVISIONS A consolidation or merger of the Corporation with or into another Corporation or Corporations or a sale, whether for cash, shares of stock, securities or properties, of all or substantially all of the assets of the Corporation shall not be deemed or construed to be a liquidation, dissolution or winding up of the Corporation within the meaning of this Article. No holder of Common Stock or Series Preferred Stock of the Corporation shall be entitled, as such, as a matter of right, to subscribe for or purchase any part of any new or additional issue of stock of any class or series whatsoever or of securities convertible into stock of any class whatsoever, whether now or hereafter authorized and whether issued for cash or other consideration, or by way of dividend. (d) JUNIOR PARTICIPATING PREFERRED STOCK, SERIES C: SECTION 1. Designation and Amount. The shares of this series shall be designated as "Junior Participating Preferred Stock, Series C" (the "Series C Preferred Stock") and the number of shares constituting the Series C Preferred Stock shall be 3,000,000. Such number of shares may be increased or decreased by resolution of the Board of Directors; provided, that no decrease shall reduce the number of shares of Series C Preferred Stock to a number less than the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Corporation convertible into Series C Preferred Stock. SECTION 2. Dividends and Distributions. (A) Subject to the rights of the holders of any shares of any series of Preferred Stock or any other stock ranking prior and superior to the Series C Preferred Stock with respect to dividends, the holders of shares of Series C Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the thirtieth day of March, June, September and December in each year (each such date being referred to herein as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series C Preferred Stock, in an amount (if any) per share rounded to the nearest cent), subject to the provision for adjustment hereinafter set forth, equal to 100 times the aggregate per share amount of all cash dividends, and 100 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions, other than a dividend payable in shares of Common Stock, par value $1.00 per share (the "Common Stock"), of the Company or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series C Preferred Stock, In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount to which holders of shares of Series C Preferred Stock were entitled immediately prior to such event under the preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. (B) The Corporation shall declare a dividend or distribution on the Series C Preferred Stock as provided in paragraph (A) of this Section immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock). (C) Dividends due pursuant to paragraph (A) of this Section shall begin to accrue and be cumulative on outstanding shares of Series C Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series C Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series C Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series C Preferred Stock entitled to receive a payment of a dividend or distribution declared thereon, which record date shall be not more than 60 days prior to the date fixed for the payment thereof. SECTION 3. Voting Rights. The holders of shares of Series C Preferred Stock shall have the following voting rights: (A) Subject to the provision for adjustment hereinafter set forth, each share of Series C Preferred Stock shall entitle the holder thereof to 100 votes on all matters submitted to a vote of the stockholders of the Corporation. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the number of votes per share to which holders of shares of Series C Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. (B) Except as otherwise provided in the Restated Certificate of Incorporation of the Company, including any other Certificate of Designations creating a series of Preferred Stock or any similar stock, or by law, the holders of shares of Series C Preferred Stock and the holders of shares of Common Stock and any other capital stock of the Corporation having general voting rights shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation. (C) Except as set forth herein, or as otherwise provided by law, holders of Series C Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action. SECTION 4. Certain Restrictions. (A) Whenever quarterly dividends or other dividends or distributions payable on the Series C Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series C Preferred Stock outstanding shall have been paid in full, the Corporation shall not: (i) declare or pay dividends, or make any other distributions, on any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series C Preferred Stock; (ii) declare or pay dividends, or make any other distributions, on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series C Preferred Stock, except dividends paid ratably on the Series C Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled; or (iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series C Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the Corporation ranking junior (as to dividends and upon dissolution, liquidation or winding up) to the Series C Preferred Stock. (B) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner. SECTION 5. Reacquired Shares. Any shares of Series C Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock subject to the conditions and restrictions on issuance set forth herein, in the Restated Certificate of Incorporation of the Company, including any Certificate of Designations creating a series of Preferred Stock or any similar stock or as otherwise required by law. SECTION 6. Liquidation, Dissolution or Winding Up. Upon any liquidation, dissolution or winding up of the Corporation the holders of shares of Series C Preferred Stock shall be entitled to receive an aggregate amount per share, subject to the provision for adjustment hereinafter set forth, equal to 100 times the aggregate amount to be distributed per share to holders of shares of Common Stock plus an amount equal to any accrued and unpaid dividends. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the aggregate amount to which holders of shares of Series C Preferred Stock were entitled immediately prior to such event under the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. SECTION 7. Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case each share of Series C Preferred Stock shall at the same time be similarly exchanged or changed into an amount per share, subject to the provision for adjustment hereinafter set forth, equal to 100 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series C Preferred Stock shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. SECTION 8. Amendment. The Restated Certificate of Incorporation of the Corporation shall not be amended in any manner, including in a merger or consolidation, which would alter, change or repeal the powers, preferences or special rights of the Series C Preferred Stock so as to affect them adversely without the affirmative vote of the holders of a least two-thirds of the outstanding shares of Series C Preferred Stock, voting together as a single class. ARTICLE FIFTH The business and affairs of the Corporation shall be managed by the Board of Directors, and the directors need not be elected by ballot unless required by the By-Laws of the Corporation. ARTICLE SIXTH Action shall be taken by stockholders of the Corporation only at annual or special meetings of stockholders, and stockholders may not act by written consent. Special meetings of the Corporation may be called only as provided in the By-Laws. ARTICLE SEVENTH The following provisions are inserted for the regulation and conduct of the affairs of the Corporation, and it is expressly provided that they are intended to be in furtherance and not in limitation or exclusion of the powers conferred by statute: (a) The Board of Directors is expressly authorized to adopt, amend or repeal the By-Laws of the Corporation. (b) Subject to the provisions of the By-Laws, meeting of the stockholders and directors of the Corporation for all purposes may be held at any place within the State of Delaware and, unless otherwise provided by law, at any place without such State. (c) All corporate powers, including the sale, mortgage, hypothecation and pledge of the whole or any part of the corporate property, shall be exercised by the Board of Directors, except as otherwise expressly provided by law. (d) The Corporation may have one or more offices within or without the State of Delaware and may keep the books of the Corporation, subject to the provisions of the laws of the State of Delaware, at such place or places within or without the State of Delaware as the Board of Directors shall from time to time determine. (e) The Board of Directors shall from time to time decide whether and to what extent and at what times and under what conditions and requirements the accounts and books of the Corporation, or any of them, except the stock book, shall be open to the inspection of the stockholders, and no stockholder shall have right to inspect any books or documents of the Corporation except as conferred by the laws of the State of Delaware or as authorized by the Board of Directors. (f) The Board of Directors shall have power from time to time to fix and determine and vary the amount of the working capital of the Corporation, and to direct and determine the use and disposition of any surplus or net profits over and above the capital stock paid in; and in its discretion the Board of Directors may use and apply any such surplus or accumulated profits in purchasing or acquiring bonds or other obligations of the Corporation, to such extent and in such manner and upon such terms as the Board of Directors shall deem expedient. (g) Directors elected by holders of stock of the Corporation entitle to vote generally in the election of directors may be removed at any time by a majority vote of such stockholders, provided that such removal may only be for cause. Directors elected by any class of stock, voting separately as a class, may be removed only by a majority vote of such class, voting separately as a class, so long as the voting power of such class shall continue, provided such removal may only be for a cause. ARTICLE EIGHTH The Corporation shall indemnify each officer and director of the Corporation to the fullest extent permitted by applicable law, except as may be otherwise provided in the Corporation's By-Laws, and in furtherance hereof the Board of Directors is expressly authorized to amend the Corporation's By-Laws from time to time to give full effect hereto, notwithstanding possible self-interest of the Directors in the action being taken. The modification or repeal of this ARTICLE EIGHTH shall not adversely affect the right to indemnification of any officer or director hereunder with respect to any act or omission occurring prior to such modification or repeal. ARTICLE NINTH (a) The number of directors of the Corporation, exclusive of directors, if any, to be elected by the holders of one or more series of Series Preferred Stock, shall be not less than five nor more than eighteen. Subject to such limitation, such number may be fixed by the By-Laws, or by action of the stockholders or of the Board of Directors under the specific provisions of a By-Law adopted by the stockholders. The directors of the Corporation shall be divided into three classes, as nearly equal in number as practicable. The term of office of the first class shall expire at the first annual meeting of stockholders succeeding the initial classification of directors, the term of office of the second class shall expire at the second annual meeting succeeding such classification and the term of office of the third class shall expire at the third annual meeting succeeding such classification. At each annual meeting, directors to replace those whose terms of office expire at such annual meeting shall be elected to hold office until the third succeeding annual meeting or until his successor shall be elected and qualify or until his earlier death, resignation or removal. If the number of directors is changed, the number of directorships shall be apportioned among the classes as to make each class as nearly equal in size as practicable. (b) Any vacancies on the Board of Directors occurring for any reason, or any newly created directorships resulting from any increase in the number of directors, shall be filled by the Board of Directors, the appointee to any such vacancy to serve for the unexpired portion of the term of the director whose leaving the Board created the vacancy, and the appointee to any newly created directorship to be assigned by the Board to such class of the Board so as to make the classes as nearly equal in size as practicable. ARTICLE TENTH (a) The affirmative vote of the holders of not less than a majority of the Voting Stock (as hereinafter defined) of the Corporation shall be required before the Corporation may purchase any outstanding shares of Common Stock of the Corporation at a price known by the Corporation to be above Market Price (as hereinafter defined) from a person known by the Corporation to be a Selling Stockholder (a hereinafter defined), unless the purchase is made by the Corporation on the same terms and as a result of a duly authorized offer to purchase any and all of the outstanding shares of Common Stock of the Corporation. (b) For purposes of this ARTICLE TENTH: (1) The term "Voting Stock" shall mean the outstanding shares of stock of the Corporation entitled to vote in elections of directors of the Corporation considered as one class. (2) The majority vote required by Section (a), when applicable, shall be in addition to any lesser vote or no vote required or permitted by law or this Certificate of Incorporation exclusive of this ARTICLE TENTH and the shares of the Selling Stockholder shall, for this purpose, be counted as having abstained regardless of how they have been voted. (3) The term "Market Price" shall mean the highest closing sale price, during the thirty (30) day period immediately preceding the date in question, of a share of the Common Stock of the Corporation on the Composite Tape for New York Stock Exchange Issues, or, if such stock is not quoted on the Composite Tape or is not listed on such Exchange, on the principal United States securities exchange registered under the Securities Exchange Act of 1934 on which such stock is listed, or, if such stock is not listed on any such exchange, the highest closing bid quotation with respect to a share of such stock during the thirty (30) day period preceding the date in question on the National Association of Securities Dealers, Inc. Automated Quotations System or any system then in use, or if no such quotations are available, the fair market value on the date in question of a share of such stock. (4) The term "Selling Stockholder" shall mean and include any person who or which is the beneficial owner of in the aggregate more than three percent (3%) of the outstanding shares of Common Stock of the Corporation and who or which has purchased or agreed to purchase any of such shares within the most recent two-year period (other than any stockholder who owned in excess of 50% of the voting power of the capital stock of the Corporation on the date of the filing of this Amended and Restated Certificate of Incorporation). (5) A "person" shall mean any individual, firm, partnership, Corporation or other entity. (6) A person shall be the "beneficial owner" of any shares of Common Stock of the Corporation: (i) which such person or any of its Affiliates or Associates (as hereinafter defined) beneficially owns, directly or indirectly; or (ii) which such person or any of its Affiliates or Associates has (a) the right to acquire (whether such right is conditional or exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise, or (b) the right to vote pursuant to any agreement, arrangement or understanding; or (iii) which are beneficially owned, directly or indirectly, by any other person with which such person or any of its Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing thereof. (7) The terms "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Act of 1934, as in effect on July 1, 1984. (8) For the purposes of determining whether a person is a Selling stockholder, the number of shares of Common Stock deemed to be outstanding and the number of shares beneficially owned by the person shall include shares respectively deemed owned through application of paragraph (6) of this Section (b) but shall not include any other shares of Common Stock which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise, or shares of the Selling Stockholder whose acquisition of more than three percent of the outstanding shares of Common Stock of the Corporation within the most recent two-year period results from other than a purchase or agreement to purchase or vote shares of the Corporation. (9) Nothing contained in this ARTICLE TENTH shall be construed to relieve any Selling Stockholders from any fiduciary obligation imposed by law. (10) The Board of Directors of the Corporation shall have the power to determine the application of or compliance with this ARTICLE TENTH, including, without limitation, (a) whether a person is a Selling Stockholder; (b) whether a person is an Affiliate or Associate of another; (c) whether Section (a) is or has become applicable in respect of a proposed transaction; (d) what is the Market Price and whether a price is above Market Price; and (e) when or whether a purchase or agreement to purchase any share or shares of Common Stock of the Corporation has occurred and when or whether a person has become a beneficial owner of any share or shares of Common Stock of the Corporation. Any decision or action taken by the Board of Directors arising out of or in connection with the construction, interpretation and effect of this ARTICLE TENTH shall lie within their absolute discretion and shall be conclusive and binding except in circumstances involving bad faith. ARTICLE ELEVENTH SECTION 1. Vote Required for Certain Business Combinations. (a) Higher Vote for Certain Business Combinations. In addition to any affirmative vote required by law or this Certificate of Incorporation, and except as otherwise expressly provided in Section 2 of this ARTICLE ELEVENTH, any transaction or contract which involves or includes: (i) any merger or consolidation of the Corporation or any Subsidiary (as hereinafter defined) with (a) any Interested Stockholder (as hereinafter defined) or (b) any other Corporation (whether or not itself an Interested Stockholder) which is, or after such merger or consolidation would be, an Affiliate (as hereinafter defined) of an Interested Stockholder; or (ii) the issuance or transfer by the Corporation or any Subsidiary (in one transaction or a series of transactions) to or with any Interested Stockholder or any Affiliate of any Interested Stockholder of any assets of the Corporation or any Subsidiary having an aggregate Fair Market Value of $50 million or more; or (iii) the issuance or transfer by the Corporation or any Subsidiary (in one transaction or a series of transactions) of any securities of the Corporation or any Subsidiary to any Interested Stockholder or any Affiliate of any Interested Stockholder in exchange for cash, securities (to the extent the acquisition thereof does not come within the requirements of ARTICLE TENTH) or other property (or a combination thereof) having an aggregate Fair Market Value of $50 million or more; or (iv) the adoption of any plan or proposal for the liquidation or dissolution of the Corporation proposed by or on behalf of any Interested Stockholder or any Affiliate of any Interested Stockholder; or (v) any reclassification of securities (including any reverse stock split), or recapitalization of the Corporation, or any merger or consolidation of the Corporation with any of its Subsidiaries or any other transaction (whether or not with or into or otherwise involving an Interested Stockholder) which has the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any class of Equity Security (as hereinafter defined) of the Corporation or any Subsidiary which is directly or indirectly owned by any Interested Stockholder or any Affiliate of any Interested Stockholder: shall require the affirmative vote of the holders of at least 80% of the voting power of the then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (the "Voting Stock"), voting together as a single class. Such affirmative vote shall be required notwithstanding the fact that no vote may be required, or that a lesser percentage may be specified by law or in any agreement with any national securities exchange or this Certificate of Incorporation exclusive of this ARTICLE ELEVENTH. (b) Definition of "Business Combination". The term "Business Combination" used in this ARTICLE ELEVENTH shall mean any transaction or contract which is referred to in any one or more of clauses (i) through (v) of paragraph (a) of this Section 1. SECTION 2. When Higher Vote is Not Required. The provisions of Section 1 of this ARTICLE ELEVENTH shall not be applicable to any particular Business Combination, and such Business Combination shall require only such affirmative vote as is required by law and any other provision of this Certificate of Incorporation, if all of the conditions specified in either of the following paragraphs (a) or (b) are met: (a) Approval by Directors. The Business Combination shall have been approved by a majority of the Disinterested Directors (as hereinafter defined). (b) Price and Procedure Requirements. All of the following conditions shall have been met: (i) The aggregate amount of the cash and the Fair Market Value (as hereinafter defined), as of the date of the consummation of the Business Combination, of consideration other than cash to be received per share by holders of Common Stock in such Business Combination shall be at least equal to the higher of the following: (a) (if applicable) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers' fees) paid by the Interested Stockholder for any shares of Common Stock acquired by it (1) within the two-year period immediately prior to the first public announcement of the terms of the proposed Business Combination (the "Announcement Date") or (2) in the transaction in which it became an Interested stockholder, whichever is higher; or (b) the Fair Market Value per share of Common Stock on the Announcement Date or on the date on which the Interested Stockholder became an Interested Stockholder (such latter date is referred to in this ARTICLE ELEVENTH as the "Determination Date"), whichever is higher. (ii) The aggregate amount of the cash and the Fair Market Value, as of the date of the consummation of the Business Combination, of consideration other than cash to be received per share by holders of shares of any other class of outstanding Voting Stock shall be at least equal to the higher of the following (it being intended that the requirements of this paragraph (b)(ii) shall be required to be met with respect to every class of outstanding Voting Stock, whether or not the Interested Stockholder has previously acquired any shares of a particular class of Voting Stock): (a) (if applicable) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers' fees) paid by the Interested Stockholder for any shares of such class of Voting Stock acquired by it (1) within the two-year period immediately prior to the Announcement Date or (2) in the transaction in which it became an Interested Stockholder, whichever is higher; (b) (if applicable) the highest preferential amount per share to which the holders of shares of such class of Voting Stock are entitled in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation; and (c) the Fair Market Value per share of such class of Voting Stock on the Announcement Date or on the Determination Date, whichever is higher. (iii) The consideration to be received by holders of a particular class of outstanding Voting Stock (including Common Stock) shall be in cash or in the same form as the Interested Stockholder has previously paid for shares of such class of Voting Stock. If the Interested Stockholder has paid for shares of any class of Voting Stock with varying forms of consideration, the form of consideration for such class of Voting Stock shall be either cash or the form used to acquire the largest number of shares of such class of Voting Stock previously acquired by it. The price determined in accordance with paragraph (b)(i) and (b)(ii) of this Section 2 shall be subject to appropriate adjustment in the event of any stock dividend, stock split, combination of shares of similar event. (iv) After such Interested Stockholder has become an Interested Stockholder and prior to the consummation of such Business Combination: (a) except as approved by a majority of the Disinterested Directors, there shall have been no failure to declare and pay at the regular date therefor any full quarterly dividends (whether or not cumulative) on any outstanding stock having preference over the Common Stock as to dividends or upon liquidation; (b) there shall have been (1) no reduction in the annual rate of dividends paid on the Common Stock (except as necessary to reflect any subdivision of the Common Stock), except as approved by a majority of the Disinterested Directors, and (2) an increase in such annual rate of dividends as necessary to reflect any reclassification (including any reverse stock split), recapitalization, reorganization or any similar transaction which has the effect of reducing the number of outstanding shares of the Common Stock, unless the failure so to increase such annual rate is approved by a majority of the Disinterested Directors; and (c) such Interested Stockholder shall not have become the beneficial owner of any additional shares of Voting Stock or securities convertible into Voting Stock except as part of the transaction which results in such Interested Stockholder becoming an Interest Stockholder. (v) After such Interested Stockholder has become an Interested Stockholder, such Interested Stockholder shall not have received the benefit, directly or indirectly (except proportionately as stockholder), of any loans, advances, guarantees, ledges or other financial assistance or any tax credits or other tax advantages provided by the Corporation, whether in anticipation of or in connection with such Business Combinations or otherwise. (vi) A proxy or information statement describing the proposed Business Combination and complying with the requirements of the Securities Exchange Act of 1934 and the rules and regulations thereunder (or any subsequent provisions replacing such Act, rules or regulations) shall be mailed to public stockholders of the Corporation at least 30-days prior to the consummation of such Business Combination (whether or not such proxy or information statement is required to be mailed pursuant to such Act or subsequent provisions). SECTION 3. Certain Definitions. For the purpose of this ARTICLE ELEVENTH: A. "Person" shall mean any individual, firm, Corporation or other entity. B. "Interested Stockholder" shall mean any person (other than (i) the Corporation, (ii) any Subsidiary or (iii) any stockholder who on the date of the filing of this Amended and Restated Certificate of Incorporation is then the beneficial owner, directly or indirectly, of 50% or more of the voting power of the outstanding Voting Stock who or which: (i) is the beneficial owner, directly or indirectly, of 20% or more of the voting power of the outstanding Voting Stock; or (ii) is an Affiliate of the Corporation and at any time within the two-year period immediately prior to the date in question was the beneficial owner, directly or indirectly, of 20% or more of the voting power of the then outstanding Voting Stock; or (iii) is an assignee of or has otherwise succeeded to any shares of Voting Stock which were at any time within the two-year period immediately prior to the date in question beneficially owned by any Interested Stockholder, if such assignment or succession shall have occurred in the course of a transaction or series of transactions not involving a public offering within the meaning of the Securities Act of 1933. C. A person shall be a "beneficial owner" of any Voting Stock: (i) which such person or any of its Affiliates or Associates (as hereinafter defined) beneficially owns directly or indirectly; or (ii) which such person or any of its Affiliates or Associates has (a) the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise, or (b) the right to vote pursuant to any agreement, arrangement or understanding; (iii) which are beneficially owned, directly or indirectly, by any other person with which such person or any of its Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of Voting Stock. D. For the purpose of determining whether a person is an Interested Stockholder pursuant to paragraph B of this Section 3, the number of shares of Voting Stock deemed to be outstanding shall include shares deemed owned through application of paragraph C of this Section 3 but shall not include any other shares of Voting Stock which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise. E. "Affiliate" or "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as in effect on July 1, 1984. F. "Subsidiary" means any Corporation of which a majority of any class of Equity Security is owned, directly or indirectly, by the Corporation, provided, however, that for the purposes of the definition of Interested Stockholder set forth in paragraph B of this Section 3, the term "Subsidiary" shall mean only a Corporation of which a majority of each class of Equity Security is owned, directly or indirectly, by the Corporation. G. "Fair Market Value" means: (i) in the case of stock, the highest closing sale price during the 30-day period immediately preceding the date in question of a share of such stock on the Composite Tape for New York Stock Exchange issues, or, if such stock is not quoted on the Composite Tape, or the New York Stock Exchange, or, if such stock is not listed on such Exchange, on the principal United States securities exchange registered under the Securities Exchange Act of 1934 on which such stock is listed, or, if such stock is not listed on any exchange, the highest closing bid quotation with respect to a share of such stock during the 30- day period preceding the date in question on the National Association of Securities Dealers, Inc. Automated Quotations System or any system then in use, or if no such quotations are available, the fair market value on the date in question of a share of such stock as determined by the Disinterested Directors in good faith; and (ii) in the case of property other than cash or stock, the fair market value of such property on the date in question as determined by a majority of the Disinterested Directors. H. In the event of any Business Combination in which the Corporation survives, the phrase "consideration other than cash to be received" as used in paragraph (b)(i) and (ii) of Section 2 of this ARTICLE ELEVENTH shall include the share of Common Stock and/or the shares of any other class of outstanding Voting Stock retained by the holders of such shares. I. "Equity Security" shall have the meaning ascribed to such term in Section 3(a)(11) of the Securities Exchange Act of 1934, as in effect on July 1, 1984. J. "Disinterested Director" means any member of the Board of Directors who is unaffiliated with the Interested Stockholder and was a member of the Board of Directors prior to the time that the Interested Stockholder became an Interested Stockholder, and any successor of a Disinterested Director who is unaffiliated with the Interested Stockholder and is recommended to succeed a Disinterested Director by a majority of Disinterested Directors then on the Board of Directors. SECTION 4. Powers of the Board of Directors. The Board of Directors shall have the power to interpret all of the terms and provisions of this ARTICLE ELEVENTH, including, without limitation, and on the basis of information known to the Board of Directors after reasonable inquiry (A) whether a person is an Interested Stockholder, (B) the number of shares of Voting Stock beneficially owned by any person, (C) whether a person is an Affiliate or Associate of another, (D) whether the assets which are the subject of any Business Combination have, or the consideration to be received for the issuance or transfer of securities by the Corporation or any Subsidiary in any Business Combination has, an aggregate Fair Market Value of $50 million or more. SECTION 5. No Effect on Fiduciary Obligations of Interested Stockholders. Nothing contained in this ARTICLE ELEVENTH shall be construed to relieve any Interested Stockholder from any fiduciary obligations imposed by law. SECTION 6. Amendment, Repeal, etc. Notwithstanding any other provisions of this Certificate of Incorporation or the By-Laws (and notwithstanding the fact that a lesser percentage may be specified by law, this Certificate of Incorporation or the By-Laws or otherwise) the affirmative vote or consent of the holders of 80% or more of the outstanding Voting Stock voting together as a single class, shall be required to amend or repeal, or adopt any provisions inconsistent with, this ARTICLE ELEVENTH or any provision hereof. ARTICLE TWELFTH To the fullest extent permitted by the Delaware General Corporation Law as the same exists or may hereafter be amended, a director of this Corporation shall not be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. The modification or repeal of this ARTICLE TWELFTH shall not affect the restriction hereunder of a director's personal liability for any breach, act or omission occurring prior to such modification or repeal. EX-4.II.(C) 3 AMENDED AND RESTATED FIVE-YEAR CREDIT AGREEMENT Exhibit 4.ii.(c) Execution Copy $650,000,000 AMENDED AND RESTATED FIVE-YEAR CREDIT AGREEMENT dated as of December 8, 1999 among IMC GLOBAL INC., Various Financial Institutions, ROYAL BANK OF CANADA, as Documentation Agent, SUNTRUST BANK, ATLANTA, as Co-Documentation Agent, THE CHASE MANHATTAN BANK, as Syndication Agent, BANK ONE, NA, as Co-Syndication Agent, and BANK OF AMERICA, N.A., as Administrative Agent BANC OF AMERICA SECURITIES LLC, Lead Arranger and Sole Book Manager TABLE OF CONTENTS Page ARTICLE 1 DEFINITIONS SECTION 1.01. Definitions 1 SECTION 1.02. Accounting Terms and Determinations 12 SECTION 1.03. Types of Borrowing 13 ARTICLE 2 THE CREDITS SECTION 2.01. Commitments to Lend 13 SECTION 2.02. Notice of Committed Borrowings 14 SECTION 2.03. Bid Rate Borrowings 14 SECTION 2.04. Notice to Banks; Funding of Loans 18 SECTION 2.05. Registry; Notes 19 SECTION 2.06. Maturity of Loans 19 SECTION 2.07. Interest Rates 19 SECTION 2.08. Fees 21 SECTION 2.09. Optional Termination or Reduction of Commitments 22 SECTION 2.10. Method of Electing Interest Rates 22 SECTION 2.11. Scheduled Termination of Commitments 23 SECTION 2.12. Optional Prepayments 23 SECTION 2.13. General Provisions as to Payments 24 SECTION 2.14. Funding Losses 24 SECTION 2.15. Computation of Interest and Fees 25 SECTION 2.16. Letters of Credit 25 SECTION 2.17. Regulation D Compensation 28 SECTION 2.18. Takeout of Swingline Loans 28 SECTION 2.19. Foreign Costs 29 ARTICLE 3 CONDITIONS SECTION 3.01. Effectiveness 30 SECTION 3.02. Borrowings and Issuance of Letters of Credits 31 SECTION 3.03. First Borrowing by or Issuance of Letter of Credit for Each Eligible Subsidiary 31 ARTICLE 4 REPRESENTATIONS AND WARRANTIES SECTION 4.01. Corporate Existence and Power 32 SECTION 4.02. Corporate and Governmental Authorization; No Contravention 32 SECTION 4.03. Binding Effect 32 SECTION 4.04. Financial Information 32 SECTION 4.05. Litigation 33 SECTION 4.06. Compliance with Laws 33 SECTION 4.07. Environmental Matters 34 SECTION 4.08. Taxes 34 SECTION 4.09. Subsidiaries 34 SECTION 4.10. Regulatory Restrictions on Borrowing 34 SECTION 4.11. Full Disclosure 34 SECTION 4.12. Year 2000 35 ARTICLE 5 COVENANTS SECTION 5.01. Information 35 SECTION 5.02. Payment of Obligations 37 SECTION 5.03. Maintenance of Property; Insurance 37 SECTION 5.04. Conduct of Business and Maintenance of Existence 37 SECTION 5.05. Compliance with Laws 38 SECTION 5.06. Inspection of Property, Books and Records 38 SECTION 5.07. Mergers and Sales of Assets 38 SECTION 5.08. Use of Proceeds 39 SECTION 5.09. Negative Pledge 39 SECTION 5.10. Debt of Subsidiaries 40 SECTION 5.11. Transactions with Affiliates 40 SECTION 5.12. Leverage Ratio 40 ARTICLE 6 DEFAULTS SECTION 6.01. Events of Default 41 SECTION 6.02. Notice of Default 43 SECTION 6.03. Cash Cover 43 ARTICLE 7 THE ADMINISTRATIVE AGENT SECTION 7.01. Appointment and Authorization 44 SECTION 7.02. Administrative Agent and Affiliates 44 SECTION 7.03. Action by Administrative Agent 44 SECTION 7.04. Consultation with Experts 44 SECTION 7.05. Liability of Administrative Agent 44 SECTION 7.06. Indemnification 45 SECTION 7.07. Credit Decision 45 SECTION 7.08. Successor Administrative Agent 45 SECTION 7.09. Agents' Fees 45 SECTION 7.10. Other Agents 46 ARTICLE 8 CHANGE IN CIRCUMSTANCES SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair 46 SECTION 8.02. Illegality 46 SECTION 8.03. Increased Cost and Reduced Return 47 SECTION 8.04. Taxes 48 SECTION 8.05. Base Rate Loans Substituted for Affected Fixed Rate Loans 50 SECTION 8.06. Substitution of Bank 51 ARTICLE 9 REPRESENTATIONS AND WARRANTIES OF ELIGIBLE SUBSIDIARIES SECTION 9.01. Corporate Existence and Power 51 SECTION 9.02. Corporate and Governmental Authorization; Contravention 51 SECTION 9.03. Binding Effect 51 SECTION 9.04. Taxes 52 ARTICLE 10 GUARANTY SECTION 10.01. The Guaranty 52 SECTION 10.02. Guaranty Unconditional 52 SECTION 10.03. Discharge Only Upon Payment In Full; Reinstatement In Certain Circumstances 53 SECTION 10.04. Waiver by the Company 53 SECTION 10.05. Subrogation 53 SECTION 10.06. Stay of Acceleration 53 ARTICLE 11 MISCELLANEOUS SECTION 11.01. Notices 54 SECTION 11.02. No Waivers 54 SECTION 11.03. Expenses; Indemnification 54 SECTION 11.04. Sharing of Set-offs 55 SECTION 11.05. Amendments and Waivers 55 SECTION 11.06. Successors and Assigns 56 SECTION 11.07. Collateral 57 SECTION 11.08. Confidentiality 57 SECTION 11.09. Governing Law; Submission to Jurisdiction 58 SECTION 11.10. Counterparts; Integration 58 SECTION 11.11. Waiver of Jury Trial 58 SECTION 11.12. Effect of Amendment and Restatement; Resignation of Resigning Agent 58 PRICING SCHEDULE SCHEDULE I Existing Letters of Credit EXHIBIT A - Note EXHIBIT B - Form of Bid Rate Quote Request EXHIBIT C - Form of Invitation for Bid Rate Quotes EXHIBIT D - Form of Bid Rate Quote EXHIBIT E-1 - Opinion of Special Counsel for the Company EXHIBIT E-2 - Opinion of General Counsel of the Company EXHIBIT F - Opinion of Mayer, Brown & Platt, Special Counsel for the Administrative Agent EXHIBIT G - Assignment and Assumption Agreement EXHIBIT H - Form of Election to Participate EXHIBIT I - Form of Election to Terminate EXHIBIT J - Matters to be covered in Opinion of Counsel for Eligible Subsidiaries EXHIBIT K - Form of Notice of Borrowing EXHIBIT L - Form of Notice of Interest Rate Election AMENDED AND RESTATED FIVE-YEAR CREDIT AGREEMENT AMENDED AND RESTATED FIVE-YEAR CREDIT AGREEMENT dated as of December 8, 1999 among IMC GLOBAL INC., a Delaware corporation (together with its successors, the "Company"), various financial institutions, ROYAL BANK OF CANADA, as Documentation Agent, SUNTRUST BANK, ATLANTA, as Co- Documentation Agent, THE CHASE MANHATTAN BANK, as Syndication Agent, BANK ONE, NA, as Co-Syndication Agent, and BANK OF AMERICA, N.A., as Administrative Agent. WHEREAS, the Company, the financial institutions listed on the signature pages hereof and Morgan Guaranty Trust Company of New York, as administrative agent (in such capacity, the "Resigning Administrative Agent"), are parties to a Five-Year Credit Agreement dated as of December 15, 1997 (as amended prior to the date hereof, the "Existing Credit Agreement"); and WHEREAS, the signatories hereto have agreed (a) to amend the Existing Credit Agreement in certain respects, including (i) appointing Bank of America, N.A. as Administrative Agent in place of the Resigning Administrative Agent, (ii) revising certain definitions and (iii) adding a utilization fee, and (b) to restate the Existing Credit Agreement in its entirety pursuant hereto; NOW, THEREFORE, the parties hereto agree as follows: ARTICLE DEFINITIONS 1.1. SECTION Definitions . The following terms, as used herein, have the following meanings: 1.2. 1.3. "Acquisition" means an acquisition by the Company or any of its Consolidated Subsidiaries of a company, a division, a location or a line of business or of all or substantially all of the assets of any of the foregoing. 1.4. 1.5. "Administrative Agent" means Bank of America, N.A. in its capacity as administrative agent for the Banks hereunder, and its successors in such capacity. 1.6. 1.7. "Administrative Questionnaire" means, with respect to each Bank, the administrative questionnaire in the form submitted to such Bank by the Administrative Agent and submitted to the Administrative Agent (with a copy to the Company) duly completed by such Bank. 1.8. 1.9. "Affiliate" means (i) any Person that directly, or indirectly through one or more intermediaries, controls the Company (a "Controlling Person") or (ii) any Person (other than the Company or a Subsidiary) which is controlled by or is under common control with a Controlling Person. As used herein, the term "control" means possession, directly or indirectly, of the power to vote 10% or more of any class of voting securities of a Person or to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise. 1.10. 1.11. "Agent" means any one of the Administrative Agent, the Documentation Agent, the Co-Documentation Agent, the Syndication Agent or the Co-Syndication Agent, and "Agents" means any two or more of the foregoing. 1.12. 1.13. "Agrico" means IMC-Agrico Company, a Delaware general partnership, and its successors. 1.14. 1.15. "Applicable Lending Office" means, with respect to any Bank, (i) in the case of its Domestic Loans, its Domestic Lending Office, (ii) in the case of its Euro-Dollar Loans, its Euro-Dollar Lending Office, (iii) in the case of its Bid Rate Loans, its Bid Rate Lending Office and (iv) in the case of its Swingline Loans, its Swingline Lending Office. 1.16. 1.17. "Approved Officer" means the president, the chief financial officer, the acting chief financial officer, the treasurer, a vice president, an assistant treasurer or the controller of the Company or such other representative of the Company as may be designated by any one of the foregoing with the consent of the Administrative Agent. 1.18. 1.19. "Assignee" has the meaning set forth in Section 11.06(c). 1.20. 1.21. "Bank" means each bank or other financial institution listed on the signature pages hereof, each Assignee which becomes a Bank pursuant to Section 11.06(c), and their respective successors. 1.22. 1.23. "Base Rate" means, for any day, a rate per annum equal to the higher of (i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the Federal Funds Rate for such day. 1.24. 1.25. "Base Rate Loan" means a Syndicated Loan which bears interest at the Base Rate pursuant to the applicable Notice of Committed Borrowing or Notice of Interest Rate Election or the provisions of Article 8. 1.26. 1.27. "Benefit Arrangement" means at any time an employee benefit plan within the meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan and which is maintained or otherwise contributed to by any member of the ERISA Group. 1.28. 1.29. "Bid Rate (General)" has the meaning set forth in Section 2.03(d). 1.30. 1.31. "Bid Rate (General) Auction" means a solicitation of Bid Rate Quotes setting forth Bid Rates (General) pursuant to Section 2.03. 1.32. 1.33. "Bid Rate (General) Loan" means a loan made or to be made by a Bank pursuant to a Bid Rate (General) Auction. 1.34. "Bid Rate (Indexed) Auction" means a solicitation of Bid Rate Quotes setting forth Bid Rate (Indexed) Margins based on the London Interbank Offered Rate pursuant to Section 2.03. 1.35. 1.36. "Bid Rate (Indexed) Loan" means a loan made or to be made by a Bank pursuant to a Bid Rate (Indexed) Auction (including such a loan bearing interest at the Base Rate pursuant to Section 8.01(a)). 1.37. 1.38. "Bid Rate (Indexed) Margin" has the meaning set forth in Section 2.03(d). 1.39. 1.40. "Bid Rate Lending Office" means, as to each Bank, its Domestic Lending Office or such other office, branch or affiliate of such Bank as it may hereafter designate as its Bid Rate Lending Office by notice to the Company and the Administrative Agent; provided that any Bank may from time to time by notice to the Company and the Administrative Agent designate separate Bid Rate Lending Offices for its Bid Rate (Indexed) Loans, on the one hand, and its Bid Rate (General) Loans, on the other hand, in which case all references herein to the Bid Rate Lending Office of such Bank shall be deemed to refer to either or both of such offices, as the context may require. 1.41. 1.42. "Bid Rate Loan" means a Bid Rate (Indexed) Loan or a Bid Rate (General) Loan. 1.43. 1.44. "Bid Rate Quote" means an offer by a Bank to make a Bid Rate Loan in accordance with Section 2.03. 1.45. 1.46. "Borrower" means the Company or any Eligible Subsidiary, as the context may require, and their respective successors, and "Borrowers" means all of the foregoing. References to "the Borrower" in connection with any Loan or Letter of Credit are to the Borrower to which such Loan is or is to be made or at whose request such Letter of Credit is or is to be issued. As the context may permit, the terms "Borrower" and "Borrowers" include the Company in its capacity as guarantor of the obligations of the other Borrowers hereunder. 1.47. 1.48. "Borrowing" has the meaning set forth in Section 1.03. 1.49. 1.50. "Co-Documentation Agent" means SunTrust Bank, Atlanta in its capacity as co-documentation agent for the Banks hereunder, and its successors in such capacity. 1.51. 1.52. "Commitment" means (i) with respect to each Bank listed on the signature pages hereof, the amount set forth opposite the name of such Bank on the signature pages hereof, and (ii) with respect to each Assignee which becomes a Bank pursuant to Section 11.06(c), the amount of the Commitment thereby assumed by it, in each case as such amount may from time to time be reduced pursuant to Section 2.09 or 11.06(c) or increased pursuant to Section 11.06(c). 1.53. 1.54. "Committed Loan" means a Syndicated Loan or a Swingline Loan. 1.55. 1.56. "Company" has the meaning set forth in the introductory paragraph. 1.57. "Consolidated Net Worth" means at any date the consolidated shareholders' equity of the Company and its Consolidated Subsidiaries determined as of such date (other than any amount attributable to stock which is required to be redeemed or is redeemable at the option of the holder, if certain events or conditions occur or exist or otherwise). 1.58. 1.59. "Consolidated Subsidiary" means, for any Person, at any date any Subsidiary or other entity the accounts of which would be consolidated with those of such Person in its consolidated financial statements if such statements were prepared as of such date; unless otherwise specified "Consolidated Subsidiary" means a Consolidated Subsidiary of the Company. 1.60. 1.61. "Co-Syndication Agent" means Bank One, NA in its capacity as co- syndication agent for the Banks hereunder, and its successors in such capacity. 1.62. 1.63. "Debt" of any Person means at any date, without duplication, (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of such Person to pay the deferred purchase price of property or services, except trade accounts payable and similar items arising in the ordinary course of business, (iv) all obligations of such Person as lessee which are capitalized in accordance with generally accepted accounting principles, (v) all non-contingent obligations (and, for purposes of Section 5.09 and the definition of Material Financial Obligations, all contingent obligations) of such Person to reimburse any bank or other Person in respect of amounts paid under a letter of credit or similar instrument, (vi) all Debt secured by a Lien on any asset of such Person, whether or not such Debt is otherwise an obligation of such Person, provided that the amount of such Debt treated as Debt of such Person solely pursuant to this clause (vi) shall not exceed the greater of the book value or the fair market value of the collateral, and (vii) all Debt of others Guaranteed by such Person. For purposes of clause (v) above, a reimbursement obligation in respect of a letter of credit or similar instrument is contingent unless and until there shall have been a drawing under such letter of credit or instrument. 1.64. 1.65. "Default" means any condition or event which constitutes an Event of Default or which with the giving of notice or lapse of time or both would, unless cured or waived, become an Event of Default. 1.66. 1.67. "Derivatives Obligations" of any Person means all obligations of such Person in respect of any rate swap transaction, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of the foregoing transactions) or any combination of the foregoing transactions. 1.68. 1.69. "Documentation Agent" means Royal Bank of Canada in its capacity as documentation agent in respect of this Agreement. 1.70. "Domestic Business Day" means any day except a Saturday, Sunday or other day on which commercial banks in New York City, Charlotte or Chicago are authorized by law to close. 1.71. 1.72. "Domestic Lending Office" means, as to each Bank, its office located at its address set forth in its Administrative Questionnaire (or identified in its Administrative Questionnaire as its Domestic Lending Office) or such other office as such Bank may hereafter designate as its Domestic Lending Office by notice to the Company and the Administrative Agent. 1.73. 1.74. "Effective Date" means the date this Agreement becomes effective in accordance with Section 3.01. 1.75. 1.76. "Election to Participate" means an Election to Participate substantially in the form of Exhibit H hereto. 1.77. 1.78. "Election to Terminate" means an Election to Terminate substantially in the form of Exhibit I hereto. 1.79. 1.80. "Eligible Subsidiary" means any Substantially-Owned Consolidated Subsidiary of the Company as to which an Election to Participate shall have been delivered to the Administrative Agent and as to which an Election to Terminate shall not have been delivered to the Administrative Agent. Each such Election to Participate and Election to Terminate shall be duly executed on behalf of such Consolidated Subsidiary and the Company in such number of copies as the Administrative Agent may request. The delivery of an Election to Terminate shall not affect any obligation of an Eligible Subsidiary theretofore incurred. The Administrative Agent shall promptly give notice to the Banks of the receipt of any Election to Participate or Election to Terminate. 1.81. 1.82. "Environmental Laws" means any and all federal, state, local and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or other governmental restrictions relating to the environment or to emissions, discharges or releases of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes into the environment including, without limitation, ambient air, surface water, ground water, or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes. 1.83. 1.84. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, or any successor statute. 1.85. 1.86. "ERISA Group" means the Company, any Subsidiary and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Company or any Subsidiary, are treated as a single employer under Section 414 of the Internal Revenue Code. 1.87. 1.88. "Euro-Dollar Business Day" means any Domestic Business Day on which commercial banks are open for international business (including dealings in dollar deposits) in London. 1.89. 1.90. "Euro-Dollar Lending Office" means, as to each Bank, its office, branch or affiliate located at its address set forth in its Administrative Questionnaire (or identified in its Administrative Questionnaire as its Euro-Dollar Lending Office) or such other office, branch or affiliate of such Bank as it may hereafter designate as its Euro-Dollar Lending Office by notice to the Company and the Administrative Agent. 1.91. 1.92. "Euro-Dollar Loan" means a Syndicated Loan which bears interest at a Euro-Dollar Rate pursuant to the applicable Notice of Committed Borrowing or Notice of Interest Rate Election. 1.93. 1.94. "Euro-Dollar Margin" means a rate per annum determined in accordance with the Pricing Schedule. 1.95. 1.96. "Euro-Dollar Rate" means a rate of interest determined pursuant to Section 2.07(b) on the basis of a London Interbank Offered Rate. 1.97. 1.98. "Euro-Dollar Reference Banks" means the principal London offices of Royal Bank of Canada, The Chase Manhattan Bank and Bank of America, N.A. 1.99. 1.100. "Euro-Dollar Reserve Percentage" has the meaning set forth in Section 2.17. 1.101. 1.102. "Events of Default" has the meaning set forth in Section 6.01. 1.103. 1.104. "Existing Credit Agreement" has the meaning set forth in the recitals. 1.105. 1.106. "Existing Harris Debt" means Debt of Harris Chemical North America, Inc., a Delaware corporation, under its outstanding $250,000,000 10.25% Senior Secured Discount Notes and its outstanding $335,000,000 10.75% Senior Subordinated Notes. 1.107. 1.108. "Existing Letters of Credit" means the letters of credit identified in Schedule I. 1.109. 1.110. "Federal Funds Rate" means, for any day, the rate per annum (rounded upwards, if necessary, to the nearest 1/100th of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Domestic Business Day next succeeding such day, provided that (i) if such day is not a Domestic Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Domestic Business Day as so published on the next succeeding Domestic Business Day, and (ii) if no such rate is so published on such next succeeding Domestic Business Day, the Federal Funds Rate for such day shall be the average rate quoted to Bank of America, N.A. (or its successor as Administrative Agent) on such day on such transactions as determined by the Administrative Agent. 1.111. 1.112. "Fixed Rate Loans" means Euro-Dollar Loans, Swingline Loans or Bid Rate Loans (excluding Swingline Loans or Bid Rate (Indexed) Loans bearing interest at the Base Rate) or any combination of the foregoing. 1.113. 1.114. "Group of Loans" means at any time a group of Loans consisting of (i) all Loans to a single Borrower which are Base Rate Loans at such time or (ii) all Euro-Dollar Loans to a single Borrower having the same Interest Period at such time, provided that, if a Committed Loan of any particular Bank is converted to or made as a Base Rate Loan pursuant to Article 8, such Loan shall be included in the same Group or Groups of Loans from time to time as it would have been if it had not been so converted or made. 1.115. 1.116. "Guarantee" by any Person means any obligation, contingent or otherwise, of such Person directly or indirectly guaranteeing any Debt of any other Person, provided that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business. The term "Guarantee" used as a verb has a corresponding meaning. 1.117. 1.118. "Harris Chemical Acquisition" means, collectively, the merger of Harris Chemical Group with and into IMC Merger Sub Inc., a wholly-owned Subsidiary of the Company, with Harris Chemical Group as the survivor thereof, pursuant to the certain Agreement and Plan of Merger, dated December 11, 1997, by and among the Company, IMC Merger Sub, Inc. and Harris Chemical Group, and the acquisition, directly or indirectly, by the Company of all of the outstanding shares of Harris Chemical Australia Pty Limited pursuant to the Sale and Purchase Agreement made as of December 11, 1997 among Prudential Asset Management Asia Limited, DGHA Persons and Trusts named therein, Search Investment NV, Harris Chemical Australia Pty Limited, Marsupial L.L.C., Marsupial-II L.L.C., Soda Ash (L) BHD, Manager Shareholders named therein and the Company. 1.119. 1.120. "Harris Chemical Group" means Harris Chemical Group, Inc., a Delaware corporation. 1.121. 1.122. "IMC Inorganic Chemicals Inc." means IMC Inorganic Chemicals Inc., a Delaware corporation, formerly known as Harris Chemical Group, Inc. 1.123. 1.124. "Indemnitee" has the meaning set forth in Section 11.03(b). 1.125. 1.126. "Interest Period" means: (1) with respect to each Euro-Dollar Loan, the period commencing on the date of borrowing specified in the applicable Notice of Borrowing or on the date specified in an applicable Notice of Interest Rate Election and ending one, two, three or six, or, if deposits of a corresponding maturity are available to each Bank in the London interbank market, nine or twelve, months thereafter, as the Borrower may elect in such notice; provided that: 1.127. (a) any Interest Period which would otherwise end on a day which is not a Euro-Dollar Business Day shall be extended to the next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Euro-Dollar Business Day; and (a) any Interest Period which begins on the last Euro-Dollar Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Euro-Dollar Business Day of a calendar month; (2) with respect to each Swingline Loan, the period commencing on the date of borrowing specified in the applicable Notice of Borrowing and ending such number of days thereafter (but not more than 10 Euro-Dollar Business Days) as the Borrower may elect in such notice; provided that any Interest Period which would otherwise end on a day which is not a Euro- Dollar Business Day shall be extended to the next succeeding Euro-Dollar Business Day; (3) with respect to each Bid Rate (Indexed) Loan, the period commencing on the date of borrowing specified in the applicable Notice of Borrowing and ending such number of months thereafter (but not less than one month) as the Borrower may elect in accordance with Section 2.03; provided that: (a) any Interest Period which would otherwise end on a day which is not a Euro-Dollar Business Day shall be extended to the next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Euro-Dollar Business Day; and (b) any Interest Period which begins on the last Euro-Dollar Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Euro-Dollar Business Day of a calendar month; and (4) with respect to each Bid Rate (General) Loan, the period commencing on the date of borrowing specified in the applicable Notice of Borrowing and ending such number of days thereafter (but not less than 7 days) as the Borrower may elect in accordance with Section 2.03; provided that any Interest Period which would otherwise end on a day which is not a Euro-Dollar Business Day shall be extended to the next succeeding Euro-Dollar Business Day; and provided further that any Interest Period which would otherwise end after the Termination Date shall end on the Termination Date. "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended, or any successor statute. "Issuing Bank" means Morgan Guaranty Trust Company of New York, Suntrust Bank, Atlanta, Bank of America, N.A., Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank International", New York Branch, Royal Bank of Canada, Harris Trust and Savings Bank and any other Bank that may agree to issue letters of credit hereunder, in each case as issuer of a Letter of Credit hereunder. "Letter of Credit" means a letter of credit to be issued or issued hereunder by the Issuing Bank in accordance with Section 2.16. "Letter of Credit Liabilities" means, for any Bank and at any time, such Bank's ratable participation in the sum of (x) the amounts then owing by the Borrower in respect of amounts drawn under Letters of Credit and (y) the aggregate amount then available for drawing under all Letters of Credit. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge or security interest, or any other type of preferential arrangement that has the practical effect of creating a security interest, in respect of such asset. For the purposes of this Agreement, the Company or any Subsidiary shall be deemed to own subject to a Lien any asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such asset. "Loan" means a Committed Loan or a Bid Rate Loan and "Loans" means Committed Loans or Bid Rate Loans or any combination of the foregoing. "London Interbank Offered Rate" has the meaning set forth in Section 2.07(b). "Material Adverse Effect" means a material adverse effect upon (i) the financial condition, operations or properties of the Company and its Consolidated Subsidiaries, taken as a whole, or (ii) the ability of the Company to perform under, or the ability of the Banks to enforce repayment of the Loans and the other obligations of the Company under, this Agreement. "Material Financial Obligations" means a principal or face amount of Debt and/or payment or collateralization obligations in respect of Derivatives Obligations of the Company and/or one or more of its Subsidiaries, arising in one or more related or unrelated transactions, exceeding in the aggregate $100,000,000. "Material Plan" means at any time a Plan or Plans having aggregate Unfunded Liabilities in excess of $100,000,000. "Material Subsidiary" means, at any date, (i) any Subsidiary having (x) at least 5% of the total consolidated assets of the Company and its Consolidated Subsidiaries (determined as of the last day of the fiscal quarter of such Person most recently ended on or prior to such date) or (y) at least 5% of Consolidated EBITDA (as defined in Section 5.12) for the four consecutive fiscal quarters most recently ended on or prior to such date or (ii) collectively, any one or more Subsidiaries having (x) at least 10% of the total consolidated assets of the Company and its Consolidated Subsidiaries (determined as of the last day of the fiscal quarter of such Persons most recently ended on or prior to such date) or (y) at least 10% of Consolidated EBITDA for the four consecutive fiscal quarters most recently ended on or prior to such date. "Moody's" means Moody's Investors Service, Inc. "Multiemployer Plan" means at any time an employee pension benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any member of the ERISA Group either (i) is then making or accruing an obligation to make contributions or (ii) has within the preceding five plan years made contributions, including for these purposes any Person which was at the time such contribution was made a member of the ERISA Group. "Notes" means promissory notes of the Borrower, in the form required by Section 2.05, evidencing the obligation of the Borrower to repay the Loans, and "Note" means any one of such promissory notes issued hereunder. "Notice of Borrowing" means a Notice of Committed Borrowing (as defined in Section 2.02) or a Notice of Bid Rate Borrowing (as defined in Section 2.03(f)), in either case in substantially the form of Exhibit K. "Notice of Interest Rate Election" has the meaning set forth in Section 2.10(a). "Notice of Issuance" has the meaning set forth in Section 2.16(b). "Parent" means, with respect to any Bank, any Person controlling such Bank. "Participant" has the meaning set forth in Section 11.06(b). "PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA. "Person" means an individual, a corporation, a limited liability company, a partnership, an association, a trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "Plan" means at any time an employee pension benefit plan (other than a Multiemployer Plan) which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Internal Revenue Code and either (i) is maintained, or contributed to, by any member of the ERISA Group for employees of any member of the ERISA Group or (ii) has at any time within the preceding five years been maintained, or contributed to, by any Person which was at such time a member of the ERISA Group for employees of any Person which was at such time a member of the ERISA Group. "PLP" means Phosphate Resource Partners Limited Partnership, a Delaware limited partnership, and its successors. "Pricing Schedule" means the schedule annexed hereto denominated as such. "Prime Rate" means the rate of interest publicly announced by Bank of America, N.A. in Charlotte, North Carolina from time to time as its Prime Rate. Each change in the Prime Rate shall be effective from and including the day such change is publicly announced. "Quarterly Payment Date" means the last Domestic Business Day of each March, June, September and December. "Regulation U" means Regulation U of the Board of Governors of the Federal Reserve System, as in effect from time to time. "Required Banks" means at any time Banks having more than 50% of the aggregate amount of the Commitments or, if the Commitments shall have been terminated, holding more than 50% of the sum of the aggregate unpaid principal amount of the Loans and the aggregate Letter of Credit Liabilities. "Resigning Agent" has the meaning set forth in the recitals. "Revolving Credit Period" means the period from and including the Effective Date to but not including the Termination Date. "S&P" means Standard & Poor's Rating Services, a division of The McGraw- Hill Companies, Inc. "Series E Preferred Stock" means the shares of preferred stock of The Vigoro Corporation, a Delaware corporation and wholly-owned Subsidiary of the Company, par value $100 per share, designated Series E. "Subsidiary" means, as to any Person, any corporation or other entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at the time directly or indirectly owned by such Person; unless otherwise specified, "Subsidiary" means a Subsidiary of the Company. "Substantial Assets" means assets sold or otherwise disposed of in a single transaction or a series of related transactions representing 25% or more of the consolidated assets of the Company and its Consolidated Subsidiaries, taken as a whole. "Substantially-Owned Consolidated Subsidiary" means any Consolidated Subsidiary at least 80% of the Voting Stock of which is at the time directly or indirectly owned by the Company; provided that Agrico shall be deemed a Substantially-Owned Consolidated Subsidiary for so long as it is a Consolidated Subsidiary. "Swingline Bank" means Bank of America, N.A., Suntrust Bank, Atlanta and any other Bank that may agree to make Swingline Loans hereunder. "Swingline Lending Office" means, as to any Swingline Bank, its office located at its address set forth in its Administrative Questionnaire (or identified in its Administrative Questionnaire as its Swingline Lending Office) or such other office as such Swingline Bank may hereafter designate as its Swingline Lending Office by notice to the Borrower and the Administrative Agent. "Swingline Loan" means a loan made by the Swingline Bank pursuant to Section 2.01(b). "Swingline Takeout Loan" means a Base Rate Loan made pursuant to Section 2.18. "Syndicated Loan" means a Loan made by a Bank pursuant to Section 2.01(a); provided that, if any loan or loans (or portions thereof) are combined or subdivided pursuant to a Notice of Interest Rate Election, the term "Syndicated Loan" shall refer to the combined principal amount resulting from such combination or to each of the separate principal amounts resulting from such subdivision, as the case may be. "Syndication Agent" means The Chase Manhattan Bank in its capacity as syndication agent in respect of this Agreement. "Termination Date" means December 15, 2002, or, if such day is not a Euro-Dollar Business Day, the next preceding Euro-Dollar Business Day. "United States" means the United States of America, including the States and the District of Columbia, but excluding its territories and possessions. "Unfunded Liabilities" means, with respect to any Plan at any time, the amount (if any) by which (i) the value of all benefit liabilities under such Plan, determined on a plan termination basis using the assumptions prescribed by the PBGC for purposes of Section 4044 of ERISA (or other applicable standard), exceeds (ii) the fair market value of all Plan assets allocable to such liabilities under Title IV of ERISA (excluding any accrued but unpaid contributions), all determined as of the then most recent valuation date for such Plan, but only to the extent that such excess represents a potential liability of a member of the ERISA Group to the PBGC or any other Person under Title IV of ERISA. "Unrefunded Swingline Loan" has the meaning set forth in Section 2.18(b). "Voting Stock" means capital stock issued by a corporation, or equivalent interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even if the right so to vote has been suspended by the happening of such a contingency. 1.1. SECTION Accounting Terms and Determinations. Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared in accordance with generally accepted accounting principles as in effect from time to time, applied on a basis consistent in all material respects (except for changes concurred in by the Company's independent public accountants) with the most recent audited consolidated financial statements of the Company and its Consolidated Subsidiaries delivered to the Banks; provided that, if the Company notifies the Administrative Agent that the Company wishes to amend any covenant in Article 5 to eliminate the effect of any change in generally accepted accounting principles on the operation of such covenant (or if the Administrative Agent notifies the Company that the Required Banks wish to amend Article 5 for such purpose), then the Company's compliance with such covenant shall be determined on the basis of generally accepted accounting principles in effect immediately before the relevant change in generally accepted accounting principles became effective, until either such notice is withdrawn or such covenant is amended in a manner satisfactory to the Company and the Required Banks, and the parties hereto agree to enter into negotiations in good faith in order to amend such provisions in a credit-neutral manner so as to reflect equitably such changes with the desired result that the criteria for evaluating the financial condition and performance of the Company and its Consolidated Subsidiaries shall be the same after such changes as if such changes had not been made. 1.2. 1.3. SECTION Types of Borrowings . The term "Borrowing" denotes the aggregation of Loans of one or more Banks to be made to a single Borrower pursuant to Article 2 on a single date and for a single Interest Period. Borrowings are classified for purposes of this Agreement either by reference to the pricing of Loans comprising such Borrowing (e.g., a "Fixed Rate Borrowing" is a Euro-Dollar Borrowing, a Swingline Borrowing or a Bid Rate Borrowing (excluding any such Borrowing consisting of Swingline Loans or Bid Rate (Indexed) Loans bearing interest at the Base Rate), and a "Euro- Dollar Borrowing" is a Borrowing comprised of Euro-Dollar Loans) or by reference to the provisions of Article 2 under which participation therein is determined (i.e., a "Syndicated Borrowing" is a Borrowing under Section 2.01 in which all Banks participate in proportion to their Commitments, while a "Bid Rate Borrowing" is a Borrowing under Section 2.03 in which the Bank participants are determined on the basis of their bids in accordance therewith). 1.4. ARTICLE THE CREDITS 1.1. SECTION Commitments to Lend. (a) Syndicated Loans. During the Revolving Credit Period, each Bank severally agrees, on the terms and conditions set forth in this Agreement, to make loans to any Borrower pursuant to this subsection (a) from time to time in amounts such that the aggregate principal amount of Committed Loans by such Bank, together with its Letter of Credit Liabilities and its participating interests in any Unrefunded Swingline Loans, at any one time outstanding to all Borrowers shall not exceed the amount of its Commitment. Each Borrowing under this subsection (a) (other than a Swingline Takeout Borrowing) shall be in an aggregate principal amount of $10,000,000 or any larger multiple of $1,000,000 (except that any such Borrowing may be in the aggregate amount available in accordance with Section 3.02(b) and except that any such Borrowing to refund a Swingline Loan or to fund the reimbursement obligation in respect of a Letter of Credit may be in the exact amount required for such purpose) and shall be made from the several Banks ratably in proportion to their respective Commitments. Within the foregoing limits, any Borrower may borrow under this subsection (a), repay or, to the extent permitted by Section 2.12, prepay Loans and reborrow at any time during the Revolving Credit Period under this subsection (a). (b) Swingline Loans. From time to time prior to the Termination Date, each Swingline Bank agrees, on the terms and conditions set forth in this Agreement, to make loans to any Borrower pursuant to this subsection (b) from time to time in amounts such that (i) the aggregate principal amount of its Committed Loans together with its Letter of Credit Liabilities at any one time outstanding to all Borrowers shall not exceed the amount of its Commitment and (ii) the aggregate principal amount of Swingline Loans at any time outstanding shall not exceed $25,000,000. Within the foregoing limits, any Borrower may borrow under this subsection (b), repay or, to the extent permitted by Section 2.12, prepay Loans and reborrow at any time during the Revolving Credit Period under this subsection (b); provided that the proceeds of a Swingline Borrowing may not be used, in whole or in part, to refund any prior Swingline Borrowing. Each Borrowing under this subsection (b) shall be in an aggregate principal amount of $500,000 or any larger multiple of $250,000 (except that any such Borrowing may be in the aggregate amount available in accordance with Section 2.01(a)). 1.1. SECTION Notice of Committed Borrowings. The Borrower shall give the Administrative Agent notice (a "Notice of Committed Borrowing") not later than 11:00 A.M. (New York City time) on (x) the date of each Base Rate Borrowing or Swingline Borrowing and (y) the third Euro-Dollar Business Day before each Euro-Dollar Borrowing, specifying: 1.2. (a) the date of such Borrowing, which shall be a Domestic Business Day in the case of a Base Rate Borrowing or a Swingline Borrowing or a Euro-Dollar Business Day in the case of a Euro-Dollar Borrowing; (b) the aggregate amount of such Borrowing; (c) whether the Loans comprising such Borrowing are to be Swingline Loans or Syndicated Loans, and, in the case of Swingline Loans, the applicable Swingline Banks; (d) in the case of a Syndicated Borrowing, whether the Loans comprising such Borrowing are to bear interest initially at the Base Rate or a Euro-Dollar Rate; and (e) in the case of a Euro-Dollar Borrowing or a Swingline Borrowing, the duration of the initial Interest Period applicable thereto, subject to the provisions of the definition of Interest Period. 1.1. SECTION Bid Rate Borrowings . The Bid Rate Option. In addition to Committed Borrowings pursuant to Section 2.01, any Borrower may, as set forth in this Section, request the Banks to make offers to make Bid Rate Loans to the Borrower. The Banks may, but shall have no obligation to, make such offers and the Borrower may, but shall have no obligation to, accept any such offers in the manner set forth in this Section. 1.2. 1.3. (b) Bid Rate Quote Request. When a Borrower wishes to request offers to make Bid Rate Loans under this Section, it shall transmit to the Administrative Agent by telex or facsimile transmission a Bid Rate Quote Request substantially in the form of Exhibit B hereto so as to be received no later than 11:00 A.M. (New York City time) on (x) the fifth Euro-Dollar Business Day prior to the date of Borrowing proposed therein, in the case of a Bid Rate (Indexed) Auction or (y) the Domestic Business Day next preceding the date of Borrowing proposed therein, in the case of a Bid Rate (General) Auction (or, in either case, such other time or date as the Borrower and the Administrative Agent shall have mutually agreed and shall have notified to the Banks not later than the date of the Bid Rate Quote Request for the first Bid Rate (Indexed) Auction or Bid Rate (General) Auction for which such change is to be effective) specifying: 1.4. 1.5. (i) the proposed date of Borrowing, which shall be a Euro-Dollar Business Day, 1.6. 1.7. (ii) the aggregate amount of such Borrowing, which shall be $10,000,000 or a larger multiple of $1,000,000, 1.8. 1.9. (iii) the duration of the Interest Period applicable thereto, subject to the provisions of the definition of Interest Period, and 1.10. 1.11. (iv) whether the Bid Rate Quotes requested are to set forth a Bid Rate (Indexed) Margin or a Bid Rate (General). 1.12. The Borrower may request offers to make Bid Rate Loans for more than one Interest Period in a single Bid Rate Quote Request. (c) Invitation for Bid Rate Quotes. Promptly upon receipt of a Bid Rate Quote Request, the Administrative Agent shall send to the Banks by telex or facsimile transmission an Invitation for Bid Rate Quotes substantially in the form of Exhibit C hereto, which shall constitute an invitation by the Borrower to each Bank to submit Bid Rate Quotes offering to make the Bid Rate Loans to which such Bid Rate Quote Request relates in accordance with this Section. (d) Submission and Contents of Bid Rate Quotes. (i) Each Bank may submit a Bid Rate Quote containing an offer or offers to make Bid Rate Loans in response to any Invitation for Bid Rate Quotes. Each Bid Rate Quote must comply with the requirements of this subsection (d) and must be submitted to the Administrative Agent by telex or facsimile transmission at its offices specified in or pursuant to Section 11.01 not later than (x) 2:00 P.M. (New York City time) on the fourth Euro-Dollar Business Day prior to the proposed date of Borrowing, in the case of a Bid Rate (Indexed) Auction or (y) 10:00 A.M. (New York City time) on the proposed date of Borrowing, in the case of a Bid Rate (General) Auction (or, in either case, such other time or date as the Borrower and the Administrative Agent shall have mutually agreed and shall have notified to the Banks not later than the date of the Bid Rate Quote Request for the first Bid Rate (Indexed) Auction or Bid Rate (General) Auction for which such change is to be effective); provided that Bid Rate Quotes submitted by the Administrative Agent (or any affiliate of the Administrative Agent) in the capacity of a Bank may be submitted, and may only be submitted, if the Administrative Agent or such affiliate notifies the Borrower of the terms of the offer or offers contained therein not later than (x) 1:00 P.M. (New York City time) on the fourth Euro-Dollar Business Day prior to the proposed date of Borrowing, in the case of a Bid Rate (Indexed) Auction or (y) 9:45 A.M. (New York City time) on the proposed date of Borrowing, in the case of a Bid Rate (General) Auctions. Subject to Articles 3 and 6, any Bid Rate Quote so made shall be irrevocable except with the written consent of the Administrative Agent given on the instructions of the Borrower. (ii) Each Bid Rate Quote shall be in substantially the form of Exhibit D hereto and shall in any case specify: (A) the proposed date of Borrowing, (B) the principal amount of the Bid Rate Loan for which each such offer is being made, which principal amount (w) may be greater than or less than the Commitment of the quoting Bank, (x) must be $5,000,000 or a larger multiple of $1,000,000, (y) may not exceed the principal amount of Bid Rate Loans for each Interest Period for which offers were requested and (z) may be subject to an aggregate limitation as to the principal amount of Bid Rate Loans for which offers being made by such quoting Bank may be accepted, (C) in the case of a Bid Rate (Indexed) Auction, the margin above or below the applicable London Interbank Offered Rate (the "Bid Rate (Indexed) Margin") offered for each such Bid Rate Loan, expressed as a percentage (specified to the nearest 1/10,000th of 1%) to be added to or subtracted from such base rate, (D) in the case of a Bid Rate (General) Auction, the rate of interest per annum (specified to the nearest 1/10,000th of 1%) (the "Bid Rate (General)") offered for each such Bid Rate Loan, and (E) the identity of the quoting Bank. A Bid Rate Quote may set forth up to five separate offers by the quoting Bank with respect to each Interest Period specified in the related Invitation for Bid Rate Quotes. (iii) Any Bid Rate Quote shall be disregarded if: (A) it is not substantially in conformity with Exhibit D hereto or does not specify all of the information required by subsection 2.03(d)(ii); (B) it contains qualifying, conditional or similar language beyond that contemplated by Exhibit D (other than a qualification or condition as to minimum amount); (C) it proposes terms other than or in addition to those set forth in the applicable Invitation for Bid Rate Quotes; or (D) it arrives after the time set forth in subsection 2.03(d)(i). (e) Notice to Borrower. The Administrative Agent shall promptly but in no event later than (i) 5:00 P.M. (New York City time) on the fourth Euro-Dollar Business Day prior to the proposed date of Borrowing, in the case of a Bid Rate (Indexed) Auction or (ii) 10:30 A.M. (New York City time) on the proposed date of Borrowing, in the case of a Bid Rate (General) Auction (or, in either case such other time or date as the Borrower and the Administrative Agent shall have mutually agreed and shall have notified to the Banks not later than the date of the Bid Rate Quote Request for the first Bid Rate (Indexed) Auction or Bid Rate (General) Auction for which such change is to be effective) notify the Borrower of the terms (x) of any Bid Rate Quote submitted by a Bank that is in accordance with subsection (d) and (y) of any Bid Rate Quote that amends, modifies or is otherwise inconsistent with a previous Bid Rate Quote submitted by such Bank with respect to the same Bid Rate Quote Request. Any such subsequent Quote shall be disregarded by the Administrative Agent unless such subsequent Quote is submitted solely to correct a manifest error in such former Quote. The Administrative Agent's notice to the Borrower shall specify (A) the aggregate principal amount of Loans for which offers have been received for each Interest Period specified in the related Bid Rate Quote Request, (B) the respective principal amounts and Bid Rate (Indexed) Margins or Bid Rates (General), as the case may be, so offered and (C) if applicable, limitations on the aggregate principal amount of Bid Rate Loans for which offers in any single Bid Rate Quote may be accepted. (f) Acceptance and Notice by Borrower. Not later than 11:00 A.M. (New York City time) on (x) the third Euro-Dollar Business Day prior to the proposed date of Borrowing, in the case of a Bid Rate (Indexed) Auction or (y) the proposed date of Borrowing, in the case of a Bid Rate (General) Auction (or, in either case, such other time or date as the Borrower and the Administrative Agent shall have mutually agreed and shall have notified to the Banks not later than the date of the Bid Rate Quote Request for the first Bid Rate (Indexed) Auction or Bid Rate (General) Auction for which such change is to be effective), the Borrower shall notify the Administrative Agent of its acceptance or non-acceptance of the offers so notified to it pursuant to subsection (e). In the case of acceptance, such notice (a "Notice of Bid Rate Borrowing") shall specify the aggregate principal amount of offers for each Interest Period that are accepted. The Borrower may accept any Bid Rate Quote in whole or in part; provided that: (i) the aggregate principal amount of each Bid Rate Borrowing may not exceed the applicable amount set forth in the related Bid Rate Quote Request, (ii) the principal amount of each Bid Rate Borrowing must be $10,000,000 or a larger multiple of $1,000,000, and (iii) acceptance of offers may only be made on the basis of ascending Bid Rate (Indexed) Margins or Bid Rates (General), as the case may be. (g) Allocation by Administrative Agent. If offers are made by two or more Banks with the same Bid Rate (Indexed) Margins or Bid Rates (General), as the case may be, for a greater aggregate principal amount than the amount in respect of which such offers are accepted for the related Interest Period, the principal amount of Bid Rate Loans in respect of which such offers are accepted shall be allocated by the Administrative Agent among such Banks as nearly as possible (in multiples of $1,000,000, as the Administrative Agent may deem appropriate) in proportion to the aggregate principal amounts of such offers. Determinations by the Administrative Agent of the amounts of Bid Rate Loans shall be conclusive in the absence of manifest error. 1.1. SECTION Notice to Banks; Funding of Loans . (a) Upon receipt of a Notice of Borrowing, the Administrative Agent shall promptly notify each Bank of the contents thereof and of such Bank's share (if any) of such Borrowing and such Notice of Borrowing shall not thereafter be revocable by the Borrower. 1.2. 1.3. (b) Not later than 1:00 P.M. (New York City time) on the date of each Borrowing, each Bank participating therein shall (except as provided in subsection (c) of this Section) make available its share of such Borrowing, in Federal or other funds immediately available in New York City, to the Administrative Agent at its address specified in or pursuant to Section 11.01. Unless the Administrative Agent determines that any applicable condition specified in Article 3 has not been satisfied, the Administrative Agent will make the funds so received from the Banks available to the Borrower at the Administrative Agent's aforesaid address not later than 2:30 P.M. (New York City time) on the date of such Borrowing. 1.4. (c) Unless the Administrative Agent shall have received notice from a Bank prior to the time of any Borrowing that such Bank will not make available to the Administrative Agent such Bank's share of such Borrowing, the Administrative Agent may assume that such Bank has made such share available to the Administrative Agent on the date of such Borrowing in accordance with subsection (b) of this Section 2.04 and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent that such Bank shall not have so made such share available to the Administrative Agent, such Bank and, if such Bank shall not have made such payment within two Domestic Business Days of demand therefor, the Borrower severally agree to repay to the Administrative Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Administrative Agent, at (i) in the case of the Borrower, a rate per annum equal to the higher of the Federal Funds Rate and the interest rate applicable thereto pursuant to Section 2.07 and (ii) in the case of such Bank, the Federal Funds Rate. If such Bank shall repay to the Administrative Agent such corresponding amount, such amount so repaid shall constitute such Bank's Loan included in such Borrowing for purposes of this Agreement. 1.5. 1.6. (d) The failure of any Bank to make the Loan to be made by it as part of any Borrowing shall not relieve any other Bank of its obligation, if any, hereunder to make a Loan on the date of such Borrowing, but no Bank shall be responsible for the failure of any other Bank to make a Loan to be made by such other Bank. 1.7. 1.8. SECTION Registry; Notes . (a) The Administrative Agent shall maintain a register (the "Register") on which it will record the Commitment of each Bank, each Loan made by such Bank and each repayment of any Loan made by such Bank. Any such recordation by the Administrative Agent on the Register shall be presumptively correct, absent manifest error. Failure to make any such recordation, or any error in such recordation, shall not affect the Borrowers' obligations hereunder. 1.9. 1.10. (b) Each Borrower hereby agrees that, promptly upon the request of any Bank at any time, such Borrower shall deliver to such Bank a duly executed Note, in substantially the form of Exhibit A hereto, payable to the order of such Bank and representing the obligation of such Borrower to pay the unpaid principal amount of the Loans made to such Borrower by such Bank, with interest as provided herein on the unpaid principal amount from time to time outstanding. 1.11. 1.12. (c) Each Bank shall record the date, amount and maturity of each Loan made by it and the date and amount of each payment of principal made by the Borrower with respect thereto, and each Bank receiving a Note pursuant to this Section, if such Bank so elects in connection with any transfer or enforcement of any Note, may endorse on the schedule forming a part thereof appropriate notations to evidence the foregoing information with respect to each such Loan then outstanding; provided that the failure of such Bank to make any such recordation or endorsement shall not affect the obligations of the Borrowers hereunder or under the Notes. Such Bank is hereby irrevocably authorized by the Borrowers so to endorse any Note and to attach to and make a part of any Note a continuation of any such schedule as and when required. 1.13. 1.14. SECTION Maturity of Loans . (a) Each Syndicated Loan shall mature, and the principal amount thereof shall be due and payable (together with accrued and unpaid interest thereon), on the Termination Date. 1.15. 1.16. (b) Each Swingline Loan included in any Swingline Borrowing and each Bid Rate Loan included in any Bid Rate Borrowing shall mature, and the principal amount thereof shall be due and payable (together with accrued and unpaid interest thereon), on the last day of the Interest Period applicable to such Borrowing. 1.17. 1.18. SECTION Interest Rates . (a) Each Base Rate Loan shall bear interest on the outstanding principal amount thereof, for each day from the date such Loan is made until it becomes due, at a rate per annum equal to the Base Rate for such day. Such interest shall be payable quarterly in arrears on each Quarterly Payment Date, at maturity and, with respect to the principal amount of any Base Rate Loan converted to a Euro- Dollar Loan, on the date such Base Rate Loan is so converted. Any overdue principal of or overdue interest on any Base Rate Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the sum of 2% plus the Base Rate for such day. 1.19. 1.20. (b) Each Euro-Dollar Loan shall bear interest on the outstanding principal amount thereof, for each day during each Interest Period applicable thereto, at a rate per annum equal to the sum of the Euro-Dollar Margin for such day plus the London Interbank Offered Rate applicable to such Interest Period. Such interest shall be payable for each Interest Period on the last day thereof and, if such Interest Period is longer than three months, at intervals of three months after the first day thereof. 1.21. 1.22. The "London Interbank Offered Rate" applicable to any Interest Period means the average (rounded upward, if necessary, to the next higher 1/16 of 1%) of the respective rates per annum at which deposits in dollars are offered to each of the Euro-Dollar Reference Banks in the London interbank market at approximately 11:00 A.M. (London time) two Euro- Dollar Business Days before the first day of such Interest Period in an amount approximately equal to the principal amount of the Loan of such Euro- Dollar Reference Bank to which such Interest Period is to apply and for a period of time comparable to such Interest Period. If any Euro-Dollar Reference Bank does not furnish a timely quotation, the Administrative Agent shall determine the relevant interest rate on the basis of the quotation furnished by the remaining Euro-Dollar Reference Banks or, if none of such quotations is available on a timely basis, the provisions of Section 8.01 shall apply. 1.23. 1.24. (c) Any overdue principal of or overdue interest on any Euro-Dollar Loan shall bear interest, payable on demand, for each day from and including the date payment thereof was due to but excluding the date of actual payment, at a rate per annum equal to the sum of 2% plus the higher of (i) the sum of the Euro-Dollar Margin for such day plus the London Interbank Offered Rate applicable to such Loan at the date such payment was due and (ii) the Base Rate for such day. 1.25. 1.26. (d) Each Swingline Loan shall bear interest on the outstanding principal amount thereof, for each day during the Interest Period applicable thereto, at a rate per annum equal to the Base Rate for such day or such other rate as may be from time to time determined by mutual agreement between the Swingline Bank making such Loan and the Borrower. Interest on each Swingline Loan shall be payable at the maturity of such Loan. Any overdue principal of or overdue interest on any Swingline Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the sum of 2% plus the Base Rate for such day; provided that if and to the extent the failure to pay such principal or interest when due was attributable to default by a Bank in making a Loan which such Bank was obligated to make hereunder, such interest shall accrue at a rate per annum equal to the Base Rate from and including the date such payment was due to but not including the first Domestic Business Day thereafter and shall accrue at a rate per annum equal to the sum of 2% plus the Base Rate from and including such first succeeding Domestic Business Day until paid. 1.27. 1.28. (e) Subject to Section 8.01(a), each Bid Rate (Indexed) Loan shall bear interest on the outstanding principal amount thereof, for the Interest Period applicable thereto, at a rate per annum equal to the sum of the London Interbank Offered Rate for such Interest Period (determined in accordance with Section 2.07(b) as if each Euro-Dollar Reference Bank were to participate in the related Bid Rate (Indexed) Borrowing ratably in proportion to its Commitment) plus (or minus) the Bid Rate (Indexed) Margin quoted by the Bank making such Loan in accordance with Section 2.03. Each Bid Rate (General) Loan shall bear interest on the outstanding principal amount thereof, for the Interest Period applicable thereto, at a rate per annum equal to the Bid Rate (General) quoted by the Bank making such Loan in accordance with Section 2.03. Such interest shall be payable for each Interest Period on the last day thereof and, if such Interest Period is longer than three months, at intervals of three months after the first day thereof. Any overdue principal of or overdue interest on any Bid Rate Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the sum of 2% plus the Base Rate for such day. 1.29. 1.30. (f) The Administrative Agent shall determine each interest rate applicable to the Loans hereunder. The Administrative Agent shall give prompt notice to the Borrower and the participating Banks of each rate of interest so determined, and its determination thereof shall be conclusive in the absence of manifest error. 1.31. 1.32. SECTION Fees . (a) Facility Fee. The Company shall pay to the Administrative Agent for the account of each Bank a facility fee at the Facility Fee Rate (determined daily in accordance with the Pricing Schedule). Such facility fee shall accrue (i) from and including the earlier of the date hereof and the Effective Date to but excluding the date of termination of the Commitments in their entirety, on the daily aggregate amount of the Commitments (whether used or unused) and (ii) from and including such date of termination to but excluding the date the Loans and Letter of Credit Liabilities shall be repaid in their entirety, on the daily average aggregate outstanding principal amount of the Loans and Letter of Credit Liabilities. 1.33. 1.34. (b) Letter of Credit Fees. Each Borrower shall pay (i) to the Administrative Agent for the account of the Banks ratably a letter of credit fee accruing daily on the aggregate amount then available for drawing under all outstanding Letters of Credit issued at its request at a rate per annum equal to the Euro-Dollar Margin and (ii) to each Issuing Bank a letter of credit fronting fee accruing daily on the aggregate amount then available for drawing under all Letters of Credit issued by such Issuing Bank issued at its request at a rate per annum mutually agreed from time to time by the Borrowers and such Issuing Bank. 1.35. 1.36. (c) Utilization Fees. For any day on which the aggregate outstanding principal amount of the Loans is equal to or greater than 25% of the aggregate amount of the Commitments, the Company shall pay to the Administrative Agent for the account of each Bank a utilization fee for such day computed at a rate per annum equal to the Utilization Fee Rate (determined daily in accordance with the Pricing Schedule) on the principal amount of such Bank's Loans. Such utilization fee shall accrue (for any day on which applicable) from and including the Effective Date to the date on which the Commitments are terminated, and thereafter until all Loans are paid in full. 1.37. 1.38. (d) Payments. Accrued fees under this Section shall be payable quarterly in arrears on each Quarterly Payment Date and upon the date of termination of the Commitments in their entirety (and, thereafter, on demand until the Loans and Letter of Credit Liabilities shall be repaid in their entirety). 1.39. 1.40. SECTION Optional Termination or Reduction of Commitments . The Company may, upon notice to the Administrative Agent not later than 11:00 A.M. (New York City time) on any Domestic Business Day, (i) terminate the Commitments at any time, if no Loans or Letter of Credit Liabilities are outstanding at such time (after giving effect to any contemporaneous prepayment of the Loans in accordance with Section 2.12) or (ii) ratably reduce from time to time by an aggregate amount of $25,000,000 or any larger multiple of $1,000,000 the aggregate amount of the Commitments in excess of the aggregate outstanding principal amount of the Loans and Letter of Credit Liabilities. 1.41. 1.42. SECTION Method of Electing Interest Rates . (a) The Loans included in each Syndicated Borrowing shall bear interest initially at the type of rate specified by the Borrower in the applicable Notice of Committed Borrowing. Thereafter, the Borrower may from time to time elect to change or continue the type of interest rate borne by each Group of Loans (subject in each case to the provisions of Article 8 and the last sentence of this subsection (a)), as follows: 1.43. 1.44. (i) if such Loans are Base Rate Loans, the Borrower may elect to convert such Loans to Euro-Dollar Loans as of any Euro-Dollar Business Day; and 1.45. 1.46. (ii) if such Loans are Euro-Dollar Loans, the Borrower may elect to convert such Loans to Base Rate Loans or elect to continue such Loans as Euro-Dollar Loans for an additional Interest Period, subject to Section 2.14 in the case of any such conversion or continuation effective on any day other than the last day of the then current Interest Period applicable to such Loans. 1.47. 1.48. Each such election shall be made by delivering a notice in substantially the form of Exhibit L (a "Notice of Interest Rate Election") to the Administrative Agent not later than 11:00 A.M. (New York City time) on the third Euro-Dollar Business Day before the conversion or continuation selected in such notice is to be effective. A Notice of Interest Rate Election may, if it so specifies, apply to only a portion of the aggregate principal amount of the relevant Group of Loans, provided that (i) such portion is allocated ratably among the Loans comprising such Group and (ii) the portion to which such notice applies, and the remaining portion to which it does not apply, are each $10,000,000 or any larger multiple of $1,000,000. 1.49. 1.50. (b) Each Notice of Interest Rate Election shall specify: 1.51. (i) the Group of Loans (or portion thereof) to which such notice applies; (ii) the date on which the conversion or continuation selected in such notice is to be effective, which shall comply with the applicable clause of subsection 2.10(a) above; (iii) if the Loans comprising such Group are to be converted, the new type of Loans and, if the Loans being converted are to be Fixed Rate Loans, the duration of the next succeeding Interest Period applicable thereto; and (iv) if such Loans are to be continued as Euro-Dollar Loans for an additional Interest Period, the duration of such additional Interest Period. Each Interest Period specified in a Notice of Interest Rate Election shall comply with the provisions of the definition of the term "Interest Period". (c) Promptly after receiving a Notice of Interest Rate Election from the Borrower pursuant to subsection 2.10(a) above, the Administrative Agent shall notify each Bank of the contents thereof and such notice shall not thereafter be revocable by the Borrower. If no Notice of Interest Rate Election is timely received prior to the end of an Interest Period for any Group of Loans, the Borrower shall be deemed to have elected that such Group of Loans be converted to Base Rate Loans as of the last day of such Interest Period. (d) An election by the Borrower to change or continue the rate of interest applicable to any Group of Loans pursuant to this Section shall not constitute a "Borrowing" subject to the provisions of Section 3.02. 1.1. SECTION Scheduled Termination of Commitments . The Commitments shall terminate on the Termination Date, and any Loans then outstanding (together with accrued and unpaid interest thereon) shall be due and payable on such date. 1.2. 1.3. SECTION Optional Prepayments . (a) Subject in the case of any Fixed Rate Borrowing to Section 2.14, the Borrower may upon notice to the Administrative Agent not later than 11:00 A.M. (New York City time) on any Domestic Business Day prepay on such Domestic Business Day any Group of Base Rate Loans, any Swingline Borrowing or any Bid Rate Borrowing bearing interest at the Base Rate pursuant to Section 8.01(a) and upon at least three Euro-Dollar Business Days' notice to the Administrative Agent not later than 11:00 A.M. (New York City time) prepay any Group of Euro-Dollar Loans, in each case in whole at any time, or from time to time in part in amounts aggregating $10,000,000 or any larger multiple of $1,000,000, by paying the principal amount to be prepaid together with accrued interest thereon to the date of prepayment. Each such optional prepayment shall be applied to prepay ratably the Loans of the several Banks included in such Group or Borrowing. 1.4. 1.5. (b) Except as provided in subsection 2.12(a), the Borrower may not prepay all or any portion of the principal amount of any Bid Rate Loan prior to the maturity thereof. 1.6. 1.7. (c) Upon receipt of a notice of prepayment pursuant to this Section, the Administrative Agent shall promptly notify each Bank of the contents thereof and of such Bank's share (if any) of such prepayment and such notice shall not thereafter be revocable by the Borrower. 1.8. 1.9. SECTION General Provisions as to Payments . (a) Each payment of principal of, and interest on, the Loans and of fees hereunder shall be made not later than 2:30 P.M. (New York City time) on the date when due, in Federal or other funds immediately available in New York City, to the Administrative Agent at its address referred to in Section 11.01. The Administrative Agent will promptly distribute to each Bank its ratable share of each such payment received by the Administrative Agent for the account of the Banks. Whenever any payment of principal of, or interest on, the Base Rate Loans, Swingline Loans or Letter of Credit Liabilities or of fees shall be due on a day which is not a Domestic Business Day, the date for payment thereof shall be extended to the next succeeding Domestic Business Day. Whenever any payment of principal of, or interest on, the Euro-Dollar Loans shall be due on a day which is not a Euro-Dollar Business Day, the date for payment thereof shall be extended to the next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another calendar month, in which case the date for payment thereof shall be the next preceding Euro-Dollar Business Day. Whenever any payment of principal of, or interest on, the Bid Rate Loans shall be due on a day which is not a Euro-Dollar Business Day, the date for payment thereof shall be extended to the next succeeding Euro-Dollar Business Day. If the date for any payment of principal is extended by operation of law or otherwise, interest thereon shall be payable for such extended time. 1.10. 1.11. (b) Unless the Administrative Agent shall have received notice from a Borrower prior to the date on which any payment is due from such Borrower to the Banks hereunder that such Borrower will not make such payment in full, the Administrative Agent may assume that such Borrower has made such payment in full to the Administrative Agent on such date and the Administrative Agent may, in reliance upon such assumption, cause to be distributed to each Bank on such due date an amount equal to the amount then due such Bank. If and to the extent that such Borrower shall not have so made such payment, each Bank shall repay to the Administrative Agent forthwith on demand such amount distributed to such Bank together with interest thereon, for each day from the date such amount is distributed to such Bank until the date such Bank repays such amount to the Administrative Agent, at the Federal Funds Rate. 1.12. 1.13. SECTION Funding Losses . If a Borrower makes any payment of principal with respect to any Fixed Rate Loan or any Euro-Dollar Loan is converted to a Base Rate Loan or continued as a Euro-Dollar Loan for a new Interest Period (pursuant to Article 2, 6 or 8 or otherwise) on any day other than the last day of an Interest Period applicable thereto, or if a Borrower fails to borrow, prepay, convert or continue any Fixed Rate Loans after notice has been given to any Bank in accordance with Section 2.04(a), 2.10(c) or 2.12(c) (other than by reason of a default by the Bank demanding payment hereunder), such Borrower shall reimburse each Bank within 15 days after written demand from such Bank for any resulting loss or reasonable expense incurred by it (or by an existing or prospective Participant in the related Loan, but not to exceed the loss and expense which would have been incurred by such Bank had no participations been granted by it), including (without limitation) any loss incurred in obtaining, liquidating or employing deposits from third parties, but excluding loss of profit or margin for the period after any such payment or conversion or failure to borrow, prepay, convert or continue, provided that such Bank shall have delivered to such Borrower a certificate setting forth in reasonable detail the calculation of the amount of such loss or expense, which certificate shall be presumptively correct in the absence of manifest error. 1.14. 1.15. SECTION Computation of Interest and Fees . Interest based on the Prime Rate hereunder shall be computed on the basis of a year of 365 days (or 366 days in a leap year) and paid for the actual number of days elapsed (including the first day but excluding the last day). All other interest and all fees shall be computed on the basis of a year of 360 days and paid for the actual number of days elapsed (including the first day but excluding the last day). 1.16. 1.17. SECTION Letters of Credit . (a) Subject to the terms and conditions hereof, each Issuing Bank agrees to issue Letters of Credit hereunder from time to time before the sixth Domestic Business Day preceding the Termination Date upon the request of any Borrower; provided that, immediately after each Letter of Credit is issued (i) the aggregate amount of the Letter of Credit Liabilities plus the aggregate outstanding amount of all Loans shall not exceed the aggregate amount of the Commitments and (ii) the aggregate Letter of Credit Liabilities shall not exceed $100,000,000. On the Effective Date, each of the Existing Letters of Credit shall be deemed to be a Letter of Credit issued at the request of the Company hereunder, and shall from and after such date be governed by the provisions of this Agreement as fully as if the same had been issued pursuant hereto on the Effective Date. Upon the date of issuance by an Issuing Bank of a Letter of Credit (or on the Effective Date, in the case of the Existing Letters of Credit), the Issuing Bank shall be deemed, without further action by any party hereto, to have sold to each Bank, and each Bank shall be deemed, without further action by any party hereto, to have purchased from the Issuing Bank, a participation in such Letter of Credit and the related Letter of Credit Liabilities in the proportion its Commitment bears to the aggregate Commitments. 1.18. 1.19. (b) The Borrower shall give an Issuing Bank notice at least three Domestic Business Days prior to the requested issuance of a Letter of Credit specifying the date such Letter of Credit is to be issued, and describing the terms of such Letter of Credit and the nature of the transactions to be supported thereby (such notice, including any such notice given in connection with the extension of a Letter of Credit, a "Notice of Issuance"). Upon receipt of a Notice of Issuance, the Issuing Bank shall promptly notify the Administrative Agent, and the Administrative Agent shall promptly notify each Bank of the contents thereof and of the amount of such Bank's participation in such Letter of Credit. The issuance by the Issuing Bank of each Letter of Credit shall, in addition to the conditions precedent set forth in Article 3, be subject to the conditions precedent that such Letter of Credit shall be in such form and contain such terms as shall be reasonably satisfactory to the Issuing Bank and that the Borrower shall have executed and delivered such other instruments and agreements relating to such Letter of Credit as the Issuing Bank shall have reasonably requested. The Borrower shall also pay to the Issuing Bank for its own account issuance, drawing, amendment and extension charges in the amounts and at the times as agreed between the Borrower and the Issuing Bank. The extension or renewal of any Letter of Credit shall be deemed to be an issuance of such Letter of Credit, and if any Letter of Credit contains a provision pursuant to which it is deemed to be extended unless notice of termination is given by the Issuing Bank, the Issuing Bank shall timely give such notice of termination unless it has theretofore timely received a Notice of Issuance and the other conditions to issuance of a Letter of Credit have also theretofore been met with respect to such extension. 1.20. 1.21. (c) No Letter of Credit shall have a term extending or extendible beyond the fifth Domestic Business Day preceding the Termination Date. 1.22. 1.23. (d) Upon receipt from the beneficiary of any Letter of Credit of any notice of a drawing under such Letter of Credit, the Issuing Bank shall notify the Administrative Agent and the Administrative Agent shall promptly notify the Borrower and each other Bank as to the amount to be paid as a result of such demand or drawing and the payment date. The Borrower shall be irrevocably and unconditionally obligated forthwith to reimburse the Issuing Bank for any amounts paid by the Issuing Bank upon any drawing under any Letter of Credit, without presentment, demand, protest or other formalities of any kind. In the event of a drawing under a Letter of Credit, the Borrower shall, unless it gives not less than one Domestic Business Day's notice to the Administrative Agent to the contrary, be deemed to have timely given a Notice of Borrowing for a Base Rate Borrowing on the date of such drawing in the exact amount due the Issuing Bank hereunder on such date, and the Administrative Agent shall apply the proceeds of such Borrowing to make payment thereof. 1.24. 1.25. (e) All such amounts paid by the Issuing Bank and remaining unpaid by the Borrower shall bear interest, payable on demand, for each day until paid at a rate per annum equal to the Base Rate for such day plus, if such amount remains unpaid for more than one Domestic Business Day, 2%; provided that if and to the extent the failure to pay such principal or interest when due is attributable to default by a Bank in making a Loan which such Bank was obligated to make hereunder, such interest shall accrue at a rate per annum equal to the Base Rate from and including the date such payment was due to but not including the first Domestic Business Day thereafter and shall accrue at a rate per annum equal to the sum of 2% plus the Base Rate from and including such first succeeding Domestic Business Day until paid. In addition, each Bank will pay to the Administrative Agent, for the account of the Issuing Bank, immediately upon the Issuing Bank's demand at any time during the period commencing after such drawing until reimbursement therefor in full by the Borrower, an amount equal to such Bank's ratable share of such drawing (in proportion to its participation therein), together with interest on such amount for each day from the date of the Issuing Bank's demand for such payment (or, if such demand is made after 12:00 Noon (New York City time) on such date, from the next succeeding Domestic Business Day) to the date of payment by such Bank of such amount at a rate of interest per annum equal to the Federal Funds Rate. The Issuing Bank will pay to each Bank ratably all amounts received from the Borrower for application in payment of its reimbursement obligations in respect of any Letter of Credit, but only to the extent such Bank has made payment to the Issuing Bank in respect of such Letter of Credit pursuant hereto. 1.26. 1.27. (f) The obligations of each Borrower and Bank under subsections 2.16(d) and 2.16(e) above shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement, under all circumstances whatsoever, including without limitation the following circumstances: 1.28. 1.29. (i) the use which may be made of the Letter of Credit by, or any acts or omission of, a beneficiary of a Letter of Credit (or any Person for whom the beneficiary may be acting); 1.30. 1.31. (ii) the existence of any claim, set-off, defense or other rights that such Borrower may have at any time against a beneficiary of a Letter of Credit (or any Person for whom the beneficiary may be acting), the Banks (including the Issuing Bank), any other Borrower or any other Person, whether in connection with this Agreement or the Letter of Credit or any document related hereto or thereto or any unrelated transaction; 1.32. 1.33. (iii) any statement or any other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect whatsoever; 1.34. 1.35. (iv) payment under a Letter of Credit to the beneficiary of such Letter of Credit against presentation to the Issuing Bank of a draft or certificate that does not comply with the terms of the Letter of Credit; and 1.36. 1.37. (v) any other act or omission to act or delay of any kind by any Bank (including the Issuing Bank), the Administrative Agent or any other Person or any other event or circumstance whatsoever that might, but for the provisions of this subsection (v), constitute a legal or equitable discharge of such Borrower's or Bank's obligations hereunder; provided however that nothing in this subsection 2.16(f) shall relieve the Issuing Bank, the Administrative Agent or any other Bank of legal responsibility it would otherwise have for the consequences of its own gross negligence or willful misconduct. (g) Each Borrower hereby indemnifies and holds harmless each Bank (including each Issuing Bank) and the Administrative Agent from and against any and all liabilities, losses, damages, costs or out-of-pocket expenses which such Bank or the Administrative Agent may incur (including, without limitation, any liabilities, losses, damages, costs or out-of-pocket expenses which an Issuing Bank may incur by reason of or in connection with the failure of any other Bank to fulfill or comply with its obligations to such Issuing Bank hereunder (but nothing herein contained shall affect any rights the Borrower may have against such defaulting Bank)), and none of the Banks (including the Issuing Banks) nor the Administrative Agent nor any of their officers or directors or employees or agents shall be liable or responsible, by reason of or in connection with the execution and delivery or transfer of or payment or failure to pay under any Letter of Credit issued at the request of such Borrower, including without limitation any of the circumstances enumerated in subsection 2.16(f) above, as well as (i) any error, omission, interruption or delay in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, (ii) any loss or delay in the transmission of any document required in order to make a drawing under a Letter of Credit, and (iii) any consequences arising from causes beyond the control of the Issuing Bank, including without limitation any government acts, or any other circumstances whatsoever in making or failing to make payment under such Letter of Credit; provided that such Borrower shall not be required to indemnify the Issuing Bank for any claims, damages, losses, liabilities, costs or expenses, and the Borrower shall have a claim for direct damage suffered by it, to the extent found by a court of competent jurisdiction to have been caused by (x) the willful misconduct or gross negligence of the Issuing Bank in determining whether a request presented under any such Letter of Credit complied with the terms of such Letter of Credit or (y) the Issuing Bank's failure to pay under any such Letter of Credit after the presentation to it of a request strictly complying with the terms and conditions of such Letter of Credit. Nothing in this subsection 2.16(g) is intended to limit the obligations of any Borrower under any other provision of this Agreement. To the extent any Borrower does not indemnify an Issuing Bank as required by this subsection, the Banks agree to do so ratably in accordance with their Commitments. 1.1. SECTION Regulation D Compensation . In the event that a Bank is required to maintain reserves of the type contemplated by the definition of "Euro-Dollar Reserve Percentage", such Bank may require the Borrower to pay, contemporaneously with each payment of interest on the Euro-Dollar Loans, additional interest on the related Euro-Dollar Loan of such Bank at a rate per annum determined by such Bank up to but not exceeding the excess of (i) (A) the applicable London Interbank Offered Rate divided by (B) one minus the Euro-Dollar Reserve Percentage over (ii) the applicable London Interbank Offered Rate. Any Bank wishing to require payment of such additional interest (x) shall so notify the Borrower and the Administrative Agent, in which case such additional interest on the Euro-Dollar Loans of such Bank shall be payable to such Bank at the place indicated in such notice with respect to each Interest Period commencing at least three Euro-Dollar Business Days after the giving of such notice and (y) shall furnish to the Borrower at least three Euro-Dollar Business Days prior to each date on which interest is payable on the Euro-Dollar Loans of such Borrower an officer's certificate setting forth the amount to which such Bank is then entitled under this Section 2.17 (which shall be consistent with such Bank's good faith estimate of the level at which the related reserves are maintained by it). Each such notification shall be accompanied by such information as the Borrower may reasonably request. 1.2. 1.3. "Euro-Dollar Reserve Percentage" means for any day that percentage (expressed as a decimal) which is in effect on such day, as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement for a member bank of the Federal Reserve System in New York City with deposits exceeding five billion dollars in respect of "Eurocurrency liabilities" (or in respect of any other category of liabilities which includes deposits by reference to which the interest rate on Euro-Dollar Loans is determined or any category of extensions of credit or other assets which includes loans by a non-United States office of any Bank to United States residents). 1.4. 1.5. SECTION Takeout of Swingline Loans . (a) In the event that any Swingline Loan shall not be repaid in full at or prior to the maturity thereof the Administrative Agent shall, on behalf of the Borrower (each Borrower hereby irrevocably directing and authorizing the Administrative Agent so to act on its behalf), give a Notice of Borrowing requesting the Banks, including the Swingline Bank, to make a Base Rate Borrowing on the maturity date of such Swingline Loan in an amount equal to the unpaid principal amount of such Swingline Loan. Each Bank will make the proceeds of its Base Rate Loan included in such Borrowing available to the Administrative Agent for the account of the Swingline Bank which made such Swingline Loan on such date in accordance with Section 2.04. The proceeds of such Base Rate Borrowing shall be immediately applied to repay such Swingline Loan. 1.6. 1.7. (b) If, for any reason, a Base Rate Borrowing may not be (as determined by the Administrative Agent in its sole discretion), or is not, made pursuant to subsection (a) above to refund a Swingline Loan as required by said subsection, then, effective on the date such Borrowing would otherwise have been made, each Bank severally, unconditionally and irrevocably agrees that it shall purchase an undivided participating interest in such Swingline Loan (an "Unrefunded Swingline Loan") in an amount equal to the amount of the Loan which otherwise would have been made by such Bank pursuant to subsection (a), which purchase shall be funded by the time such Loan would have been required to be funded pursuant to Section 2.04 by transfer to the Administrative Agent, for the account of the Swingline Bank, in immediately available funds, of the amount of its participation. 1.8. 1.9. (c) Whenever, at any time after the Swingline Bank has received from any Bank payment in full for such Bank's participating interest in a Swingline Loan, the Swingline Bank (or the Administrative Agent on its behalf) receives any payment on account thereof, the Swingline Bank (or the Administrative Agent, as the case may be) will promptly distribute to such Bank its participating interest in such payment (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Bank's participating interest was outstanding and funded); provided, however, that in the event that such payment is subsequently required to be returned, such Bank will return to the Swingline Bank (or the Administrative Agent, as the case may be) any portion thereof previously distributed by the Swingline Bank (or the Administrative Agent, as the case may be) to it. 1.10. 1.11. (d) Each Bank's obligation to purchase and fund participating interests pursuant to this Section shall be absolute and unconditional and shall not be affected by any circumstance, including, without limitation: any setoff, counterclaim, recoupment, defense or other right which such Bank or the Borrower may have against any Swingline Bank, or any other Person for any reason whatsoever; the occurrence or continuance of a Default or the failure to satisfy any of the conditions specified in Article 3; any adverse change in the condition (financial or otherwise) of any Borrower; any breach of this Agreement by any Borrower or any Bank; or (v) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing. 1.12. 1.13. SECTION Foreign Costs . (a) If the cost to any Bank of making or maintaining any Loan or of issuing or participating in any Letter of Credit is increased, or the amount of any sum received or receivable by any Bank (or its Applicable Lending Office) is reduced by an amount deemed by such Bank to be material, by reason of the fact that the Borrower of such Loan or Letter of Credit is incorporated in, or conducts business in, a jurisdiction outside the United States of America, such Borrower shall indemnify such Bank for such increased cost or reduction within 15 days after demand by such Bank (with a copy to the Administrative Agent). A certificate of such Bank claiming compensation under this subsection (a) and setting forth the additional amount or amounts to be paid to it hereunder shall be conclusive in the absence of manifest error. 1.14. 1.15. (b) Each Bank will promptly notify the Company and the Administrative Agent of any event of which it has knowledge that will entitle such Bank to additional compensation pursuant to subsection (a) and will designate a different Applicable Lending Office if, in the judgment of such Bank, such designation will avoid the need for, or reduce the amount of, such compensation and will not be otherwise disadvantageous to such Bank. 1.16. ARTICLE CONDITIONS 1.1. SECTION Effectiveness . This Agreement shall become effective, and all loans outstanding under the Existing Credit Agreement shall be deemed to be Loans hereunder, on the date that each of the following conditions shall have been satisfied (or waived in accordance with Section 11.05): (a) receipt by the Administrative Agent of evidence that counterparts hereof have been signed by each Borrower, the Resigning Agent and the Required Banks (it being understood that the Administrative Agent may rely on telegraphic, telecopy, telex or other written confirmation from any party of execution of a counterpart hereof by such party); (a) receipt by the Administrative Agent of an opinion of (i) Kirkland & Ellis, special counsel for the Company, substantially in the form of Exhibit E-1 hereto and (ii) Mary Ann Hynes, General Counsel of the Company, substantially in the form of Exhibit E-2 hereto, and in each case covering such additional matters relating to the transactions contemplated hereby as the Required Banks may reasonably request; (a) receipt by the Administrative Agent of an opinion of Mayer, Brown & Platt, special counsel for the Administrative Agent, substantially in the form of Exhibit F hereto and covering such additional matters relating to the transactions contemplated hereby as the Required Banks may reasonably request; and (a) receipt by the Administrative Agent of all documents it may have reasonably requested prior to the date hereof relating to the existence of the Company, the corporate authority for and the validity of this Agreement and the Notes, and any other matters relevant hereto, all in form and substance satisfactory to the Administrative Agent; provided that this Agreement shall not become effective or be binding on any party hereto unless all of the foregoing conditions are satisfied not later than December 24, 1999; and provided further that the provisions of Sections 2.08, 2.09, 2.14 and 11.03 shall become effective upon satisfaction of the condition specified in clause 3.01(a). The Administrative Agent shall promptly notify the Company and the Banks of the Effective Date, and such notice shall be conclusive and binding on all parties hereto. 1.1. SECTION Borrowings and Issuance of Letters of Credits . The obligation of any Bank to make a Loan on the occasion of any Borrowing and the obligation of the Issuing Bank to issue (or renew or extend the term of) any Letter of Credit is subject to the satisfaction of the following conditions; provided that if such Borrowing is a Swingline Takeout Borrowing, only the conditions set forth in clauses 3.02(a) and 3.02(b) must be satisfied: 1.2. (a) receipt by the Administrative Agent of a Notice of Borrowing as required by Section 2.02 or 2.03 or receipt by the Issuing Bank of a Notice of Issuance as required by Section 2.16, as the case may be; (a) the fact that, immediately after such Borrowing or issuance of such Letter of Credit, the sum of the aggregate outstanding principal amount of the Loans and the aggregate amount of Letter of Credit Liabilities will not exceed the aggregate amount of the Commitments, the aggregate outstanding principal amount of Swingline Loans will not exceed $25,000,000 and the aggregate amount of Letter of Credit Liabilities will not exceed $100,000,000; (a) the fact that, immediately after such Borrowing or issuance of such Letter of Credit, no Default shall have occurred and be continuing; and (a) the fact that the representations and warranties (other than (i) the representation and warranty set forth in Section 4.04(b) in the case of a Borrowing which does not result in an increase in the sum of the aggregate outstanding principal amount of the Loans and the aggregate Letter of Credit Liabilities, (ii) the representation and warranty set forth in Section 4.04(a) and (iii) the representations and warranties set forth in Section 4.12 in the case of a Borrowing after December 31, 2000) of the Borrower and, if the Borrower is not the Company, of the Company contained in this Agreement shall be true on and as of the date of such Borrowing or issuance of such Letter of Credit. Each Borrowing and each issuance of a Letter of Credit hereunder shall be deemed to be a representation and warranty by the Borrower (and, if the Company is not the Borrower, by the Company) on the date of such Borrowing or issuance as to the facts specified in clauses (b), (c) and (d) of this Section (unless such Borrowing is a Swingline Takeout Borrowing, in which case the Borrower (and the Company) shall be deemed to represent and warrant as to the facts specified in clause (b) of this Section). 1.1. SECTION First Borrowing by or Issuance of Letter of Credit for Each Eligible Subsidiary . The obligation of each Bank to make a Loan and the obligation of each Issuing Bank to issue (or renew or extend the term of) any Letter of Credit on the occasion of the first Borrowing by or issuance for each Eligible Subsidiary is subject to the satisfaction of the following further conditions: 1.2. (a) receipt by the Administrative Agent of an opinion or opinions of counsel for such Eligible Subsidiary reasonably acceptable to the Administrative Agent (which, in the case of an Eligible Subsidiary organized under the laws of the United States or a State thereof may be an employee of the Company) and addressed to the Administrative Agent and the Banks, substantially to the effect of Exhibit J hereto and covering such additional matters relating to the transactions contemplated hereby as the Required Banks may reasonably request; and (a) receipt by the Administrative Agent of all documents which it may reasonably request relating to the existence of such Eligible Subsidiary, the authority for and the validity of the Election to Participate of such Eligible Subsidiary, this Agreement and the Notes of such Eligible Subsidiary, and any other matters relevant thereto, all in form and substance reasonably satisfactory to the Administrative Agent. ARTICLE REPRESENTATIONS AND WARRANTIES 2 The Company represents and warrants that: 3 3.1. SECTION Corporate Existence and Power . The Company is a corporation duly incorporated, validly existing and in good standing under the laws of Delaware, has all corporate powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted and is duly qualified to do business as a foreign corporation in each jurisdiction where such qualification is required, except where the failure so to qualify could not reasonably be expected to have a Material Adverse Effect. 1.1. SECTION Corporate and Governmental Authorization; No Contravention . The execution, delivery and performance by the Company of this Agreement and its Notes are within the Company's corporate powers, have been duly authorized by all necessary corporate action, require no action by or in respect of, or filing with, any governmental body, agency or official and do not contravene, or constitute a default under, any provision of applicable law or regulation or of the certificate of incorporation or by-laws of the Company or of any agreement, judgment, injunction, order, decree or other instrument binding upon the Company or any of its Subsidiaries or result in the creation or imposition of any Lien on any asset of the Company or any of its Subsidiaries. 1.2. 1.3. SECTION Binding Effect . This Agreement constitutes a valid and binding agreement of the Company and each of its Notes, if and when executed and delivered in accordance with this Agreement, will constitute a valid and binding obligation of the Company, in each case enforceable in accordance with its terms, except as the same may be limited by bankruptcy, insolvency or similar laws affecting creditors' rights generally and by general principles of equity. 1.4. 1.5. SECTION Financial Information . (a) The consolidated balance sheet of the Company and its Consolidated Subsidiaries as of December 31, 1998 and the related consolidated statements of earnings, cash flows and changes in stockholders' equity for the fiscal year then ended, reported on by Ernst & Young LLP, copies of which are included in the Company's Form 10- K for the period ended December 31, 1998 and have been delivered to each of the Banks, fairly present in all material respects, in conformity with generally accepted accounting principles, the consolidated financial position of the Company and its Consolidated Subsidiaries as of such date and their consolidated results of operations and cash flows for such fiscal year. 1.6. 1.7. (b) The financial statements presented in the Company's Form 10- Q for the period ended September 30, 1999, which the Company has filed with the Securities and Exchange Commission, copies of which have been delivered to each of the Banks, fairly present in all material respects, on a basis consistent with the financial statements referred to in Section 4.04(a), the consolidated financial position of the Company and its Consolidated Subsidiaries as of such date and their consolidated results of operations and cash flows for such nine-month period (subject to normal year-end audit adjustments and the absence of full footnotes). 1.8. 1.9. (c) Since September 30, 1999, there has been no material adverse change in the business, financial position or operations of the Company and its Consolidated Subsidiaries, considered as a whole. 1.10. 1.11. SECTION Litigation . Except as disclosed in the Company's annual report on Form 10-K for the year ended December 31, 1998, each registration statement (other than a registration statement on Form S-8 (or its equivalent)) and each report on Form 10-K, 10-Q and 8-K (or their equivalents) which the Company shall have filed with the Securities and Exchange Commission at any time thereafter, there is no action, suit or proceeding pending against, or to the knowledge of the Company, threatened against or affecting, the Company or any of its Subsidiaries before any court or arbitrator or any governmental body, agency or official which could reasonably be expected to have a Material Adverse Effect or which in any manner draws into question the validity of this Agreement or any Note. 1.1. SECTION Compliance with Laws . (a) The Company and each Subsidiary is in compliance in all material respects with all applicable laws, ordinances, rules, regulations and requirements of governmental authorities except where (i) non-compliance could not reasonably be expected to have a Material Adverse Effect or (ii) the necessity of compliance therewith is contested in good faith by appropriate proceedings. (b) Each member of the ERISA Group has fulfilled its obligations under the minimum funding standards of ERISA and the Internal Revenue Code with respect to each Plan and is in compliance in all material respects with the presently applicable provisions of ERISA and the Internal Revenue Code with respect to each Plan. No member of the ERISA Group has (i) sought a waiver of the minimum funding standard under Section 412 of the Internal Revenue Code in respect of any Plan, (ii) failed to make any contribution or payment to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement, which has resulted or could result in the imposition of a Lien or the posting of a bond or other security under ERISA or the Internal Revenue Code or (iii) incurred any liability under Title IV of ERISA other than a liability to the PBGC for premiums under Section 4007 of ERISA. 1.1. SECTION Environmental Matters . In the ordinary course of its business, the Company conducts a systematic review of the effects and reasonably ascertainable associated liabilities and costs of Environmental Laws on the business, operations and properties of the Company and its Subsidiaries. The associated liabilities and costs include, without limitation: any capital or operating expenditures required for clean-up or closure of properties presently or previously owned; any capital or operating expenditures required to achieve or maintain compliance with Environmental Laws; any constraints on operating activities related to achieving or maintaining compliance with Environmental Laws, including any periodic or permanent shutdown of any facility or reduction in the level or change in the nature of operations conducted thereat; any costs or liabilities in connection with off-site disposal of wastes or hazardous substances; and any actual or potential liabilities to third parties, including employees, arising under Environmental Laws, and any related costs and expenses. On the basis of this review, the Company has reasonably concluded that such associated liabilities and costs, including the costs of compliance with Environmental Laws, could not reasonably be expected to have a Material Adverse Effect. 1.2. 1.3. SECTION Taxes . The Company and its Subsidiaries have filed all United States Federal income tax returns and all other material tax returns which are required to be filed by them and have paid all taxes due pursuant to such returns or pursuant to any assessment received by the Company or any Subsidiary except (i) where nonpayment could not reasonably be expected to have a Material Adverse Effect or (ii) where the same are contested in good faith by appropriate proceedings. The charges, accruals and reserves on the books of the Company and its Subsidiaries in respect of taxes or other governmental charges are, in the opinion of the Company, adequate. 1.4. 1.5. SECTION Subsidiaries . Each of the Company's corporate Subsidiaries is a corporation validly existing and in good standing under the laws of its jurisdiction of incorporation, and has all corporate powers and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted and is duly qualified to do business as a foreign corporation in each jurisdiction where such qualification is required, except where the failure so to qualify could not reasonably be expected to have Material Adverse Effect. 1.6. 1.7. SECTION Regulatory Restrictions on Borrowing . The Company is not an "investment company" within the meaning of the Investment Company Act of 1940, as amended, a "holding company" within the meaning of the Public Utility Holding Company Act of 1935, as amended, or otherwise subject to any regulatory scheme which restricts its ability to incur debt. 1.8. 1.9. SECTION Full Disclosure . Neither the Company's Form 10-K for the year ended December 31, 1998, as of the date of filing of such Form 10- K, nor any registration statement (other than a registration statement on Form S-8 (or its equivalent)) or report on Form 10-K, 10-Q and 8-K (or their equivalents) which the Company shall have filed with the Securities and Exchange Commission as at the time of filing of such registration statement or report, as applicable, contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make any statements contained therein, in the light of the circumstances under which they were made, not misleading; provided that to the extent any such document contains forecasts and/or projections, it is understood and agreed that uncertainty is inherent in any forecasts or projections and that no assurances can be given by the Company of the future achievement of such performance. 1.10. 1.11. SECTION Year 2000 . Any reprogramming required to permit the proper functioning, in and following year 2000, of the Company's computer systems and equipment containing embedded microchips (including systems and equipment supplied by others or with which the Company's systems interface) and the testing of all such systems and equipment, as so reprogrammed, will be completed in a timely fashion. The cost to the Company of such reprogramming and testing and of the reasonably foreseeable consequences of year 2000 to the Company (including, without limitation, reprogramming errors and the failure of others' systems or equipment) will not result in a Default or a Material Adverse Effect. Except for such of the reprogramming referred to in the preceding sentence as may be necessary, the computer and management information systems of the Company and its Subsidiaries are and, with ordinary course upgrading and maintenance, will continue for the term of this Agreement, to be sufficient to permit the Company to conduct its business without Material Adverse Effect. 1.12. ARTICLE COVENANTS The Company and, where stated, each other Borrower agree that, so long as any Bank has any Commitment hereunder or any amount payable hereunder remains unpaid or any Letter of Credit Liabilities remain outstanding: 1.1. SECTION Information . The Company will deliver to each of the Banks: 1.2. (a) as soon as available and in any event within 95 days after the end of each fiscal year of the Company, a consolidated balance sheet of the Company and its Consolidated Subsidiaries as of the end of such fiscal year and the related consolidated statements of earnings, cash flows, and changes in stockholders' equity for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on in a manner consistent with the requirements of the Securities and Exchange Commission and audited by Ernst & Young LLP or other independent public accountants of nationally recognized standing; (a) as soon as available and in any event within 50 days after the end of each of the first three quarters of each fiscal year of the Company, an unaudited consolidated balance sheet of the Company and its Consolidated Subsidiaries as of the end of such quarter and the related unaudited consolidated statements of earnings and cash flows for such quarter and for the portion of the Company's fiscal year ended at the end of such quarter, setting forth in each case in comparative form the figures for the corresponding quarter and the corresponding portion of the Company's previous fiscal year, all certified (subject to normal year-end adjustments) as to fairness of presentation and preparation based on financial accounting principles consistent with generally accepted accounting principles by an Approved Officer of the Company; (a) simultaneously with the delivery of each set of financial statements referred to in clauses (a) and (b) above, a certificate of an Approved Officer of the Company (i) setting forth in reasonable detail the calculations required to establish whether the Company was in compliance with the requirements of Sections 5.10 and 5.12 on the date of such financial statements and (ii) stating whether any Default exists on the date of such certificate and, if any Default then exists, setting forth the details thereof and the action which the Company is taking or proposes to take with respect thereto; (a) simultaneously with the delivery of each set of financial statements referred to in clause (a) above, a statement of the firm of independent public accountants which reported on such statements (i) that nothing has come to their attention to cause them to believe that any Default arising from the Company's failure to comply with its obligations under Sections 5.10 and 5.12 existed on the date of such statements (it being understood that such accountants shall not thereby be required to perform any procedures not otherwise required under generally accepted auditing standards) and (ii) confirming the calculations set forth in the officer's certificate delivered simultaneously therewith pursuant to clause (c) above; (a) within five days after any officer of the Company obtains knowledge of any Default, if such Default is then continuing, a certificate of an Approved Officer of the Company setting forth the details thereof and the action which the Company is taking or proposes to take with respect thereto; (a) promptly upon the mailing thereof to the shareholders of the Company generally, copies of all financial statements, reports and proxy statements so mailed; (a) promptly after the filing thereof, copies of all registration statements (other than the exhibits thereto and any registration statements on Form S-8 or its equivalent) and reports (other than the exhibits thereto) on Forms 10-K, 10-Q and 8-K (or their equivalents) which the Company shall have filed with the Securities and Exchange Commission; (a) if and when any member of the ERISA Group (i) gives or is required to give notice to the PBGC of any "reportable event" (as defined in Section 4043 of ERISA) with respect to any Plan which might constitute grounds for a termination of such Plan under Title IV of ERISA, or knows that the plan administrator of any Plan has given or is required to give notice of any such reportable event, a copy of the notice of such reportable event given or required to be given to the PBGC; (ii) receives notice of complete or partial withdrawal liability under Title IV of ERISA or notice that any Multiemployer Plan is in reorganization, is insolvent or has been terminated, a copy of such notice; (iii) receives notice from the PBGC under Title IV of ERISA of an intent to terminate, impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or appoint a trustee to administer any Plan, a copy of such notice; (iv) applies for a waiver of the minimum funding standard under Section 412 of the Internal Revenue Code, a copy of such application; (v) gives notice of intent to terminate any Plan under Section 4041(c) of ERISA, a copy of such notice and other information filed with the PBGC; (vi) gives notice of withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such notice; or (vii) fails to make any payment or contribution to any Plan or Multiemployer Plan or in respect of any Benefit Arrangement or makes any amendment to any Plan or Benefit Arrangement which has resulted or could result in the imposition of a Lien or the posting of a bond or other security, a certificate of the chief financial officer or the chief accounting officer of the Company setting forth details as to such occurrence and action, if any, which the Company or applicable member of the ERISA Group is required or proposes to take; and (a) from time to time such additional information regarding the financial position or business of the Company and its Subsidiaries as the Administrative Agent, at the request of any Bank, may reasonably request. 1.1. SECTION Payment of Obligations . Each Borrower will pay and discharge, and will cause each of its Subsidiaries to pay and discharge, at or before maturity, all their respective material obligations and liabilities (including, without limitation, tax liabilities and claims of materialmen, warehousemen and the like which if unpaid might by law give rise to a Lien), except where the same may be contested in good faith by appropriate proceedings, and will maintain, and will cause each of its Subsidiaries to maintain, in accordance with generally accepted accounting principles, appropriate reserves for the accrual of any of the same. 1.1. SECTION Maintenance of Property; Insurance . (a) Each Borrower will keep, and will cause each of its Subsidiaries to keep, all material property useful and necessary in its business in good working order and condition, ordinary wear and tear excepted. (b) Each Borrower will, and will cause each of its Subsidiaries to, maintain (either in the name of the Company or in such Borrower's or Subsidiary's own name) with financially sound and responsible insurance companies, insurance on all its respective properties in at least such amounts, against at least such risks and with such risk retention as are usually maintained, insured against or retained, as the case may be, in the same general area by companies of established repute engaged in the same or a similar business; provided that the Borrowers and their Subsidiaries may self-insure to the same extent as other companies of established repute engaged in the same or a similar business in the same general area in which such Borrower or such Subsidiary operates and to the extent consistent with prudent business practice. Each Borrower will furnish to the Banks, upon request from the Administrative Agent, information presented in reasonable detail as to the insurance so carried. 1.1. SECTION Conduct of Business and Maintenance of Existence . Each Borrower and its Subsidiaries taken as a whole will continue to engage in business of the same general type as now conducted by such Borrower and its Subsidiaries and any ancillary or related lines of business, and each Borrower will preserve, renew and keep in full force and effect, and will cause each of its Subsidiaries to preserve, renew and keep in full force and effect, its respective legal existence and its respective rights, privileges and franchises necessary or desirable in the normal conduct of business; provided that nothing in this Section shall prohibit (i) the consolidation or merger of a Subsidiary (other than an Eligible Subsidiary with obligations with respect to Loans or Letters of Credit outstanding hereunder) with or into another Person, (ii) the consolidation or merger of an Eligible Subsidiary with or into the Company or another Eligible Subsidiary or (iii) the termination of the corporate existence of any Subsidiary (other than an Eligible Subsidiary with obligations with respect to Loans or Letters of Credit outstanding hereunder) if, in the case of clauses (i), (ii) and (iii), such consolidation, merger or termination is not materially disadvantageous to the Banks; and provided further that nothing in this Section shall prohibit any sale or other disposition of assets permitted under Section 5.07. 1.2. 1.3. SECTION Compliance with Laws . Each Borrower will comply, and cause each of its Subsidiaries to comply, in all material respects with all applicable laws, ordinances, rules, regulations, and requirements of governmental authorities (including, without limitation, Environmental Laws and ERISA and the rules and regulations thereunder) except where (i) the necessity of compliance therewith is contested in good faith by appropriate proceedings or (ii) the failure to comply could not reasonably be expected to have a Material Adverse Effect. 1.4. 1.5. SECTION Inspection of Property, Books and Records . Each Borrower will keep, and will cause each of its Subsidiaries to keep, proper books of record and account in which full, true and correct entries shall be made of all dealings and transactions in relation to its business and activities; and will permit, and will cause each of its Subsidiaries to permit, representatives of any Bank at such Bank's expense to visit and inspect any of its respective properties, to examine and make abstracts from any of its respective books and records and to discuss its respective affairs, finances and accounts with its respective officers, employees and independent public accountants, all at such reasonable times as may be desired. 1.6. 1.7. SECTION Mergers and Sales of Assets . (a) The Company will not consolidate or merge with or into any other Person; provided that the Company may merge with another Person if (x) the Company is the corporation surviving such merger and (y) after giving effect to such merger, no Default shall have occurred and be continuing. 1.8. 1.9. (b) The Company will not sell, lease or otherwise transfer, directly or indirectly, assets (exclusive of assets transferred in the ordinary course of business) if after giving effect to such transfer the aggregate book value of assets so transferred subsequent to the date of this Agreement would constitute Substantial Assets as of the day preceding the date of such transfer other than (i) sales of accounts receivable to IMC-Agrico Receivables Company L.L.C. or any other similar bankruptcy- remote Subsidiary of the Company or any of its Subsidiaries established for the purpose of engaging in transactions related to accounts receivable, (ii) the sale of assets acquired pursuant to an Acquisition that are unrelated to the business of the same general type as now conducted by the Company and its Subsidiaries, and (iii) the sale of assets acquired in or as a direct result of the Harris Chemical Acquisition. 1.10. 1.11. SECTION Use of Proceeds . The proceeds of the Loans made under this Agreement and of the Letters of Credit under this Agreement will be used by the Borrowers for general corporate purposes, including without limitation Acquisitions. None of such proceeds will be used in violation of Regulation T, U or X of the Board of Governors of the Federal Reserve System. 1.12. 1.13. SECTION Negative Pledge . Neither any Borrower nor any Subsidiary of any Borrower will create, assume or suffer to exist any Lien on any asset now owned or hereafter acquired by it, except: 1.14. (a) Liens existing on the date of this Agreement securing Debt outstanding on the date of this Agreement in an aggregate principal or face amount not exceeding $135,000,000; (a) any Lien existing on any asset of any Person at the time such Person becomes a Subsidiary of a Borrower and not created in contemplation of such event; (a) any Lien on any asset securing Debt incurred or assumed for the purpose of financing all or any part of the cost of acquiring or constructing such asset, provided that such Lien attaches to such asset concurrently with or within 90 days after the acquisition or completion of construction thereof; (a) any Lien on any asset of any Person existing at the time such Person is merged or consolidated with or into a Borrower or a Subsidiary of a Borrower and not created in contemplation of such event; (a) any Lien existing on any asset prior to the acquisition thereof by a Borrower or a Subsidiary of a Borrower and not created in contemplation of such acquisition; (a) any Lien arising out of the refinancing, extension, renewal or refunding of any Debt secured by any Lien permitted by any of the foregoing clauses of this Section, provided that the proceeds of such Debt are used solely for the foregoing purpose and to pay financing costs and such Debt is not secured by any additional assets; (a) Liens arising in the ordinary course of its business which (i) do not secure Debt or Derivatives Obligations, (ii) do not secure any obligation in an amount exceeding $100,000,000 and (iii) do not in the aggregate materially detract from the value of its assets or materially impair the use thereof in the operation of its business; (a) Liens on cash and cash equivalents securing Derivatives Obligations, provided that the aggregate amount of cash and cash equivalents subject to such Liens may at no time exceed $10,000,000; and (a) Liens not otherwise permitted by the foregoing clauses of this Section securing Debt in an aggregate principal or face amount, together with all other Debt secured by Liens permitted under this Section 5.09(i), not to exceed an amount equal to 10% of Consolidated Net Worth (calculated as of the last day of the fiscal quarter most recently ended on or prior to the date of the most recent incurrence of such Debt). 1.1. SECTION Debt of Subsidiaries . Total Debt of all Subsidiaries (excluding Debt (i) of a Subsidiary owing to the Company, (ii) of a Subsidiary owing to a Substantially-Owned Consolidated Subsidiary, (iii) of an Eligible Subsidiary under this Agreement, (iv) of PLP in an aggregate principal amount not exceeding $300,000,000 outstanding on December 15, 1997 (but not any refinancing thereof), (v) of Harris Chemical North America, Inc. and its Subsidiaries arising out of the Argus Utilities sale- leaseback transaction in an aggregate principal amount not exceeding $71,000,000, or (vi) of IMC Inorganic Chemicals Inc., formerly known as Harris Chemical Group Inc., and its Subsidiaries in an aggregate principal amount not exceeding UKf 50,000,000) will not at any date exceed 25% of Consolidated Net Worth (calculated as of the last day of the fiscal quarter most recently ended on or prior to such date). For purposes of this Section any preferred stock of a Consolidated Subsidiary (other than the Series E Preferred Stock) held by a Person other than the Company or a Substantially-Owned Consolidated Subsidiary shall be included, at the higher of its voluntary or involuntary liquidation value, in the "Debt" of such Consolidated Subsidiary. 1.2. 1.3. SECTION Transactions with Affiliates . No Borrower will, nor will it permit any of its Subsidiaries to, directly or indirectly, pay any funds to or for the account of, make any investment (whether by acquisition of stock or indebtedness, by loan, advance, transfer of property, guarantee or other agreement to pay, purchase or service, directly or indirectly, any Debt, or otherwise) in, lease, sell, transfer or otherwise dispose of any assets, tangible or intangible, to, or participate in, or effect, any transaction with, any Affiliate except: (i) transactions on an arm's-length basis on terms at least as favorable to such Borrower or such Subsidiary as could have been obtained from a third party who was not an Affiliate, (ii) marketing services provided by IMC Global Operations Inc. to Agrico, (iii) employee leasing services agreements between IMC Global Operations Inc. and Agrico, (iv) transactions between Agrico and the IMC Kalium business unit of the Company, (v) loans from the Company or a Subsidiary to the Company or a Subsidiary, (vi) the declaration and payment of any lawful dividend and (vii) transactions between Vigoro Partnership, a Delaware general partnership, and the IMC AgriBusiness business unit of the Company. 1.4. 1.5. SECTION Leverage Ratio . The Leverage Ratio will not exceed 4.00 to 1.00 as of the last day of any fiscal quarter ending on or prior to December 31, 2000 or 3.75 to 1.00 as of the last day of any fiscal quarter ending thereafter. For this purpose: 1.6. 1.7. "Consolidated Adjusted Debt" means at any date the sum of (i) the Debt of the Company and its Consolidated Subsidiaries plus (ii) the excess (if any) of (A) the aggregate unrecovered principal investment of transferees of accounts receivable from the Company or a Consolidated Subsidiary in transactions accounted for as sales under generally accepted accounting principles over (B) $100,000,000, in each case determined on a consolidated basis as of such date. 1.8. 1.9. "Consolidated EBITDA" means, for any period, the consolidated operating earnings from (i) continuing operations of the Company, (ii) continuing operations of the Company's Consolidated Subsidiaries and (iii) discontinued operations of the Company and its Consolidated Subsidiaries, in each case for such period before interest, taxes, depreciation, depletion, amortization, other income and expense, minority interests, the cumulative non-cash effect of changes in accounting standards and other non- cash adjustments to operating earnings (other than any such non-cash charge to the extent that it represents an accrual of or reserve for cash expenditures in any future period), minus any non-recurring or other charges not included in consolidated operating earnings which are cash or represent an accrual of or reserve for cash expenditures in future periods (with the exception of $100,000,000 of cash charges in the fourth quarter of 1999). Consolidated EBITDA for each four-quarter period will be adjusted on a pro-forma basis to reflect any Acquisition closed during such period as if such Acquisition had been closed on the first day of such period. 1.10. 1.11. "Leverage Ratio" means, as of the last day of any fiscal quarter, the ratio of Consolidated Adjusted Debt calculated as of such day to Consolidated EBITDA calculated for the period of four consecutive fiscal quarters ending on such day. 1.12. ARTICLEDEFAULTS 1.1. SECTION Events of Default . If one or more of the following events ("Events of Default") shall have occurred and be continuing: (a) any Borrower shall fail to pay when due any principal of any Loan or of any Letter of Credit Liabilities or shall fail to pay, within five Domestic Business Days of the due date thereof, any interest, fees or any other amount payable hereunder; (b) any Borrower shall fail to observe or perform any covenant contained in Sections 5.07 to 5.12, inclusive; (c) any Borrower shall fail to observe or perform any covenant or agreement contained in this Agreement (other than those covered by clause (a) or (b) above) for 30 days after notice thereof has been given to the Company by the Administrative Agent at the request of any Bank; (d) any representation, warranty, certification or statement made by any Borrower in this Agreement or in any certificate, financial statement or other document delivered pursuant to this Agreement shall prove to have been incorrect in any material respect when made (or deemed made); (e) the Company or any Subsidiary shall fail to make any payment in respect of Material Financial Obligations (other than the Loans and Letter of Credit Liabilities) when due or within any applicable grace period; (f) any event or condition shall occur and shall continue beyond the applicable grace or cure period, if any, provided with respect thereto and the maturity of Material Financial Obligations shall be accelerated as a result thereof; (g) (g) the Company or any Material Subsidiary or any other Borrower shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any corporate action to authorize any of the foregoing; (h) an involuntary case or other proceeding shall be commenced against the Company or any Material Subsidiary or any other Borrower seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 60 days; or an order for relief shall be entered against the Company or any Material Subsidiary or any other Borrower under the federal bankruptcy laws as now or hereafter in effect; (i) any member of the ERISA Group shall fail to pay when due an amount or amounts aggregating in excess of $25,000,000 which it shall have become liable to pay under Title IV of ERISA; or notice of intent to terminate a Material Plan shall be filed under Title IV of ERISA by any member of the ERISA Group, any plan administrator or any combination of the foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to terminate, to impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or to cause a trustee to be appointed to administer any Material Plan; or a condition shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any Material Plan must be terminated; or there shall occur a complete or partial withdrawal from, or a default, within the meaning of Section 4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans which causes one or more members of the ERISA Group to incur a current payment obligation in excess of $100,000,000 in the aggregate; (j) judgments or orders for the payment of money in excess of $100,000,000 in the aggregate shall be rendered against the Company or any Subsidiary and such judgments or orders shall continue unsatisfied and unstayed for a period of 30 days; (k) any Person or two or more Persons acting in concert shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934), directly or indirectly, of Voting Stock of the Company (or other securities convertible into such Voting Stock) representing 35% or more of the combined voting power of all Voting Stock of the Company; or (ii) during any period of up to 24 consecutive months, commencing after the date of this Agreement, individuals who at the beginning of such 24-month period were directors of the Company shall cease for any reason (other than due to death or disability) to constitute a majority of the board of directors of the Company, except to the extent that individuals who at the beginning of such 24-month period were replaced by individuals (x) elected by 66-2/3% of the remaining members of the board of directors of the Company or (y) nominated for election by a majority of the remaining members of the board of directors of the Company and thereafter elected as directors by the shareholders of the Company; or (iii) any Person or two or more Persons acting in concert shall have acquired by contract or otherwise, or shall have entered into a contract or arrangement that has resulted in its or their acquisition of, control over Voting Stock of the Company (or other securities convertible into such securities) representing 35% or more of the combined voting power of all Voting Stock of the Company; or (l) any of the obligations of the Company under Article 10 of this Agreement shall for any reason not be enforceable against the Company in accordance with their terms, or the Company shall so assert in writing; then, and in every such event, the Administrative Agent shall (i) if requested by Banks having more than 50% in aggregate amount of the Commitments, by notice to the Company terminate the Commitments and they shall thereupon terminate and (ii) if requested by Banks holding more than 50% in aggregate principal amount of the Loans, by notice to the Company declare the Loans (together with accrued interest thereon) to be, and the Loans shall thereupon become, immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrowers; provided that in the case of any of the Events of Default specified in clause (g) or (h) above with respect to any Borrower, without any notice to any Borrower or any other act by the Administrative Agent or the Banks, the Commitments shall thereupon terminate and the Loans (together with accrued interest thereon) shall become immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrowers. 1.1. SECTION Notice of Default . The Administrative Agent shall give notice to the Company under Section 6.01(c) promptly upon being requested to do so by any Bank and shall thereupon notify all the Banks thereof. 1.2. 1.3. SECTION Cash Cover . The Company agrees, in addition to the provisions of Section 6.01 hereof, that upon the occurrence and during the continuance of any Event of Default, it shall, if requested by the Administrative Agent upon the instruction of the Banks having more than 50% in the aggregate amount of the Commitments (or, if the Commitments shall have been terminated, holding more than 50% of the Letter of Credit Liabilities), pay to the Administrative Agent an amount in immediately available funds (which funds shall be held as collateral pursuant to arrangements satisfactory to the Administrative Agent) equal to the aggregate amount available for drawing under all Letters of Credit then outstanding at such time, provided that, upon the occurrence of any Event of Default specified in Section 6.01(g) or 6.01(h) with respect to any Borrower, the Company shall pay such amount forthwith without any notice or demand or any other act by the Administrative Agent or the Banks. 1.4. 1.5. ARTICLE THE ADMINISTRATIVE AGENT 1.1. SECTION Appointment and Authorization . Each Bank irrevocably appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under this Agreement and the Notes as are delegated to the Administrative Agent by the terms hereof or thereof, together with all such powers as are reasonably incidental thereto. 1.2. 1.3. SECTION Administrative Agent and Affiliates . Bank of America, N.A. shall have the same rights and powers under this Agreement as any other Bank and may exercise or refrain from exercising the same as though it were not the Administrative Agent, and Bank of America, N.A. and its affiliates may accept deposits from, lend money to, and generally engage in any kind of business with the Company or any Subsidiary or affiliate of the Company as if it were not the Administrative Agent hereunder. 1.4. 1.5. SECTION Action by Administrative Agent . The obligations of the Administrative Agent hereunder are only those expressly set forth herein. Without limiting the generality of the foregoing, the Administrative Agent shall not be required to take any action with respect to any Default, except as expressly provided in Article 6. 1.6. 1.7. SECTION Consultation with Experts . The Administrative Agent may consult with legal counsel (who may be counsel for any Borrower), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the advice of such counsel, accountants or experts. 1.8. 1.9. SECTION Liability of Administrative Agent . Neither the Administrative Agent nor any of its affiliates nor any of their respective directors, officers, agents or employees shall be liable to any Bank for any action taken or not taken by it in connection herewith (i) with the consent or at the request of the Required Banks (or, when expressly required hereby, all the Banks) or (ii) in the absence of its own gross negligence or willful misconduct. Neither the Administrative Agent nor any of its affiliates nor any of their respective directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into or verify (i) any statement, warranty or representation made in connection with this Agreement or any extension of credit hereunder; (ii) the performance or observance of any of the covenants or agreements of any Borrower; (iii) the satisfaction of any condition specified in Article 3, except receipt of items required to be delivered to the Administrative Agent; or (iv) the validity, effectiveness or genuineness of this Agreement, the Notes or any other instrument or writing furnished in connection herewith. The Administrative Agent shall not incur any liability by acting in reliance upon any notice, consent, certificate, statement, or other writing (which may be a bank wire, telex or similar writing) believed by it in good faith to be genuine or to be signed by the proper party or parties. Without limiting the generality of the foregoing, the use of the term "agent" in this Agreement with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term is used merely as a matter of market custom and is intended to create or reflect only an administrative relationship between independent contracting parties. 1.10. 1.11. SECTION Indemnification . Each Bank shall, ratably in accordance with its Commitment, indemnify the Administrative Agent, its affiliates and their respective directors, officers, agents and employees (to the extent not reimbursed by the Borrowers) against any cost, expense (including reasonable counsel fees and disbursements), claim, demand, action, loss or liability (except such as result from such indemnitees' gross negligence or willful misconduct) that such indemnitees may suffer or incur in connection with this Agreement or any action taken or omitted by such indemnitees thereunder. 1.12. 1.13. SECTION Credit Decision . Each Bank acknowledges that it has, independently and without reliance upon any Agent or any other Bank, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Bank also acknowledges that it will, independently and without reliance upon any Agent or any other Bank, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking any action under this Agreement. 1.14. 1.15. SECTION Successor Administrative Agent . The Administrative Agent may resign at any time by giving notice thereof to the Banks and the Company. Upon any such resignation, the Company, with the consent of the Required Banks (such consent not to be unreasonably withheld or delayed), shall have the right to appoint a successor Administrative Agent. If no successor Administrative Agent shall have been so appointed, and shall have accepted such appointment, within 30 days after the retiring Administrative Agent gives notice of resignation, then the retiring Administrative Agent may, on behalf of the Banks, appoint a successor Administrative Agent, which shall be a commercial bank organized or licensed under the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least $500,000,000. Upon the acceptance of its appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder. After any retiring Administrative Agent's resignation hereunder as Administrative Agent, the provisions of this Article shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent. 1.16. 1.17. SECTION Agents' Fees . The Company shall pay to each of the Agents for its own account fees in the amounts and at the times previously agreed upon between the Company and such Agent. 1.18. 1.19. SECTION Other Agents . Nothing in this Agreement shall impose upon the Documentation Agent, the Co-Documentation Agent, the Syndication Agent or the Co-Syndication Agent, in such capacity, any duties or obligations whatsoever. 1.20. ARTICLE CHANGE IN CIRCUMSTANCES 1.1. SECTION Basis for Determining Interest Rate Inadequate or Unfair . If on or prior to the first day of any Interest Period for any Euro-Dollar Borrowing or Bid Rate (Indexed) Borrowing: (a) the Administrative Agent is advised by the Euro-Dollar Reference Banks that deposits in dollars (in the applicable amounts) are not being offered to the Euro-Dollar Reference Banks in the relevant market for such Interest Period, or (a) in the case of a Euro-Dollar Borrowing, Banks having more than 50% of the aggregate amount of the affected Loans advise the Administrative Agent that the London Interbank Offered Rate as determined by the Administrative Agent will not adequately and fairly reflect the cost to such Banks of funding their Euro-Dollar Loans for such Interest Period, the Administrative Agent shall forthwith give notice thereof to the Borrower and the Banks, whereupon until the Administrative Agent notifies the Borrower that the circumstances giving rise to such suspension no longer exist, (i) the obligations of the Banks to make Euro-Dollar Loans or to continue or convert outstanding Loans as or into Euro-Dollar Loans shall be suspended and (ii) each outstanding Euro-Dollar Loan shall be converted into a Base Rate Loan on the last day of the then current Interest Period applicable thereto. Unless the Borrower notifies the Administrative Agent at least one Domestic Business Day before the date of any Fixed Rate Borrowing for which a Notice of Borrowing has previously been given that it elects not to borrow on such date, (i) if such Fixed Rate Borrowing is a Syndicated Borrowing, such Borrowing shall instead be made as a Base Rate Borrowing and (ii) if such Borrowing is a Bid Rate (Indexed) Borrowing, the Loans comprising such Borrowing shall bear interest for each day from and including the first day to but excluding the last day of the Interest Period applicable thereto at the Base Rate for such day. 1.1. SECTION Illegality . If, on or after the date of this Agreement, the adoption of any applicable law, rule or regulation, or any change in any applicable law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Bank (or its Euro-Dollar Lending Office) with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency shall make it unlawful or impossible for any Bank (or its Euro-Dollar Lending Office) to make, maintain or fund any of its Euro-Dollar Loans to any Borrower and such Bank shall so notify the Administrative Agent, the Administrative Agent shall forthwith give notice thereof to the other Banks and such Borrower, whereupon until such Bank notifies such Borrower and the Administrative Agent that the circumstances giving rise to such suspension no longer exist, the obligation of such Bank to make Euro-Dollar Loans, or to continue or convert outstanding Loans as or into Euro-Dollar Loans, to such Borrower shall be suspended. Before giving any notice to the Administrative Agent pursuant to this Section, such Bank shall designate a different Euro-Dollar Lending Office if such designation will avoid the need for giving such notice and will not be otherwise disadvantageous to such Bank in the good faith exercise of its discretion. If such notice is given, each Euro-Dollar Loan of such Bank to such Borrower then outstanding shall be converted to a Base Rate Loan either (a) on the last day of the then current Interest Period applicable to such Euro-Dollar Loan if such Bank may lawfully continue to maintain and fund such Loan to such day or (b) immediately if such Bank shall determine that it may not lawfully continue to maintain and fund such Loan to such day. 1.2. 1.3. SECTION Increased Cost and Reduced Return . (a) If on or after (x) the date of this Agreement, in the case of any Committed Loan or Letter of Credit or any obligation to make Committed Loans or issue or participate in any Letter of Credit or (y) the date of any related Bid Rate Quote, in the case of any Bid Rate Loan, the adoption of any applicable law, rule or regulation, or any change in any applicable law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Bank (or its Applicable Lending Office) with any request or directive (whether or not having the force of law) issued on or after such date of any such authority, central bank or comparable agency shall impose, modify or deem applicable any reserve, special deposit or similar requirement (including, without limitation, any such requirement imposed by the Board of Governors of the Federal Reserve System, but excluding with respect to any Euro-Dollar Loan any such requirement for which such Bank is entitled to compensation for the relevant Interest Period under Section 2.17) against assets of, deposits with or for the account of, or credit extended by, any Bank (or its Applicable Lending Office) or shall impose on any Bank (or its Applicable Lending Office) or on the London interbank market any other condition (other than in respect of Taxes or Other Taxes) affecting its Fixed Rate Loans, its Notes or its obligation to make Fixed Rate Loans or its obligations hereunder in respect of Letters of Credit and the result of any of the foregoing is to increase the cost to such Bank (or its Applicable Lending Office) of making or maintaining any Fixed Rate Loan or of issuing or participating in any Letter of Credit, or to reduce the amount of any sum received or receivable by such Bank (or its Applicable Lending Office) under this Agreement or under its Notes with respect thereto, by an amount deemed by such Bank to be material, then, within 15 days after receipt by the Company of written demand by such Bank (with a copy to the Administrative Agent), the Company shall pay to such Bank an amount which on an after-tax basis is necessary to maintain the same rate of return on capital that existed immediately prior thereto which such Bank reasonably determines is attributable to this Agreement, its Loans and Letter of Credit Liabilities or its obligations to make Loans or to issue or participate in Letters of Credit hereunder (after taking into account such Bank's policies as to capital adequacy). 1.4. 1.5. (b) If any Bank shall have determined that, on or after the date of this Agreement, the adoption of any applicable law, rule or regulation regarding capital adequacy, or any change in any such law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency given or made after the date of this Agreement, has or would have the effect of reducing the rate of return on capital of such Bank (or its Parent) as a consequence of such Bank's obligations hereunder to a level below that which such Bank (or its Parent) could have achieved but for such adoption, change, request or directive (taking into consideration its policies with respect to capital adequacy) by an amount deemed by such Bank to be material, then from time to time, within 15 days after receipt by the Company of written demand by such Bank (with a copy to the Administrative Agent), the Company shall pay to such Bank an amount which on an after-tax basis is necessary to maintain the same rate of return on capital that existed immediately prior thereto which such Bank reasonably determines is attributable to this Agreement, its Loans and Letter of Credit Liabilities or its obligations to make Loans or to issue or participate in Letters of Credit hereunder (after taking into account such Bank's policies as to capital adequacy). 1.6. 1.7. (c) Each Bank will promptly notify the Company and the Administrative Agent of any event of which it has knowledge, occurring after the date hereof, which will entitle such Bank to compensation pursuant to this Section and will designate a different Applicable Lending Office if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the judgment of such Bank, be otherwise disadvantageous to such Bank. A certificate of any Bank claiming compensation under this Section and setting forth the additional amount or amounts to be paid to it hereunder shall be presumptively correct in the absence of manifest error. In determining such amount, such Bank may use any reasonable averaging and attribution methods. Notwithstanding the foregoing subsections (a) and (b) of this Section 8.03, the Company shall only be obligated to compensate any Bank for any amount arising or accruing during any time or period commencing not more than 45 days prior to the date on which such Bank notifies the Administrative Agent and the Company that it proposes to demand such compensation and identifies to the Administrative Agent and the Company the statute, regulation or other basis upon which the claimed compensation is or will be based and any time or period during which because of the retroactive application of such statute, regulation or other such basis, such Bank did not know in good faith that such amount would arise or accrue. 1.8. 1.9. SECTION Taxes . (a) For purposes of this Section 8.04, the following terms have the following meanings: 1.10. 1.11. "Taxes" means any and all present or future taxes, duties, levies, imposts, deductions, charges or withholdings with respect to any payment by any Borrower pursuant to this Agreement or any Note, and all liabilities with respect thereto, excluding (i) in the case of each Bank and the Administrative Agent, taxes imposed on its net income and franchise or similar taxes imposed on it by a jurisdiction under the laws of which such Bank or the Administrative Agent (as the case may be) is organized or in which its principal executive office is located or, in the case of each Bank, in which its Applicable Lending Office is located (all such excluded taxes of the Administrative Agent or any Bank being herein referred to as its "Domestic Taxes") and (ii) in the case of each Bank, any United States withholding tax imposed on such payments except to the extent that such Bank is subject to United States withholding tax by reason of a U.S. Tax Law Change. 1.12. 1.13. "Other Taxes" means any present or future stamp or documentary taxes and any other excise or property taxes, or similar charges or levies, which arise from any payment made pursuant to this Agreement or under any Note or from the execution or delivery of, or otherwise with respect to, this Agreement or any Note. 1.14. 1.15. "U.S. Tax Law Change" means with respect to any Bank or Participant the occurrence (x) in the case of each Bank listed on the signature pages hereof, after the date of its execution and delivery of this Agreement and (y) in the case of any other Bank, after the date such Bank shall have become a Bank hereunder, and (z) in the case of each Participant, after the date such Participant became a Participant hereunder, of the adoption of any applicable U.S. federal law, U.S. federal rule or U.S. federal regulation relating to taxation, or any change therein, or the entry into force, modification or revocation of any income tax convention or treaty to which the United States is a party. 1.16. 1.17. (b) Any and all payments by any Borrower to or for the account of any Bank or the Administrative Agent hereunder or under any Note shall be made without deduction for any Taxes or Other Taxes; provided that, if any Borrower shall be required by law to deduct any Taxes or Other Taxes from any such payments, (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 8.04) such Bank or the Administrative Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) such Borrower shall make such deductions, (iii) such Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law and (iv) such Borrower shall furnish to the Administrative Agent, at its address referred to in Section 11.01, the original or a certified copy of a receipt evidencing payment thereof. 1.18. 1.19. (c) Each Borrower agrees to indemnify each Bank and the Administrative Agent for the full amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section 8.04) paid by such Bank or the Administrative Agent (as the case may be) and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto. In addition, each Borrower organized under the laws of a jurisdiction outside the United States agrees to indemnify the Administrative Agent and each Bank for all Domestic Taxes incurred by it and any liability (including any penalties, interest and expenses arising therefrom or with respect thereto), in each case to the extent that such Domestic Taxes or liabilities result from any payment or indemnification pursuant to this Section by or for the account of such Borrower. This indemnification shall be paid within 15 days after such Bank or the Administrative Agent (as the case may be) makes demand therefor. 1.20. 1.21. (d) Each Bank organized under the laws of a jurisdiction outside the United States, on or prior to the date of its execution and delivery of this Agreement in the case of each Bank listed on the signature pages hereof and on or prior to the date on which it becomes a Bank in the case of each other Bank, and from time to time thereafter as required by law (but only so long as such Bank remains lawfully able to do so), shall provide the Company two completed and duly executed copies of Internal Revenue Service form 1001 or 4224, as appropriate, or any successor form prescribed by the Internal Revenue Service, or other documentation reasonably requested by the Company, certifying that such Bank is entitled to benefits under an income tax treaty to which the United States is a party which exempts the Bank from United States withholding tax or reduces the rate of withholding tax on payments of interest for the account of such Bank or certifying that the income receivable pursuant to this Agreement is effectively connected with the conduct of a trade or business in the United States. 1.22. 1.23. (e) For any period with respect to which a Bank has failed to provide the Company with the appropriate form pursuant to Section 8.04(d) (unless such failure is due to a U.S. Tax Law Change), such Bank shall not be entitled to indemnification under Section 8.04(b) or 8.04(c) or with respect to any Taxes or Other Taxes which would not have been payable had such form been so provided, provided that if a Bank, which is otherwise exempt from or subject to a reduced rate of withholding tax, becomes subject to Taxes because of its failure to deliver a form required hereunder, the Company shall take such steps as such Bank shall reasonably request to assist such Bank to recover such Taxes (it being understood, however, that the Company shall have no liability to such Bank in respect of such Taxes). 1.24. 1.25. (f) If any Borrower is required to pay additional amounts to or for the account of any Bank pursuant to this Section 8.04, then such Bank will take such action (including changing the jurisdiction of its Applicable Lending Office) as in the good faith judgment of such Bank (i) will eliminate or reduce any such additional payment which may thereafter accrue and (ii) is not otherwise disadvantageous to such Bank. 1.26. 1.27. SECTION Base Rate Loans Substituted for Affected Fixed Rate Loans . If (i) the obligation of any Bank to make or to continue or convert outstanding Loans as or into Euro-Dollar Loans to any Borrower has been suspended pursuant to Section 8.02 or (ii) any Bank has demanded compensation under Section 8.03(a) or 8.04 with respect to its Euro-Dollar Loans and the Borrower shall, by at least five Euro-Dollar Business Days' prior notice to such Bank through the Administrative Agent, have elected that the provisions of this Section shall apply to such Bank, then, unless and until such Bank notifies the Borrower that the circumstances giving rise to such suspension or demand for compensation no longer apply: 1.28. (a) all Loans to such Borrower which would otherwise be made by such Bank as (or continued as or converted to) Euro-Dollar Loans, as the case may be, shall instead be Base Rate Loans (on which interest and principal shall be payable contemporaneously with the related Euro-Dollar Loans of the other Banks), and (a) after each of its Euro-Dollar Loans to such Borrower has been repaid, all payments of principal which would otherwise be applied to repay such Loans shall be applied to repay its Base Rate Loans instead. If such Bank notifies such Borrower that the circumstances giving rise to such suspension or demand for compensation no longer exist, the principal amount of each such Base Rate Loan shall be converted into a Euro- Dollar Loan on the first day of the next succeeding Interest Period applicable to the related Euro-Dollar Loans of the other Banks. 1.1. SECTION Substitution of Bank . If (i) the obligation of any Bank to make or to convert or continue outstanding Loans as or into Euro- Dollar Loans has been suspended pursuant to Section 8.02 or (ii) any Bank has demanded compensation under Section 8.03 or 8.04, the Company shall have the right, with the assistance of the Administrative Agent, to designate a substitute bank or banks (which may be one or more of the Banks) mutually satisfactory to the Company, the Administrative Agent, the Issuing Banks and the Swingline Bank (whose consent shall not be unreasonably withheld or delayed) to purchase for cash, pursuant to an Assignment and Assumption Agreement in substantially the form of Exhibit G hereto, the outstanding Loans of such Bank and assume the Commitment and Letter of Credit Liabilities of such Bank, without recourse to or warranty by, or expense to, such Bank, for a purchase price equal to the principal amount of all of such Bank's outstanding Loans and funded Letter of Credit Liabilities plus any accrued but unpaid interest thereon and the accrued but unpaid fees in respect of such Bank's Commitment hereunder plus such amount, if any, as would be payable pursuant to Section 2.14 if the outstanding Loans of such Bank were prepaid in their entirety on the date of consummation of such assignment. 1.2. ARTICLE REPRESENTATIONS AND WARRANTIES OF ELIGIBLE SUBSIDIARIES By the execution and delivery of its Election to Participate, each Eligible Subsidiary shall be deemed to have represented and warranted as of the date thereof that: 1.1. SECTION Corporate Existence and Power . It is a legal entity duly organized, validly existing and in good standing under the laws of its jurisdiction of organization and is a Substantially-Owned Consolidated Subsidiary of the Company. 1.2. 1.3. SECTION Corporate and Governmental Authorization; Contravention . The execution and delivery by it of its Election to Participate and its Notes, and the performance by it of this Agreement and its Notes, are within its legal powers, have been duly authorized by all necessary legal action, require no action by or in respect of, or filing with, any governmental body, agency or official and do not contravene, or constitute a default under, any provision of applicable law or regulation or of its organizational documents or of any agreement, judgment, injunction, order, decree or other instrument binding upon the Company or such Eligible Subsidiary or result in the creation or imposition of any Lien on any asset of the Company or any of its Subsidiaries. 1.4. 1.5. SECTION Binding Effect . Its Election to Participate has been duly executed by such Eligible Subsidiary and this Agreement constitutes a valid and binding agreement of such Eligible Subsidiary and each of its Notes, when executed and delivered in accordance with this Agreement, will constitute a valid and binding obligation of such Eligible Subsidiary, in each case enforceable in accordance with its terms, except as the same may be limited by bankruptcy, insolvency or similar laws affecting creditors' rights generally and by general principles of equity. 1.6. 1.7. SECTION Taxes . Except as disclosed in the opinion of counsel delivered pursuant to Section 3.03 of this Agreement or in its Election to Participate, there are no Taxes or Other Taxes of any country, or any taxing authority thereof or therein, which are imposed on any payment to be made by such Eligible Subsidiary pursuant hereto or on its Notes, or imposed on or by virtue of the execution, delivery or enforcement of this Agreement, its Election to Participate or of its Notes. 1.8. ARTICLE GUARANTY 1.1. SECTION The Guaranty . The Company hereby unconditionally guarantees the full and punctual payment (whether at stated maturity, upon acceleration or otherwise) of the principal of and interest (including, without limitation, interest accruing after the commencement of a bankruptcy, insolvency or similar proceeding with respect to any Eligible Subsidiary, regardless of whether such interest is an allowed claim in such proceeding) on each Loan made to and all Letter of Credit Liabilities incurred at the request of any Eligible Subsidiary pursuant to this Agreement, and the full and punctual payment of all other amounts payable by any Eligible Subsidiary under this Agreement or any Note. Upon failure by any Eligible Subsidiary to pay punctually any such amount, the Company shall forthwith on demand pay the amount not so paid at the place and in the manner specified in this Agreement. 1.1. SECTION Guaranty Unconditional . The obligations of the Company hereunder shall be unconditional and absolute and, without limiting the generality of the foregoing, shall not be released, discharged or otherwise affected by: 1.2. (a) any extension, renewal, settlement, compromise, waiver or release in respect of any obligation of any Eligible Subsidiary under this Agreement or any Note, by operation of law or otherwise; (a) any modification or amendment of or supplement to this Agreement or any Note; (a) any release, impairment, non-perfection or invalidity of any direct or indirect security for any obligation of any Eligible Subsidiary under this Agreement or any Note; (a) any change in the existence, structure or ownership of any Eligible Subsidiary, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting any Eligible Subsidiary or its assets or any resulting release or discharge of any obligation of any Eligible Subsidiary contained in this Agreement or any Note; (a) the existence of any claim, set-off or other rights which the Company may have at any time against any Eligible Subsidiary, any Agent, any Bank or any other Person, whether in connection herewith or any unrelated transactions, provided that nothing herein shall prevent the assertion of any such claim by separate suit or compulsory counterclaim; (a) any invalidity or unenforceability relating to or against any Eligible Subsidiary for any reason of this Agreement or any Note, or any provision of applicable law or regulation purporting to prohibit the payment by any Eligible Subsidiary of the principal of or interest on any Loan, any Letter of Credit Liability or any other amount payable by it under this Agreement or any Note; or (a) any other act or omission to act or delay of any kind by any Eligible Subsidiary, any Agent or Bank or any other Person or any other circumstance whatsoever which might, but for the provisions of this paragraph, constitute a legal or equitable discharge of or defense to the Company's obligations hereunder. 1.1. SECTION Discharge Only Upon Payment In Full; Reinstatement In Certain Circumstances . The Company's obligations hereunder shall remain in full force and effect until the Commitments and any Letters of Credit shall have terminated and the principal of and interest on the Loans, the Letter of Credit Liabilities and all other amounts payable by the Company and each Eligible Subsidiary under this Agreement or any Note shall have been paid in full. If at any time any payment of principal of or interest on any Loan, any Letter of Credit Liability or any other amount payable by any Eligible Subsidiary under this Agreement or any Note is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of any Eligible Subsidiary or otherwise, the Company's obligations hereunder with respect to such payment shall be reinstated at such time as though such payment had been due but not made at such time. 1.2. 1.3. SECTION Waiver by the Company . The Company irrevocably waives acceptance hereof, presentment, demand, protest and any notice not provided for herein, as well as any requirement that at any time any action be taken by any Person against any Eligible Subsidiary or any other Person. 1.4. 1.5. SECTION Subrogation . The Company irrevocably waives any and all rights to which it may be entitled, by operation of law or otherwise, upon making any payment hereunder in respect of any Eligible Subsidiary to be subrogated to the rights of the payee against such Eligible Subsidiary with respect to such payment or against any direct or indirect security therefor, or otherwise to be reimbursed, indemnified or exonerated by or for the account of such Eligible Subsidiary in respect thereof, in any bankruptcy, insolvency or similar proceeding involving such Eligible Subsidiary as debtor commenced within one year after the making of any payment by such Eligible Subsidiary under this Agreement or its Notes. 1.6. 1.7. SECTION Stay of Acceleration . In the event that acceleration of the time for payment of any amount payable by any Eligible Subsidiary under this Agreement or any Note is stayed upon insolvency, bankruptcy or reorganization of such Eligible Subsidiary, all such amounts otherwise subject to acceleration under the terms of this Agreement shall nonetheless be payable by the Company hereunder forthwith on demand by the Administrative Agent made at the request of the Required Banks. ARTICLE MISCELLANEOUS 1 .1 SECTION Notices . All notices, requests and other communications to any party hereunder shall be in writing (including bank wire, telex, facsimile transmission or similar writing) and shall be given to such party: in the case of the Company or the Administrative Agent, at its address, facsimile number or telex number set forth on the signature pages hereof, in the case of any Bank, at its address, facsimile number or telex number set forth in its Administrative Questionnaire or in the case of any party, such other address, facsimile number or telex number as such party may hereafter specify for the purpose by notice to the Administrative Agent and the Company. Each such notice, request or other communication shall be effective if given by telex, when such telex is transmitted to the telex number specified in this Section and the appropriate answerback is received, if given by facsimile transmission, when transmitted to the facsimile number specified in this Section and confirmation of receipt is received, if given by mail, 72 hours after such communication is deposited in the mail with first class postage prepaid, addressed as aforesaid or if given by any other means, when delivered at the address specified in this Section; provided that notices to the Administrative Agent under Article 2 or Article 8 shall not be effective until received. Any notice required to be given to or by any Eligible Subsidiary shall be duly given if given to or by the Company, which is hereby appointed the agent of each Eligible Subsidiary for such purpose. 1.1. SECTION No Waivers . No failure or delay by the Administrative Agent or any Bank in exercising any right, power or privilege hereunder or under any Note shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. 1.2. 1.3. SECTION Expenses; Indemnification . (a) The Company shall pay (i) all reasonable out-of-pocket expenses of the Administrative Agent, including reasonable fees and disbursements of special counsel for the Administrative Agent, in connection with the preparation of this Agreement, any waiver or consent hereunder or any amendment hereof or any Default or alleged Default hereunder and (ii) if an Event of Default occurs, all reasonable out-of-pocket expenses incurred by the Administrative Agent or any Bank, including (without duplication) the reasonable fees and disbursements of outside counsel and allocated cost of inside counsel, in connection with such Event of Default and collection, bankruptcy, insolvency and other enforcement proceedings resulting therefrom. 1.4. 1.5. (b) The Company agrees to indemnify the Administrative Agent and each Bank, their respective affiliates and the respective directors, officers, agents and employees of the foregoing (each an "Indemnitee") and hold each Indemnitee harmless from and against any and all liabilities, losses, damages, costs and out-of-pocket expenses of any kind, including, without limitation, the reasonable fees and disbursements of counsel, which may be incurred by such Indemnitee in connection with any litigation or governmental or regulatory investigation or other similar proceeding (whether or not such Indemnitee shall be designated a party thereto) relating to or arising out of this Agreement or any actual or proposed use of proceeds of Loans or Letters of Credit hereunder; provided that no Indemnitee shall have the right to be indemnified hereunder for such Indemnitee's own gross negligence or willful misconduct or for its breach of its express obligations under this Agreement, in each case as determined by a court of competent jurisdiction; provided further that in no event shall the Company have any such indemnification obligation in respect of any liabilities, losses, damages, costs or expenses resulting from disputes between any Bank and any Agent or among the Banks. 1.6. 1.7. SECTION Sharing of Set-offs . Each Bank agrees that if it shall, by exercising any right of set-off or counterclaim or otherwise, receive payment of a proportion of the aggregate amount then due with respect to the Loans and Letter of Credit Liabilities held by it which is greater than the proportion received by any other Bank in respect of the aggregate amount then due with respect to the Loans and Letter of Credit Liabilities held by such other Bank, the Bank receiving such proportionately greater payment shall purchase such participations in the Loans and Letter of Credit Liabilities held by the other Banks, and such other adjustments shall be made, as may be required so that all such payments with respect to the Loans and Letter of Credit Liabilities held by the Banks shall be shared by the Banks pro rata; provided that nothing in this Section shall impair the right of any Bank to exercise any right of set-off or counterclaim it may have and to apply the amount subject to such exercise to the payment of indebtedness of the Borrowers other than their indebtedness under this Agreement. Each Borrower agrees, to the fullest extent it may effectively do so under applicable law, that any holder of a participation in a Loan or Letter of Credit, whether or not acquired pursuant to the foregoing arrangements, may exercise rights of set-off or counterclaim and other rights with respect to such participation as fully as if such holder of a participation were a direct creditor of such Borrower in the amount of such participation. 1.8. 1.9. SECTION Amendments and Waivers . Any provision of this Agreement or the Notes may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by the Borrower and the Required Banks (and, if the rights or duties of the Administrative Agent, any Swingline Bank or any Issuing Bank are affected thereby, by such Person); provided that no such amendment or waiver shall, unless signed by all the Banks, (i) increase or decrease the Commitment of any Bank (except for a ratable decrease in the Commitments of all Banks) or subject any Bank to any additional obligation, (ii) reduce the principal of or rate of interest on any Loan or the amount to be reimbursed in respect of any Letter of Credit or any interest thereon or any fees hereunder, (iii) postpone the date fixed for any payment of principal of or interest on any Loan or for reimbursement in respect of any Letter of Credit or interest thereon or any fees hereunder or for termination of any Commitment, (iv) make any changes to Article 10 or (v) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Loans and Letter of Credit Liabilities, or the number of Banks, which shall be required for the Banks or any of them to take any action under this Section or any other provision of this Agreement; provided further that no such amendment, waiver or modification shall, unless signed by each Eligible Subsidiary, (w) subject such Eligible Subsidiary to any additional obligation, (x) increase the principal of or rate of interest on any outstanding Loan or Letter of Credit Liability of such Eligible Subsidiary, (y) accelerate the stated maturity of any outstanding Loan or Letter or Credit Liability of such Eligible Subsidiary or (z) change this proviso. 1.10. 1.11. SECTION Successors and Assigns . (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that no Borrower may assign or otherwise transfer any of its rights under this Agreement without the prior written consent of all Banks. 1.12. 1.13. (b) Any Bank may at any time grant to one or more banks or other institutions (each a "Participant") participating interests in its Commitment or any or all of its Loans and Letter of Credit Liabilities. In the event of any such grant by a Bank of a participating interest to a Participant, whether or not upon notice to the Administrative Agent, such Bank shall remain responsible for the performance of its obligations hereunder, and the Borrowers, the Issuing Banks, the Swingline Banks and the Administrative Agent shall continue to deal solely and directly with such Bank in connection with such Bank's rights and obligations under this Agreement. Any agreement pursuant to which any Bank may grant such a participating interest shall provide that such Bank shall retain the sole right and responsibility to enforce the obligations of the Borrowers hereunder including, without limitation, the right to approve any amendment, modification or waiver of any provision of this Agreement; provided that such participation agreement may provide that such Bank will not agree to any modification, amendment or waiver of this Agreement described in clause (i), (ii), (iii) or (iv) of Section 11.05 without the consent of the Participant. The Borrowers agree that each Participant shall, to the extent provided in its participation agreement, be entitled to the benefits of Article 8 with respect to its participating interest, subject to subsection (e) below. An assignment or other transfer which is not permitted by subsection (c) or (d) below shall be given effect for purposes of this Agreement only to the extent of a participating interest granted in accordance with this subsection (b). 1.14. 1.15. (c) Any Bank may at any time assign to one or more banks or other financial institutions (each an "Assignee") all, or a proportionate part (equivalent to an initial Commitment of not less than $15,000,000) of all, of its rights and obligations under this Agreement and its Notes (if any), and such Assignee shall assume such rights and obligations, pursuant to an Assignment and Assumption Agreement in substantially the form of Exhibit G hereto executed by such Assignee and such transferor Bank, with (and only with and subject to) the prior written consent of the Borrower, the Issuing Banks, the Swingline Banks and the Administrative Agent (which consents shall not be unreasonably withheld or delayed); provided that if an Assignee is an affiliate of such transferor Bank or was a Bank immediately prior to such assignment, no such consent shall be required; provided further such assignment may, but need not, include rights of the transferor Bank in respect of outstanding Bid Rate Loans. Upon execution and delivery of such instrument of assumption and payment by such Assignee to such transferor Bank of an amount equal to the purchase price agreed between such transferor Bank and such Assignee, such Assignee shall be a Bank party to this Agreement and shall have all the rights and obligations of a Bank with a Commitment as set forth in such instrument of assumption, and the transferor Bank shall be released from its obligations hereunder to a corresponding extent, and no further consent or action by any party shall be required. Upon the consummation of any assignment pursuant to this subsection (c), the transferor Bank, the Administrative Agent and the Borrowers shall make appropriate arrangements so that, if required by the Assignee, Note(s) are issued to the Assignee. In connection with any such assignment, the transferor Bank or the Assignee shall pay or cause to be paid to the Administrative Agent an administrative fee for processing such assignment in the amount of $3,000. If the Assignee is not organized under the laws of the United States of America or a state thereof, it shall, prior to the first date on which interest or fees are payable hereunder for its account, deliver to the Company and the Administrative Agent certification as to exemption from deduction or withholding of any United States federal income taxes in accordance with Section 8.04. 1.16. 1.17. (d) Any Bank may at any time assign all or any portion of its rights under this Agreement and its Notes (if any) to a Federal Reserve Bank. No such assignment shall release the transferor Bank from its obligations hereunder or modify any such obligations. 1.18. 1.19. (e) No Assignee, Participant or other transferee of any Bank's rights shall be entitled to receive any greater payment under Section 8.03 or 8.04 than such Bank would have been entitled to receive with respect to the rights transferred, unless such transfer is made by reason of the provisions of Section 8.02, 8.03 or 8.04 requiring such Bank to designate a different Applicable Lending Office under certain circumstances or at a time when the circumstances giving rise to such greater payment did not exist. 1.20. 1.21. SECTION Collateral . Each of the Banks represents to the Administrative Agent and each of the other Banks that it in good faith is not relying upon any "margin stock" (as defined in Regulation U) as collateral in the extension or maintenance of the credit provided for in this Agreement. 1.22. 1.23. SECTION Confidentiality . The Administrative Agent and each Bank agrees to keep any information delivered or made available by the Borrower pursuant to this Agreement confidential from anyone other than persons employed or retained by such Bank and its affiliates who are engaged in evaluating, approving, structuring or administering the credit facility contemplated hereby; provided that nothing herein shall prevent any Bank from disclosing such information (a) to any other Bank or to the Administrative Agent, (b) to any other Person if reasonably incidental to the administration of the credit facility contemplated hereby, (c) upon the order of any court or administrative agency, (d) upon the request or demand of any regulatory agency or authority, (e) which had been publicly disclosed other than as a result of a disclosure by the Administrative Agent or any Bank prohibited by this Agreement, (f) in connection with any litigation to which the Administrative Agent, any Bank or its subsidiaries or Parent may be a party, (g) to the extent necessary in connection with the exercise of any remedy hereunder, (h) to such Bank's or Administrative Agent's legal counsel and independent auditors and (i) subject to provisions substantially similar to those contained in this Section 11.08, to any actual or proposed Participant or Assignee. 1.24. 1.25. SECTION Governing Law; Submission to Jurisdiction . This Agreement and each Note shall be construed in accordance with and governed by the law of the State of Illinois. Each Borrower hereby submits to the nonexclusive jurisdiction of the United States District Court for the Northern District of Illinois and of any Illinois State court sitting in Chicago for purposes of all legal proceedings arising out of or relating to this Agreement or the transactions contemplated hereby. Each Borrower irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. 1.26. 1.27. SECTION Counterparts; Integration . This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement constitutes the entire agreement and understanding among the parties hereto and supersedes any and all prior agreements and understandings, oral or written, relating to the subject matter hereof. 1.28. 1.29. SECTION Waiver of Jury Trial . EACH OF THE BORROWERS, THE AGENTS, THE ISSUING BANKS, THE SWINGLINE BANKS AND THE BANKS, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. 1.30. 1.31. SECTION Effect of Amendment and Restatement; Resignation of Resigning Agent . This agreement amends and restates the Existing Credit Agreement in its entirety. Upon the effectiveness hereof, (a) the Existing Credit Agreement shall be superseded and shall be of no further force or effect (except for those provisions thereof which by their terms survive any termination thereof) and (b) Morgan Guaranty Trust Company of New York resigns as "Administrative Agent" under the Existing Credit Agreement (it being understood that the provisions of Article 7 and Section 11.03 of the Existing Credit Agreement shall inure to its benefit as to any actions taken or omitted to be taken while it was "Administrative Agent" thereunder). 1.32. 1.33. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. IMC GLOBAL INC. By: Title: 2100 Sanders Road Northbrook, IL 60062 Attention: E. Paul Dunn, Jr. Assistant Vice President and Treasurer Telecopy number: 847-205-4930 $74,750,000 BANK OF AMERICA, N.A., Individually and as Administrative Agent By: Title: Managing Director 231 South LaSalle Street Chicago, Illinois 60697 Attention: G. Burton Queen Telecopy number: (312) 987-1276 $45,500,000 THE CHASE MANHATTAN BANK, Individually and as Syndication Agent By: Title: $45,500,000 ROYAL BANK OF CANADA, Individually and as Documentation Agent By: Title: $45,500,000 MORGAN GUARANTY TRUST COMPANY OF NEW YORK By: Title: $39,000,000 CREDIT AGRICOLE INDOSUEZ By: Title: $32,500,000 HARRIS TRUST AND SAVINGS BANK By: Title: $6,500,000 THE BANK OF MONTREAL By: Title: $34,125,000 BANK ONE, NA (Main Office Chicago), Individually and as Co-Syndication Agent By: Title: $34,125,000 THE NORTHERN TRUST COMPANY By: Title: $29,250,000 ABN-AMRO BANK N.V. By: Title: By: Title: $29,250,000 BANQUE NATIONALE DE PARIS By: Title: $29,250,000 THE BANK OF NEW YORK By: Title: $22,750,000 THE BANK OF TOKYO-MITSUBISHI, LTD. CHICAGO BRANCH By: Title: $22,750,000 FIRST UNION NATIONAL BANK By: Title: $22,750,000 COOPERATIEVE CENTRALE RAIFFEISEN- BOERENLEENBANK B.A., "RABOBANK INTERNATIONAL", NEW YORK BRANCH By: Title: By: Title: $22,750,000 STANDARD CHARTERED BANK By: Title: By: Title: $22,750,000 BANK HAPOALIM B.M. By: Title: By: Title: $22,750,000 SUNTRUST BANK, ATLANTA, Individually and as Co-Documentation Agent By: Title: By: Title: $22,750,000 THE DAI-ICHI KANGYO BANK, LTD., CHICAGO BRANCH By: Title: $22,750,000 HSBC BANK USA By: Title: $22,750,000 THE INDUSTRIAL BANK OF JAPAN, LIMITED, CHICAGO BRANCH By: Title: Total Commitments $650,000,000 Pricing Schedule The "Euro-Dollar Margin," the "Utilization Fee Rate" and the "Facility Fee Rate" for any day are the respective percentages set forth below in the applicable row under the column corresponding to the Status that exists on such day:
LEVEL LEVEL LEVEL LEVEL LEVEL I II III IV V Facility Fee Rate .07% .085% .11% .15% .25% Euro-Dollar Margin .155% .19% .215% .275% .425% Utilization Fee Rate .125% .25% .25% .25% .325% (outstanding principal amount of Loans equal to or greater than 25% but less than 50% of the aggregate Commitments) Utilization Fee Rate .125% .25% .55% .575% .825% (outstanding principal amount of Loans equal to or greater than 50% of the aggregate Commitments)
For purposes of this Schedule, the following terms have the following meanings, subject to the last paragraph of this Schedule: "Level I Status" exists at any date if, at such date, the Company is rated A- or higher by S&P or A3 or higher by Moody's. "Level II Status" exists at any date if, at such date, (i) the Company is rated BBB+ or higher by S&P or Baa1 or higher by Moody's and (ii) Level I Status does not exist. "Level III Status" exists at any date if, at such date, (i) the Company is rated BBB or higher by S&P or Baa2 or higher by Moody's and (ii) neither Level I Status nor Level II Status exists. "Level IV Status" exists at any date if, at such date, (i) the Company is rated BBB- by S&P or Baa3 by Moody's and (ii) neither Level I Status, Level II Status nor Level III Status exists. "Level V Status" exists at any date if, at such date, no other Status exists. "Status" refers to the determination of which of Level I Status, Level II Status, Level III Status, Level IV Status or Level V Status exists at any date. The credit ratings to be utilized for purposes of this Schedule are those assigned to the senior unsecured long-term debt securities of the Company without third-party credit enhancement, whether or not any such debt securities are actually outstanding, and any rating assigned to any other debt security of the Company shall be disregarded. The rating in effect at any date is that in effect at the close of business on such date. If the Company is split-rated and the ratings differential is one notch, the higher of the two ratings will apply (e.g., A-/Baa1 results in Level I Status and BBB+/Baa2 results in Level II Status). If the Company is split- rated and the ratings differential is more than one notch, the average of the two ratings (or the higher of two intermediate ratings) shall be used (e.g., A-/Baa3 results in Level II Status and BBB+/Baa3 results in Level III Status). If at any date, the Company's long-term debt is rated by neither S&P nor Moody's, then Level V shall apply. SCHEDULE I EXISTING LETTERS OF CREDIT ACCOUNT PARTIES: ISSUER AMOUNT BENEFICIARY RENEWAL DATE IMC-Agrico Bank of America, N.A. $2,832,500 National Union 05/30/00 Bank of America, N.A. $570,000 National Union 05/30/00 Bank of America, N.A. $2,750,000 Brewster Phosphate 12/31/99 IMC Global Operations Inc. Bank of America, N.A. $2,683,980 National Union 12/02/99 Bank of America, N.A. $625,000 National Union 12/02/99 Bank of America, N.A. $250,000 State of Vermont 12/02/99 Bank of America, N.A. $500,000 National Union 12/02/99 Bank of America, N.A. $1,800,000 Reliance Nat'l 05/31/00 Indemnity Cooperatieve Centrale $3,182,809 Dai-Ichi-Bank 03/17/01 Raiffeisen-boerenleenbank B.A., "Rabobank International", New York Branch Cooperatieve Centrale $9,445,754 Dai-Ichi-Bank 03/17/00 Raiffeisen-boerenleenbank B.A., "Rabobank International", New York Branck Cooperatieve Centrale $2,751,485 Bank of New York 02/16/01 Raiffeisen-boerenleenbank B.A., "Rabobank Nederland", New York Branch Vigoro Industries, Inc. Harris Trust and Savings $800,000 National Union 10/31/00 Bank First Ins. Co. Harris Trust and Savings $546,000 St. Paul Fire & 02/25/00 Bank Marine Ins. Co. Kalium Chemicals Ltd. Royal Bank of Canada $25,000 MI Dept. of Natural 10/01/00 Resources Royal Bank of Canada $5,000 MI Dept. of Natural 10/01/00 Resources Western-AG Minerals Co. Carlsbad National Bank $500,000 New Mexico Self 09/03/00 Insurers IMC Kalium Ogden Corp. NationsBank $298,900 Utah Div. of Oil, 04/08/00 Gas & Mining IMC Salt Inc. Bank of America, N.A. $150,000 Louisiana Dept. of 03/24/00 Employ. Bank of America, N.A. $800,000 ACSTAR Insurance 03/26/00 Co. Bank of America, N.A. $2,352,274 Reliance Nat'l 04/30/00 Indemnity Co. Royal Bank of Canada $40,000 O&L Real Estate 07/31/00 Ltd. Liab. Co. IMC Chemicals Inc. Bank of America, N.A. $2,118,000 AIG/Nat'l Union, 03/23/00 Amer. Home Bank of America, N.A. $110,000 Kredietbank NV 04/30/00 Bank of America, N.A. $150,750 State of Colorado 03/30/00 Rec. Brd. Bank of America, N.A. $696,620.31 Colorado Nat'l Bank 08/31/00 Bank of America, N.A. $492,579.15 White River Elec. 03/30/00 Assoc. Bank of America, N.A. $119,600 ACSTAR Insurance Co. 03/26/00 Bank of America, N.A. $941,338 County of San Bern. 03/24/00 Bank of America, N.A. $300,000 San Diego Unified 04/30/00 Bank of America, N.A. $5,860,441 General Electric 07/14/00 Cap. Corp. Bank of America, N.A. $7,511,927 General Foods Cred. 07/14/00 EXHIBIT A NOTE Chicago, Illinois [Date] For value received, [Name of Borrower], a [jurisdiction of incorporation] corporation (the "Borrower"), promises to pay to the order of (the "Bank"), for the account of its Applicable Lending Office, the unpaid principal amount of each Loan made by the Bank to the Borrower pursuant to the Credit Agreement referred to below on the date specified in the Credit Agreement. The Borrower promises to pay interest on the unpaid principal amount of each such Loan on the dates and at the rate or rates provided for in the Credit Agreement. All such payments of principal and interest shall be made in lawful money of the United States in Federal or other immediately available funds at the office of Bank of America, N.A., 231 South LaSalle Street, Chicago, Illinois. All Loans made by the Bank, the respective types and maturities thereof and all repayments of the principal thereof shall be recorded by the Bank and, the Bank, if the Bank so elects in connection with any transfer or enforcement of its Note, may endorse on the schedule attached hereto appropriate notations to evidence the foregoing information with respect to the Loans then outstanding; provided that the failure of the Bank to make any such recordation or endorsement shall not affect the obligations of the Borrower hereunder or under the Credit Agreement. This note is one of the Notes referred to in the Amended and Restated Five-Year Credit Agreement dated as of December 8, 1999 among the Borrower, various financial institutions and Bank of America, N.A., as Administrative Agent (as the same may be amended from time to time, the "Credit Agreement"). Terms defined in the Credit Agreement are used herein with the same meanings. Reference is made to the Credit Agreement for provisions for the prepayment hereof and the acceleration of the maturity hereof. [The payment in full of the principal and interest on this note has, pursuant to the provisions of the Credit Agreement, been unconditionally guaranteed by IMC Global Inc.]1 [NAME OF BORROWER] By: Title: Note (cont'd) LOANS AND PAYMENTS OF PRINCIPAL Date Amount Type Amount of Maturity Notation of Loan of Loan Principal Repaid Date Made By EXHIBIT B FORM OF BID RATE QUOTE REQUEST [Date] To: Bank of America, N.A. (the "Administrative Agent") From: [Name of Borrower] Re: Amended and Restated Five-Year Credit Agreement (the "Credit Agreement") dated as of December 8, 1999 among IMC Global Inc., various financial institutions and Bank of America, N.A., as Administrative Agent. We hereby give notice pursuant to Section 2.03 of the Credit Agreement that we request Bid Rate Quotes for the following proposed Bid Rate Borrowing(s): Date of Borrowing: __________________ Principal Amount2 Interest Period3 $ Such Bid Rate Quotes should offer a Bid Rate [(General), (Indexed) Margin or both]. [The applicable base rate is the London Interbank Offered Rate.] Terms used herein have the meanings assigned to them in the Credit Agreement. [NAME OF BORROWER] By Title: EXHIBIT C FORM OF INVITATION FOR BID RATE QUOTES To: [Name of Bank] Re: Invitation for Bid Rate Quotes to [Name of Borrower] (the "Borrower") Pursuant to Section 2.03 of the Amended and Restated Five-Year Credit Agreement dated as of December 8, 1999 among IMC Global Inc., various financial institutions and the undersigned, as Administrative Agent, we are pleased on behalf of the Borrower to invite you to submit Bid Rate Quotes to the Borrower for the following proposed Bid Rate Borrowing(s): Date of Borrowing: __________________ Principal Amount Interest Period $ Such Bid Rate Quotes should offer a Bid Rate [(Indexed) Margin, (General) or both]. [The applicable base rate is the London Interbank Offered Rate.] Please respond to this invitation by no later than [2:00 P.M.] [10:00 A.M.] (New York City time) on [date]. BANK OF AMERICA, N.A., as Administrative Agent By Authorized Officer EXHIBIT D FORM OF BID RATE QUOTE To: Bank of America, N.A., as Administrative Agent 231 South LaSalle Street Chicago, Illinois 60697 Attention: Re: Bid Rate Quote to [Name of Borrower] (the "Borrower") In response to your invitation on behalf of the Borrower dated _____________, _____, we hereby make the following Bid Rate Quote on the following terms: 1. Quoting Bank: ________________________________ 2. Person to contact at Quoting Bank: _____________________________ 3. Date of Borrowing: ____________________4 4. We hereby offer to make Bid Rate Loan(s) in the following principal amounts, for the following Interest Periods and at the following rates: Principal Interest Bid Rate Amount5 Period6 [(Indexed)7 Margin] [(General)8] $ $ provided, that the aggregate principal amount of Bid Rate Loans for which the above offers may be accepted shall not exceed $____________.]2 We understand and agree that the offer(s) set forth above, subject to the satisfaction of the applicable conditions set forth in the Amended and Restated Five-Year Credit Agreement dated as of December 8, 1999 among IMC Global Inc., various financial institutions and yourselves, as Administrative Agent, irrevocably obligates us to make the Bid Rate Loan(s) for which any offer(s) are accepted, in whole or in part. Very truly yours, [NAME OF BANK] Dated: By: Authorized Officer EXHIBIT E-1 December ___, 1999 To the Banks parties to the "Credit Agreement" (as defined below) and to Bank of America, N.A., as Administrative Agent: We are issuing this opinion letter in our capacity as special legal counsel to IMC Global Inc., a Delaware corporation (the "Company") in response to the requirement in Section 3.01 of the Amended and Restated Five Year Credit Agreement, dated as of December 8, 1999 (the "Credit Agreement"), between the Company, as borrower, various financial institutions (excluding the Company, the "Banks"), and Bank of America, N.A., as administrative agent (together with the Banks, collectively called "you"). The term "Transaction Agreements" whenever it is used in this letter means the Credit Agreement and the Notes (as defined in the Credit Agreement) dated the date hereof. Unless otherwise indicated, capitalized terms used herein but not otherwise defined herein have the respective meanings set forth in the Credit Agreement. Subject to the assumptions, qualifications, exclusions and other limitations which are identified in this letter and in the schedules attached to this letter, we advise you that: 1. The Company is a corporation existing and in good standing under the General Corporation Law of the State of Delaware. 2. The Company has the corporate power to own and lease its properties and to enter into and perform its obligations under the Transaction Agreements. 3. The Company's Board of Directors has adopted by requisite vote the resolutions necessary to authorize the Company's execution, delivery and performance of the Transaction Agreements. No approval by the Company's stockholders is required. 4. The Company has duly authorized, executed and delivered the Transaction Agreements. 5. Each of the Transaction Agreements is a valid and binding obligation of the Company and is enforceable against the Company in accordance with its terms. 6. The Company is not currently required to obtain any consent, approval, authorization or order of any court or governmental agency in order to obtain the right to enter into the Transaction Agreements or to take any action in connection with the consummation of the transactions contemplated by the Transaction Agreements, except for actions or filings required in connection with ordinary course conduct by the Company of its respective businesses and ownership or operation by the Company of its respective assets. 7. The Company is not an "investment company" registered or required to be registered under the Investment Company Act of 1940, as amended. 8. The execution and delivery of the Transaction Agreements by the Company and performance of its obligations under the Transaction Agreements will not (a) violate any existing provisions of the Company's Certificate of Incorporation or Bylaws, (b) constitute a violation by the Company of any applicable provision of existing statutory law or governmental regulation covered by this letter, (c) result in the creation or imposition of any lien, charge or encumbrance upon any of the property of the Company, (d) violate any existing order, writ, injunction or decree applicable to the Company of which we are aware of any court or governmental instrumentality or (e) whether with or without the giving of notice or lapse of time or both, breach, or result in a default under, any existing obligation of the Company or any of its Subsidiaries under any of the agreements listed on Schedule E to this opinion (provided that we express no opinion as to compliance with any financial test or cross-default provision except insofar as any such cross-default provision relates to a default under an agreement listed on Schedule E to this opinion) except in each case as would not reasonably be expected to have a Material Adverse Effect. Without limiting the foregoing, the Borrowings and the application of the proceeds thereof as provided in the Credit Agreement do not violate Regulation T, U or X of the Board of Governors of the Federal Reserve System. In preparing this letter, we have relied without any independent verification upon the assumptions recited in Schedule B to this letter and upon: (i) information contained in certificates obtained from governmental authorities; (ii) factual information represented to be true in the Credit Agreement and the other Transaction Agreements; (iii) factual information provided to us by the Company; and (iv) factual information we have obtained from such other sources as we have deemed reasonable. We have assumed without investigation that there has been no relevant change or development between the dates as of which the information cited in the preceding sentence was given and the date of this letter and that the information upon which we have relied is accurate and does not omit disclosures necessary to prevent such information from being misleading. For purposes of each opinion in paragraph 1, we have relied exclusively upon a certificate issued by a governmental authority in Delaware, and such opinion is not intended to provide any conclusion or assurance beyond that conveyed by that certificate. While we have not conducted any independent investigation to determine facts upon which our opinions are based or to obtain information about which this letter advises you, we confirm that we do not have any actual knowledge which has caused us to conclude that our reliance and assumptions cited in the preceding paragraph are unwarranted or that any information supplied in this letter is wrong. The term "actual knowledge" whenever it is used in this letter with respect to our firm means conscious awareness at the time this letter is delivered on the date it bears by the following Kirkland & Ellis lawyers who have had significant involvement with negotiation or preparation of the Credit Agreement (herein called "our Designated Transaction Lawyers"): Michael G. Timmers and Gavin J. Domm. Our advice on every legal issue addressed in this letter is based exclusively on the internal law of the State of Illinois, the federal law of the United States and the General Corporation Law of the State of Delaware. Issues addressed by this letter may be governed in whole or in part by other laws, but we express no opinion as to whether any relevant difference exists between the laws upon which our opinions are based and any other laws which may actually govern. Our opinions are subject to all qualifications in Schedule A and do not cover or otherwise address any law or legal issue which is identified in the attached Schedule C or any provision in the Credit Agreement or any of the other Transaction Agreements of any type identified in Schedule D. Provisions in the Transaction Agreements which are not excluded by Schedule D or any other part of this letter or its attachments are called the "Relevant Agreement Terms." Our advice on each legal issue addressed in this letter represents our opinion as to how that issue would be resolved were it to be considered by the highest court of the jurisdiction upon whose law our opinion on that issue is based. The manner in which any particular issue would be treated in any actual court case would depend in part on facts and circumstances particular to the case, and this letter is not intended to guarantee the outcome of any legal dispute which may arise in the future. It is possible that some Relevant Agreement Terms may not prove enforceable for reasons other than those cited in this letter should an actual enforcement action be brought, but (subject to all the exceptions, qualifications, exclusions and other limitations contained in this letter) such unenforceability would not in our opinion prevent you from realizing the principal benefits purported to be provided by the Relevant Agreement Terms. This letter speaks as of the time of its delivery on the date it bears. We do not assume any obligation to provide you with any subsequent opinion or advice by reason of any fact about which our Designated Transaction Lawyers did not have actual knowledge at that time, by reason of any change subsequent to that time in any law covered by any of our opinions, or for any other reason. The attached schedules are an integral part of this letter, and any term defined in this letter or any schedule has that defined meaning wherever it is used in this letter or in any schedule to this letter. You may rely upon this letter only for the purpose served by the provision in the Credit Agreement cited in the initial paragraph of this letter in response to which it has been delivered. Without our written consent: (i) no Person other than you may rely on this letter for any purpose; (ii) this letter may not be cited or quoted in any financial statement, prospectus, private placement memorandum or other similar document; (iii) this letter may not be cited or quoted in any other document or communication which might encourage reliance upon this letter by any Person or for any purpose excluded by the restrictions in this paragraph; and (iv) copies of this letter may not be furnished to anyone for purposes of encouraging such reliance. Notwithstanding the foregoing, Persons who subsequently become Banks (or participants in accordance with the terms of the Credit Agreement) may rely on this letter as of the time of its delivery on the date hereof as if this letter were addressed to them. Sincerely, Kirkland & Ellis Schedule A General Qualifications All of our opinions ("our opinions") in the letter to which this Schedule is attached ("our letter") are subject to each of the qualifications set forth in this Schedule. 1. Bankruptcy and Insolvency Exception. Each of our opinions is subject to the effect of bankruptcy, insolvency, reorganization, receivership, moratorium and other similar laws. This exception includes: a. the federal Bankruptcy Code and thus comprehends, among others, matters of turn-over, automatic stay, avoiding powers, fraudulent transfer, preference, discharge, conversion of a non- recourse obligation into a recourse claim, limitations on ipso facto and anti-assignment clauses and the coverage of pre- petition security agreements applicable to property acquired after a petition is filed; b. all other federal and state bankruptcy, insolvency, reorganization, receivership, moratorium, arrangement and assignment for the benefit of creditors laws that affect the rights of creditors generally or that have reference to or affect only creditors of specific types of debtors; c. state fraudulent transfer and conveyance laws; and d. judicially developed doctrines in this area, such as substantive consolidation of entities and equitable subordination. 2. Equitable Principles Limitation. Each of our opinions is subject to the effect of general principles of equity, whether applied by a court of law or equity. This limitation includes principles: a. governing the availability of specific performance, injunctive relief or other equitable remedies, which generally place the award of such remedies, subject to certain guidelines, in the discretion of the court to which application for such relief is made; a. affording equitable defenses (e.g., waiver, laches and estoppel) against a party seeking enforcement; a. requiring good faith and fair dealing in the performance and enforcement of a contract by the party seeking its enforcement; a. requiring reasonableness in the performance and enforcement of an agreement by the party seeking enforcement of the contract; b. requiring consideration of the materiality of (i) a breach and (ii) the consequences of the breach to the party seeking enforcement; a. requiring consideration of the impracticability or impossibility of performance at the time of attempted enforcement; and a. affording defenses based upon the unconscionability of the enforcing party's conduct after the parties have entered into the contract. 3. Other Common Qualifications. Each of our opinions is subject to the effect of rules of law that: a. limit or affect the enforcement of provisions of a contract that purport to waive, or to require waiver of, the obligations of good faith, fair dealing, diligence and reasonableness; a. provide that forum selection clauses in contracts are not necessarily binding on the court(s) in the forum selected; a. limit the availability of a remedy under certain circumstances where another remedy has been elected; a. provide a time limitation after which a remedy may not be enforced; a. limit the right of a creditor to use force or cause a breach of the peace in enforcing rights; a. relate to the sale or disposition of collateral or the requirements of a commercially reasonable sale; a. limit the enforceability of provisions releasing, exculpating or exempting a party from, or requiring indemnification of a party for, liability for its own action or inaction, to the extent the action or inaction involves negligence, recklessness, willful misconduct, unlawful conduct, violation of public policy or litigation against another party determined adversely to such party; a. may, where less than all of a contract may be unenforceable, limit the enforceability of the balance of the contract to circumstances in which the unenforceable portion is not an essential part of the agreed exchange; a. govern and afford judicial discretion regarding the determination of damages and entitlement to attorneys' fees and other costs; a. may permit a party that has materially failed to render or offer performance required by the contract to cure that failure unless (i) permitting a cure would unreasonably hinder the aggrieved party from making substitute arrangements for performance, or (ii) it was important in the circumstances to the aggrieved party that performance occur by the date stated in the contract. 4. Referenced Provision Qualification. In addition, our opinions, insofar as they relate to the validity, binding effect or enforceability of a provision in any of the Transaction Agreements requiring the Company to perform its obligations under, or to cause any other Person to perform its obligations under, any provision (a "Referenced Provision") of such Transaction Agreement or of any of the other Transaction Agreements or stating that any action will be taken as provided in or in accordance with any provision (also a "Referenced Provision") of any other Transaction Agreement, are subject to the same qualifications as the corresponding opinion in this letter relating to the validity, binding effect and enforceability of such Referenced Provision. Requirements in the Transaction Agreements that provisions therein may only be waived or amended in writing may not be enforceable to the extent that an oral agreement or an implied agreement by trade practice or course of conduct has been created modifying any such provision. Schedule B Assumptions For purposes of our letter, we have relied, without investigation, upon each of the following assumptions: 1. The Company has the requisite title and rights to any property involved in the transactions effected under the Transaction Agreements (herein called the "Transactions"). 1. Each of you is existing and in good standing in your jurisdiction of organization. 1. The Credit Agreement constitutes valid and binding obligations of yours and is enforceable against you in accordance with its terms (subject to qualifications, exclusions and other limitations similar to those applicable to our letter). 1. You have satisfied those legal requirements that are applicable to you to the extent necessary to entitle you to enforce the Transaction Agreements against the Company. 1. Each document submitted to us for review is accurate and complete, each such document that is an original is authentic, each such document that is a copy conforms to an authentic original, and all signatures (other than those of or on behalf of the Company) on each such document are genuine. 1. There has not been any mutual mistake of fact or misunderstanding, fraud, duress or undue influence. 1. The conduct of the parties to the Transaction Agreements has complied with any requirement of good faith, fair dealing and conscionability. 1. You have acted in good faith and without notice of any defense against the enforcement of any rights created by, or adverse claim to any property or security interest transferred or created as part of, the Transactions. 1. There are no agreements or understandings among the parties, written or oral, and there is no usage of trade or course of prior dealing among the parties that would, in either case, define, supplement or qualify the terms of the Credit Agreement or any of the other Transaction Agreements. 1. The constitutionality or validity of a relevant statute, rule, regulation or agency action is not in issue. 1. All parties to the Transactions will act in accordance with, and will refrain from taking any action that is forbidden by, the terms and conditions of the Transaction Agreements. 2. All agreements other than the Transaction Agreements (if any) with respect to which we have provided advice in our letter or reviewed in connection with our letter would be enforced as written. 1. The Company will not in the future take any discretionary action (including a decision not to act) permitted under the Transaction Agreements that would result in a violation of law or constitute a breach or default under any other agreements or court orders to which the Company may be subject. 1. The Company will in the future obtain all permits and governmental approvals required, and will in the future obtain all actions required, relevant to the consummation of the Transactions or performance of the Transaction Agreements. 15. All information required to be disclosed in connection with any consent or approval by the Company's Board of Directors or stockholders (or equivalent governing group) and all other information required to be disclosed in connection with any issue relevant to our opinions has in fact been fully and fairly disclosed to all persons to whom it is required to be disclosed. 16. The Company's certificate of incorporation (or equivalent governing instrument), all amendments to that certificate, all resolutions adopted establishing classes or series of stock under that certificate, the Company's bylaws and all amendments to its bylaws have been adopted in accordance with all applicable legal requirements. 17. Each person who has taken any action relevant to any of our opinions in the capacity of director or officer was duly elected to that director or officer position and held that position when such action was taken. Schedule C Excluded Law and Legal Issues None of the opinions or advice contained in our letter covers or otherwise addresses any of the following laws, regulations or other governmental requirements or legal issues: 1. federal securities laws and regulations (excluding the Investment Company Act of 1940 to the extent of our opinion contained in paragraph 7) and all other laws and regulations administered by the United States Securities and Exchange Commission), state "Blue Sky" laws and regulations, and laws and regulations relating to commodity (and other) futures and indices and other similar instruments; 1. pension and employee benefit laws and regulations (e.g., ERISA); 1. federal and state antitrust and unfair competition laws and regulations; 1. compliance with fiduciary duty requirements; 1. the statues and ordinances, the administrative decisions and the rules and regulations of counties, towns, municipalities and special political subdivisions (whether created or enabled through legislative action at the federal, state or regional level -- e.g., water agencies, joint power districts, turnpike and tollroad authorities, rapid transit districts or authorities, and port authorities) and judicial decisions to the extent that they deal with any of the foregoing; 1. fraudulent transfer and fraudulent conveyance laws; 1. federal and state environmental laws and regulations; 1. federal and state land use and subdivision laws and regulations; 1. federal and state tax laws and regulations; 1. federal patent, trademark and copyright, state trademark, and other federal and state intellectual property laws and regulations; 1. federal and state racketeering laws and regulations (e.g., RICO); 1. federal and state health and safety laws and regulations (e.g., OSHA); 1. federal and state labor laws and regulations; 1. federal and state laws, regulations and policies concerning (i) national and local emergency, (ii) possible judicial deference to acts of sovereign states, and (iii) criminal and civil forfeiture laws; 1. other federal and state statutes of general application to the extent they provide for criminal prosecution (e.g., mail fraud and wire fraud statutes); 1. any laws, regulations, directives and executive orders that prohibit or limit the enforceability of obligations based on attributes of the party seeking enforcement (e.g., the Trading with the Enemy Act and the International Emergency Economic Powers Act); and 1. the effect of any law, regulation or order which hereafter becomes effective. We have not undertaken any research for purposes of determining whether the Company or any of the Transactions which may occur in connection with the Credit Agreement or any of the other Transaction Agreements is subject to any law or other governmental requirement other than to those laws and requirements which in our experience would generally be recognized as applicable in the absence of research by lawyers in Illinois, and none of our opinions covers any such law or other requirement unless (i) one of our Designated Transaction Lawyers had actual knowledge of its applicability at the time our letter was delivered on the date it bears and (ii) it is not excluded from coverage by other provisions in our letter or in any Schedule to our letter. Schedule D Excluded Provisions None of the opinions in the letter to which this Schedule is attached covers or otherwise addresses any of the following types of provisions which may be contained in the Transaction Agreements: 1. Covenants not to compete, including without limitation covenants not to interfere with business or employee relations, covenants not to solicit customers, and covenants not to solicit or hire employees. 1. Indemnification for negligence, willful misconduct or other wrongdoing or strict product liability or any indemnification for liabilities arising under securities laws. 1. Provisions mandating contribution towards judgments or settlements among various parties. 1. Waivers of (i) legal or equitable defenses, (ii) rights to damages, (iii) rights to counter claim or set off, (iv) statutes of limitations, (v) rights to notice, (vi) the benefits of statutory, regulatory, or constitutional rights, unless and to the extent the statute, regulation, or constitution explicitly allows waiver, (vii) broadly or vaguely stated rights, and (viii) other benefits to the extent they cannot be waived under applicable law. 1. Provisions providing for forfeitures or the recovery of amounts deemed to constitute penalties, or for liquidated damages, acceleration of future amounts due (other than principal) without appropriate discount to present value, late charges, prepayment charges, and increased interest rates upon default. 1. Time-is-of-the-essence clauses. 1. Provisions which provide a time limitation after which a remedy may not be enforced. 1. Confession of judgment clauses. 1. Agreements to submit to the jurisdiction of any particular court or other governmental authority (either as to personal jurisdiction and subject matter jurisdiction); provisions restricting access to courts; waiver of service of process requirements which would otherwise be applicable; and provisions otherwise purporting to affect the jurisdiction and venue of courts. 1. Provisions that attempt to change or waive rules of evidence or fix the method or quantum of proof to be applied in litigation or similar proceedings. 1. Provisions appointing one party as an attorney-in-fact for an adverse party or providing that the decision of any particular person will be conclusive or binding on others. 1. Provisions purporting to limit rights of third parties who have not consented thereto or purporting to grant rights to third parties. 1. Provisions which purport to award attorneys' fees solely to one party. 1. Arbitration agreements. 1. Provisions purporting to create a trust or constructive trust without compliance with applicable trust law. 1. Provisions relating to (i) insurance coverage requirements and (ii) the application of insurance proceeds and condemnation awards. 1. Provisions that provide for the appointment of a receiver. 1. Provisions or agreements regarding proxies, shareholders agreements, shareholder voting rights, voting trusts, and the like. 1. Confidentiality agreements. 1. Provisions in any of the Transaction Agreements requiring the Company to perform its obligations under, or to cause any other Person to perform its obligations under, or stating that any action will be taken as provided in or in accordance with, any agreement or other document that is not a Transaction Agreement. Schedule E Agreements [TO COME] EXHIBIT E-2 OPINION OF GENERAL COUNSEL OF THE COMPANY December __, 1999 To each of the Banks parties to the "Credit Agreement" (as defined below) and to Bank of America, N.A., as Administrative Agent IMC Global Inc. Ladies and Gentlemen: This opinion is furnished to you pursuant to Section 3.01(b) of that certain Amended and Restated Five Year Credit Agreement, dated as of December 8, 1999 (the "Credit Agreement"), among the Company, as borrower, various financial institutions and Bank of America, N.A., as Administrative Agent, and the transactions contemplated thereby. Capitalized terms used herein and not otherwise defined are used as defined in the Credit Agreements. I am the General Counsel of the Company and have acted in such capacity in connection with the preparation, execution and delivery of the Credit Agreement and each of the Notes dated the date hereof. In that connection, I have examined: (a) counterparts of the Credit Agreement and each of the Notes dated the date hereof, in each case executed by each of the parties thereto; and (b) the certificate of incorporation and bylaws of the Company as amended through the date hereof. I have also examined the originals, or copies certified to my satisfaction, of all of the indentures, loan or credit agreements, guarantees, mortgages, security agreements, bonds, notes and other material agreements or instruments (the "Relevant Contracts"), and all of the orders, writs, judgments, injunctions, decrees, determinations and awards of which I am aware, after diligent inquiry, that affect or purport to affect the obligations of the Company under the Credit Agreement or any of the Notes dated the date hereof, or the right of the Company to borrow money, to guaranty the obligations of other Borrowers from time to time parties to the Credit Agreement or to consummate the transactions contemplated by the Credit Agreement. In addition, I have examined the originals, or copies certified to my satisfaction, of such other corporate records of the Company, certificates of public officials and of officers of the Company, and agreements, instruments and other documents, as I have deemed necessary as a basis for the opinions expressed below. In my examination of the documents referred to above, I have assumed (i) the due execution and delivery, pursuant to due authorization, of each of the documents referred to above by all parties thereto other than the Company, (ii) the authenticity of all such documents submitted to me as originals and (iii) the conformity to originals of all such documents submitted to me as copies. I am qualified to practice law in the State of Illinois. This opinion is limited to the laws of the State of Illinois, the General Corporation Law of the State of Delaware and the Federal laws of the United States. Based upon the foregoing and upon such investigation as I have deemed necessary, I am of the following opinion as of the date hereof: 1. The Company (a) is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware, (b) has all requisite corporate power and authority to own or lease and operate its properties and to carry on its business as now conducted, and (c) is duly qualified to do business and is in good standing in every state where it owns or leases real property, or in which the conduct of its business requires it to so qualify or be licensed, except where the failure to so qualify or be licensed could not be reasonably expected to have a Material Adverse Effect. 2. The execution, delivery and performance by the Company of the Credit Agreement and each of the Notes dated the date hereof, and the consummation of the transactions contemplated by the Credit Agreement, are within the Company's corporate powers, have been duly authorized by all necessary corporate action, and do not (a) contravene the Company's charter or by-laws or (b) violate any law, rule, or regulation of the State of Illinois or Federal law of the United States, or any order, writ, judgment, injunction, decree, determination or award binding on or affecting or any of its properties or (c) conflict with or result in the breach of, or constitute a default under, any Relevant Contracts binding on or affecting the Company or any of its properties or (d) result in or require the creation or imposition of any Lien upon or with respect to any of the properties of the Company or any of its Subsidiaries. 3. No authorization, approval, or other action by, and no notice to or filing with, any governmental authority or regulatory body or any third party is required for the due execution, delivery and performance by the Company of the Credit Agreement and each of the Notes dated the date hereof, or for the consummation of the transactions contemplated thereby. 4. The Credit Agreement and each of the Notes dated the date hereof have been duly executed and delivered by the Company. 5. To the best of my knowledge, except as disclosed in the Company's annual report on for the year ended December 31, 1998, each registration statement (other than a registration statement on Form S-8 (or its equivalent)) and each report on Form 10-K, 10-Q and 8-K (or their equivalents) which the Company has filed with the Securities and Exchange Commission since such date, there is no action, suit or proceeding pending against or affecting, the Company or any of its Subsidiaries before any court, governmental agency or arbitrator that (a) purports to affect the legality, validity binding effect or enforceability of the Credit Agreement or the Notes dated the date hereof or the consummation of the transactions contemplated by the Credit Agreement or (b) could reasonably be expected to have a Material Adverse Effect any Note. 6. The provisions of the Credit Agreement (without regard for any provision thereof limiting the payment of interest or any other sums thereunder to the highest rate permitted by applicable law) and the Notes dated the date hereof do not violate any applicable law of the State of Illinois relating to usury. 7. Neither the Company nor any Subsidiary of the Company is an "investment company" as such term is defined in the Investment Company Act of 1940, as amended. The opinions expressed herein are being delivered to you as of the date hereof and are solely for your benefit in connection with the transactions contemplated in the Credit Agreement and may not be relied on in any manner or for any purpose by any other Person, nor any copies published, communicated or otherwise made available in whole or in part to any other Person or entity without my express prior written consent, except that you may furnish copies thereof to any party that becomes a Bank after the date hereof pursuant to the Credit Agreement. I do not express any opinion, either implicitly or otherwise, on any issue not expressly addressed in this opinion. The opinions expressed above are based solely on facts, laws and regulations in effect on the date hereof, and I assume no obligation to revise or supplement this opinion should such facts change or should such laws or regulations be changed by legislative or regulatory action, judicial decision or otherwise, notwithstanding that such changes may affect the legal analysis or conclusions contained herein. Very truly yours, Mary Ann Hynes EXHIBIT F OPINION OF MAYER, BROWN & PLATT, SPECIAL COUNSEL FOR THE ADMINISTRATIVE AGENT December __, 1999 To the Banks and the Administrative Agent Referred to Below c/o Bank of America, N.A., as Administrative Agent 231 South LaSalle Street Chicago, Illinois 60697 Dear Sirs: We have participated in the preparation of the Amended and Restated Five Year Credit Agreement (the "Credit Agreement") dated as of December 8, 1999 among IMC Global Inc., a Delaware corporation (the "Company"), various financial institutions and Bank of America, N.A., as Administrative Agent (the "Administrative Agent"), and have acted as special counsel for the Administrative Agent for the purpose of rendering this opinion pursuant to Section 3.01(c) of the Credit Agreement. Terms defined in the Credit Agreement are used herein as therein defined. In connection herewith, we have examined (i) the Credit Agreement, including original or facsimile copies of signature pages thereto executed by the Company, each of the Banks and the Administrative Agent; and (ii) the Notes issued by the Company on the date hereof pursuant to the Credit Agreement (the "Notes" and, together with the Credit Agreement, the "Documents"). In connection with such examination, we have assumed, without any independent investigation, that: (a) all signatures of the parties on all items submitted to us are genuine; (b) all natural persons, including persons acting on behalf of a business entity, are legally competent; (c) all items submitted to us as originals are authentic, and all documents submitted to us as copies conform to authentic original documents; (d) each of the parties has full power and authority to execute, deliver and perform its obligations under the Documents to which it is a party, and all such Documents have been duly authorized by all necessary corporate or other action on the part of such parties and others and have been duly executed and delivered by such parties; (e) as to all parties (other than the Company), the Credit Agreement constitutes the legal, valid and binding obligation of such parties, enforceable against each such party in accordance with its terms; (f) the Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware; (g) the execution, delivery and performance of each of the Documents (i) are within the Company's corporate powers, (ii) have been duly authorized by all necessary corporate action on the party of the Company (including all necessary stockholder approval), (iii) do not contravene or conflict with (A) the charter or by-laws or any other organizational document of the Company, (B) any law, rule or regulation of the State of Illinois or of the Federal law of the United States, or (C) any writ, order, judgment, award, determination or decree to which the Company is subject or to which any of its property is bound and (iv) do not require any action, consent, approval, authorization, declaration or filing by or with any governmental or regulatory authority or any other third party; and (h) there are no agreements between any of the parties that would alter the agreements set forth in the Documents. Based upon the foregoing, and subject to the qualifications and exceptions set forth below, we are of the opinion that, under the laws of the State of Illinois: 1. The Credit Agreement is the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms. 2. Each Note is the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms. Our opinions are subject to the following qualifications: (a) Our opinions are subject to the effect of any applicable bankruptcy, insolvency, reorganization, receivership, fraudulent conveyance, equitable subordination, moratorium or similar law affecting creditors' rights generally and to the effect of general principles of equity (regardless of whether considered in a proceeding in equity or at law), including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing and limitations on the availability of specific performance, injunctive relief or other equitable remedies. (b) We express no opinion as to obligations relating to indemnification, contribution or exculpation of costs, expenses or liabilities which contravene public policy. (c) We express no opinion as to the enforceability, under certain circumstances, of provisions imposing penalties or forfeitures, late payment charges or an increase in interest rate upon delinquency in payment or the occurrence of a default. (d) We express no opinion as to any provision of any Document that purports to establish an evidentiary standard for determinations by the Banks or the Administrative Agent. (e) We express no opinion as to Section 11.04 of the Credit Agreement insofar as it authorizes any Person to exercise any right of offset. (f) We express no opinion as to any provision of the Credit Agreement purporting to convey rights to Persons other than parties to the Credit Agreement. (g) We express no opinion as to any waiver of (i) the right to a jury trial or (ii) any objection to venue. (h) We express no opinion as to the effect of the law of any jurisdiction other than the State of Illinois wherein enforcement of any Document may be sought (including, without limitation, whether any court outside the State of Illinois would honor the choice of Illinois law as the governing law of the Credit Agreement and the Notes). The opinions expressed herein shall be effective only as of the date of this opinion letter. We do not assume responsibility for updating this opinion letter as of any date subsequent to the date of this opinion letter, and we assume no responsibility for advising you of any changes with respect to any matters described in this opinion letter that may occur subsequent to the date of this opinion letter or from the discovery subsequent to the date of this opinion letter of information not previously known to us pertaining to events occurring prior to the date of this opinion letter. This opinion letter is solely for the benefit of the addressees hereof (and their respective successors and assigns) in connection with the transactions contemplated by the Credit Agreement, and this opinion letter may not be relied upon by any other Person or for any other purpose. Very truly yours, MAYER, BROWN & PLATT RCB:AGS EXHIBIT G ASSIGNMENT AND ASSUMPTION AGREEMENT AGREEMENT dated as of _________, ____ among [ASSIGNOR] (the "Assignor"), [ASSIGNEE] (the "Assignee"), IMC GLOBAL INC. (the "Company"), various financial institutions and BANK OF AMERICA, N.A., as Administrative Agent (the "Administrative Agent"). W I T N E S S E T H WHEREAS, this Assignment and Assumption Agreement (the "Agreement") relates to the Amended and Restated Five-Year Credit Agreement dated as of December 8, 1999, among the Company, various financial institutions and Bank of America, N.A., as Administrative Agent (as amended from time to time, the "Credit Agreement"); WHEREAS, as provided under the Credit Agreement, the Assignor has a Commitment to make Loans to the Borrowers and participate in Swingline Loans and Letters of Credit in an aggregate principal amount at any time outstanding not to exceed $__________; WHEREAS, Syndicated Loans made to the Borrowers by the Assignor under the Credit Agreement in the aggregate principal amount of $__________ are outstanding at the date hereof; WHEREAS, Swingline Loans in the aggregate principal amount of $__________ are outstanding at the date hereof; WHEREAS, Letters of Credit with a total amount available for drawing thereunder of $___________ are outstanding at the date hereof; and WHEREAS, the Assignor proposes to assign to the Assignee all of the rights of the Assignor under the Credit Agreement in respect of a portion of its Commitment thereunder in an amount equal to $__________ (the "Assigned Amount"), together with a corresponding portion of its outstanding Syndicated Loans and Letter of Credit Liabilities, and the Assignee proposes to accept assignment of such rights and assume the corresponding obligations from the Assignor on such terms; NOW, THEREFORE, in consideration of the foregoing and the mutual 1agreements contained herein, the parties hereto agree as follows: Section 1. Definitions. All capitalized terms not otherwise defined herein shall have the respective meanings set forth in the Credit Agreement. Section 2. Assignment. The Assignor hereby assigns and sells to the Assignee all of the rights of the Assignor under the Credit Agreement to the extent of the Assigned Amount, and the Assignee hereby accepts such assignment from the Assignor and assumes all of the obligations of the Assignor under the Credit Agreement to the extent of the Assigned Amount, including the purchase from the Assignor of the corresponding portion of the principal amount of the Syndicated Loans made by, and participations in Swingline Loans and Letter of Credit Liabilities of, the Assignor outstanding at the date hereof. Upon the execution and delivery hereof by the Assignor, the Assignee, the Company, the Issuing Bank(s), the Swingline Bank(s) and the Administrative Agent, and the payment of the amounts specified in Section 3 required to be paid on the date hereof (i) the Assignee shall, as of the date hereof, succeed to the rights and be obligated to perform the obligations of a Bank under the Credit Agreement with a Commitment in an amount equal to the Assigned Amount (in addition to any Commitment theretofore held by the Assignee), and (ii) the Commitment of the Assignor shall, as of the date hereof, be reduced by a like amount and the Assignor released from its obligations under the Credit Agreement to the extent such obligations have been assumed by the Assignee. The assignment provided for herein shall be without recourse to the Assignor. Section 3. Payments. As consideration for the assignment and sale contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on the date hereof in Federal funds the amount heretofore agreed between them.9 It is understood that facility, utilization and Letter of Credit fees accrued to the date hereof in respect of the Assigned Amount are for the account of the Assignor and such fees accruing from and including the date hereof are for the account of the Assignee. Each of the Assignor and the Assignee hereby agrees that if it receives any amount under the Credit Agreement which is for the account of the other party hereto, it shall receive the same for the account of such other party to the extent of such other party's interest therein and shall promptly pay the same to such other party. Section 4. Consent to Assignment. This Agreement is conditioned upon the consent of the Company, the Issuing Bank(s), the Swingline Bank(s) and the Administrative Agent pursuant to Section 11.06(c) of the Credit Agreement. The execution of this Agreement by the Company, the Issuing Bank(s), Swingline Bank(s) and the Administrative Agent is evidence of this consent. Pursuant to Section 11.06(c), each Borrower shall execute and deliver a Note, if required by the Assignee, payable to the order of the Assignee to evidence the assignment and assumption provided for herein. Section 5. Non-reliance on Assignor. The Assignor makes no representation or warranty in connection with, and shall have no responsibility with respect to, the solvency, financial condition, or statements of any Borrower, or the validity and enforceability of the obligations of any Borrower in respect of the Credit Agreement or any Note. The Assignee acknowledges that it has, independently and without reliance on the Assignor, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and will continue to be responsible for making its own independent appraisal of the business, affairs and financial condition of the Borrowers. Section 6. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois. Section 7. Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. Section 8. Administrative Questionnaire. Attached is an Administrative Questionnaire duly completed by the Assignee. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered by their duly authorized officers as of the date first above written. [ASSIGNOR] By Title: [ASSIGNEE] By Title: IMC GLOBAL INC. By Title: BANK OF AMERICA, N.A., as Issuing Bank, Swingline Bank and Administrative Agent By Title: [ISSUING BANK] By Title: EXHIBIT H FORM OF ELECTION TO PARTICIPATE [Date] Bank of America, N.A., as Administrative Agent for the Banks which are parties to the Amended and Restated Five-Year Credit Agreement dated as of December 8, 1999 among IMC Global Inc., various financial institutions and Bank of America, N.A., as Administrative Agent (the "Credit Agreement"). Dear Sirs: Reference is made to the Credit Agreement described above. Terms not defined herein which are defined in the Credit Agreement shall have for the purposes hereof the meaning provided therein. The undersigned, [name of Eligible Subsidiary], a [jurisdiction of incorporation] corporation, hereby elects to be an Eligible Subsidiary for purposes of the Credit Agreement, effective from the date hereof until an Election to Terminate shall have been delivered on behalf of the undersigned in accordance with the Credit Agreement. The undersigned confirms that the representations and warranties set forth in Article 9 of the Credit Agreement are true and correct as to the undersigned as of the date hereof, and the undersigned hereby agrees to perform all the obligations of a Borrower under, and to be bound in all respects by the terms of, the Credit Agreement, including without limitation Sections 8.03 and 11.03 thereof, as if the undersigned were a signatory party thereto. [Tax disclosure pursuant to Section 9.04] This instrument shall be construed in accordance with and governed by the laws of the State of Illinois. Very truly yours, [NAME OF ELIGIBLE SUBSIDIARY] By Title: The undersigned hereby confirms that [name of Eligible Subsidiary] is an Eligible Subsidiary for purposes of the Credit Agreement described above. IMC GLOBAL INC. By Title: Receipt of the above Election to Participate is hereby acknowledged on and as of the date set forth above. BANK OF AMERICA, N.A., as Administrative Agent By Title: EXHIBIT I FORM OF ELECTION TO TERMINATE [Date] Bank of America, N.A., as Administrative Agent for the Banks which are parties to the Amended and Restated Five-Year Credit Agreement dated as of December 8, 1999 among IMC Global Inc., various financial institutions, and Bank of America, N.A., as Administrative Agent (the "Credit Agreement"). Dear Sirs: Reference is made to the Credit Agreement described above. Terms not defined herein which are defined in the Credit Agreement shall have for the purposes hereof the meaning provided therein. The undersigned, [name of Eligible Subsidiary], a [jurisdiction of incorporation] corporation, hereby elects to terminate its status as an Eligible Subsidiary for purposes of the Credit Agreement, effective as of the date hereof. The undersigned hereby represents and warrants that all principal and interest on all Loans to the undersigned and all other amounts payable by the undersigned pursuant to the Credit Agreement have been paid in full on or prior to the date hereof. Notwithstanding the foregoing, this Election to Terminate shall not affect any obligation of the undersigned under the Credit Agreement or under any Note heretofore incurred. This instrument shall be construed in accordance with and governed by the laws of the State of Illinois. Very truly yours, [NAME OF ELIGIBLE SUBSIDIARY] By Title: The undersigned hereby confirms that the status of [name of Eligible Subsidiary] as an Eligible Subsidiary for purposes of the Credit Agreement described above is terminated as of the date hereof. IMC GLOBAL INC. By Title: Receipt of the above Election to Terminate is hereby acknowledged on and as of the date set forth above. BANK OF AMERICA, N.A., as Administrative Agent By Title: EXHIBIT J Matters to be covered in the Opinions of Counsel for the Eligible Subsidiaries 1. The Borrower is a [legal entity] duly organized, validly existing and in good standing under the laws of [jurisdiction of organization]. 2. The execution and delivery by the Borrower of its Election to Participate and its Notes and the performance by the Borrower of the Credit Agreement and its Notes are within the Borrower's legal powers, have been duly authorized by all necessary legal action, require no action by or in respect of, or filing with, any governmental body, agency or official and do not contravene, or constitute a default under, any provision of applicable law or regulation or of the [organizational documents] of the Borrower or of any agreement, judgment, injunction, order, decree or other instrument known to such counsel to be binding upon the Borrower or the Company or any of its Subsidiaries or result in the creation or imposition of any Lien on any asset of the Company or any of its Subsidiaries pursuant to any of the foregoing. 3. The Borrower's Election to Participate has been duly executed and delivered and the Credit Agreement constitutes a valid and binding agreement of the Borrower and each of its Notes has been duly executed and delivered and constitutes a valid and binding obligation of the Borrower, in each case enforceable in accordance with its terms except as the same may be limited by bankruptcy, insolvency and other similar laws affecting creditors' rights generally and by general principles of equity. [4. Except as disclosed in the Borrower's Election to Participate, there are no Taxes or Other Taxes of [jurisdiction of organization and, if different, principal place of business], or any taxing authority thereof or therein, which is imposed on any payment to be made by the Borrower pursuant to the Credit Agreement or its Notes, or imposed on or by virtue of the execution, delivery or enforcement of its Election to Participate, the Credit Agreement or its Notes.] EXHIBIT K FORM OF NOTICE OF BORROWING Date ___________ Bank of America, N.A., as Administrative Agent under the Credit Agreement referred to below Ladies and Gentlemen: The undersigned (the "Borrower") refers to the Amended and Restated Five-Year Credit Agreement dated as of December 8, 1999 (as the same may be amended from time to time, the "Credit Agreement"), among IMC Global Inc., various financial institutions and Bank of America, N.A., as Administrative Agent. Capitalized terms used but not defined herein have the meaning assigned to such terms in the Credit Agreement. The Borrower hereby notifies you, pursuant to Section [2.02] [2.03(f)] of the Credit Agreement, of its election to make the following Borrowing: 1. Amount: _________________________________ 2. Type of Borrowing: _________________________________ 3. Date of Borrowing: _________________________________ 4. Interest Period for Fixed Rate Borrowing: _________________________________ 5. Lender [for Swingline Borrowing only]: _________________________________ The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Borrowing, before and immediately after giving effect thereto and to the application of the proceeds therefrom: (a) immediately after such Borrowing, (i) the sum of the aggregate outstanding principal amount of the Loans and the aggregate amount of Letters of Credit Liabilities will not exceed the aggregate amount of the Commitments, (ii) the aggregate outstanding principal amount of Swingline Loans will not exceed $25,000,000 and (iii) the aggregate amount of Letter of Credit Liabilities will not exceed $100,000,000; (b) no Default shall have occurred and be continuing; and (c) the representations and warranties (other than the representation and warranty set forth in Section 4.04(b) in the case of a Borrowing which does not result in an increase in the sum of the aggregate outstanding principal amount of the Loans and the aggregate Letter of Credit Liabilities) of the Borrower contained in the Credit Agreement shall be true on and as of the date of such Borrowing. [NAME OF BORROWER] By Name: Title: EXHIBIT L FORM OF NOTICE OF INTEREST RATE ELECTION Date Bank of America, N.A., as Administrative Agent under the Credit Agreement referred to below Ladies and Gentlemen: The undersigned (the "Borrower") refers to the Amended and Restated Five-Year Credit Agreement dated as of December 8, 1999 (as the same may be amended from time to time, the "Credit Agreement"), among IMC Global Inc., various financial institutions and Bank of America, N.A., as Administrative Agent. Capitalized terms used but not defined herein have the meaning assigned to such terms in the Credit Agreement. The Borrower hereby notifies you, pursuant to Section 2.10(a) of the Credit Agreement, of the following interest rate election: 1. Group of Loans (or portion thereof) to which election applies 2. Effective date of election 3. New type of Loans [if Loans are to be converted] 4. Duration of next succeeding Interest Period [if Loans are converted to Euro-Dollar Loans] 5. Additional Interest Period [if Loans are continued as Euro-Dollar Loans] [NAME OF BORROWER] By___________________________ Name: Title: EX-10.III.(M) 4 FORM OF SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN Exhibit 10.iii.(m) IMC GLOBAL INC. 1998 SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN (Effective as of January 1, 1998) Contents Page Article 1. Introduction 1 Article 2. Definitions 1 Article 3. Eligibility 2 Article 4. Participant Accounts 2 Article 5. Additions to Participant Accounts 3 Article 6. Vesting in Participant Accounts 4 Article 7. Establishment of Trust 4 Article 8. Distributions 4 Article 9. Administration of the Plan 6 Article 10. Amendment and Termination 6 Article 11. General Provisions 7 IMC GLOBAL INC. 1998 SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN Article 1. Introduction 1.1. Title. The title of this Plan shall be the "IMC Global Inc. 1998 Supplemental Executive Retirement Plan." 1.2. Purpose. This Plan shall constitute an unfunded nonqualified deferred compensation arrangement established for the purpose of providing deferred compensation to a select group of management or highly compensated employees (as defined for purposes of Title I of ERISA) of the Company and adopting Affiliates. The Plan is intended to be maintained and administered in connection with the "IMC Global Inc. Profit Sharing and Savings Plan" and the "IMC Global Inc. 1998 Restoration Plan" for the benefit of employees of the Company and adopting Affiliates who are in salary grade 27 or above or who are designated as participants in the Plan by the Chief Executive Officer of the Company. Article 2. Definitions "Account" means the account maintained on behalf of each Participant which will represent the amount of the Retirement Contributions made on behalf of such Participant pursuant to Section 5.1 of the Plan, as adjusted by Section 5.2 of the Plan. "Affiliate" means an entity that, together with the Company, is considered as a single employer under Section 414(b) or (c) of the Code. "Code" means the Internal Revenue Code of 1986, as amended. "Committee" means the committee described in Section 10.1 of the Qualified Plan which is a named fiduciary of and responsible for the administration of the Qualified Plan. "Company" means IMC Global Inc., a Delaware corporation. "Effective Date" means January 1, 1998. "Employer" means, both collectively and individually as determined by the context of the applicable provision, the Company and any Affiliate which adopts this Plan with the approval of the Company. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. "Participant" means any eligible employee of an Employer who is participating under the Plan pursuant to Article 3. "Plan" means this "IMC Global Inc. 1998 Supplemental Executive Retirement Plan". "Plan Year" means the calendar year. "Retirement Contributions" means the contributions made on behalf of a Participant pursuant to Section 5.1 of this Plan. "Qualified Plan" means the "IMC Global Inc. Profit Sharing and Savings Plan," as amended from time to time. "Restoration Plan" means the "IMC Global Inc. 1998 Restoration Plan," as amended from time to time. Article 3. Eligibility Each employee of an Employer (other than the Chief Executive Officer and the Chairman of the Company) who as of the beginning of a Plan Year is in salary grade 27 or above or who is designated as a Participant for the Plan Year by the Chief Executive Officer of the Company shall be a Participant in the Plan for the Plan Year; provided, that only those employees of an Employer who are in a select group of management or are highly compensated (within the meaning of Title I of ERISA) may be designated as participants in this Plan. Article 4. Participant Accounts 4.1. Account. The Committee shall establish and maintain an Account for each Participant. The Participant's Account shall be a bookkeeping account maintained by the Company and shall reflect the amount of the Retirement Contributions and other amounts credited hereunder on behalf of the Participant. Interest on the amounts reflected in a Participant's Account shall be credited to his Account in accordance with Article 5. 4.2. Opening Account Balances. Each Participant as of the Effective Date shall have an opening balance credited to such Participant's Account as of the Effective Date equal to (i) the applicable percentage (as determined from the table in Section 5.1 below based on the Participant's age on December 31, 1997) of the Participant's 1997 base salary plus 1997 bonus (the annual bonus payable to the Participant in 1997 under the Company's Management Incentive Compensation Plan) multiplied by (ii) the Participant's years (including fractional years) of service with the Company or an Affiliate as of December 31, 1997 that were completed after the Participant's 40th birthday, reduced by (iii) the lump sum actuarial equivalent value of the Participant's accrued benefit as of December 31, 1997 (assuming payments begin at age 65 and calculated using a 5.25% immediate annuity interest rate assumption and the deferred annuity interest rate assumptions which would be used by the Pension Benefit Guaranty Corporation to calculate benefits upon plan termination and the other actuarial assumptions that were in effect under such plans on December 31, 1997) earned for the period of service used in (ii) above under all qualified and nonqualified (excluding the Company's Supplemental Executive Retirement Plan) defined benefit plans and the profit sharing component of defined contribution plans maintained by the Company and all Affiliates and further reduced by (iv) FICA withholding on the vested portion of the amount so determined after application of (iii) above. Article 5. Additions to Participant Accounts 5.1. Retirement Contributions. As of the end of each Plan Year, a Retirement Contribution shall be credited to the Account of each Participant in an amount equal to (i) the applicable percentage (as determined from the table set forth below) multiplied by (ii) the Participant's base salary for the Plan Year plus bonus (the annual bonus payable to the Participant in the Plan Year under the Company's Management Incentive Compensation Plan), reduced by (iii) the profit sharing contributions made for the Participant for the Plan Year (or that would have been so made if the Participant had not elected to continuing accruing benefits after the Effective Date under a qualified defined benefit plan maintained by the Company or an Affiliate) to the Qualified Plan and the Restoration Plan and further reduced by (iv) FICA withholding on the vested portion of the amount so determined after application of (iii) above and on any previously made Retirement Contribution amounts (and deemed investment earnings thereon) that have become vested during the Plan Year. The applicable percentage for a Participant for a Plan Year is based upon the Participant's age as of the end of the Plan Year as follows: Age Applicable Percentage <40 0% 40-49 13% 50-59 15% 60+ 17% 5.2. Interest Additions. As of the end of each calendar quarter there shall be added to each Participant's Account interest on the Account balance as of the beginning of the calendar quarter at a rate equal to the prime rate published in The Wall Street Journal on the first business day of the calendar quarter plus 2 percent. Article 6. Vesting in Participant Accounts The balance in a Participant's Account shall be 100% vested at any time after the Participant has both attained age 55 and completed at least five years of Service (as defined in the Qualified Plan). Prior to a Participant's attaining age 55 the vested percentage of the Participant's Account shall be determined based on the Participant's years of Service (as defined in the Qualified Plan) as follows: Years of Service Vested Percentage <5 0% 5 50% 6 60% 7 70% 8 80% 9 90% 10 or more 100% Article 7. Establishment of Trust 7.1. Establishment of Trust. The Company may, in its sole discretion, establish a grantor trust (as described in Section 671 of the Code) for the purpose of accumulating assets to provide for the obligations hereunder. The assets and income of such trust shall be subject to the claims of the general creditors of an Employer hereunder, but only to the extent that such assets and income are attributable to the contributions of that individual Employer. The establishment of such a trust shall not affect the Employers' liability to pay benefits hereunder except that any such liability shall be offset by any payments actually made to a Participant under such a trust. In the event such a trust is established, the amount to be contributed thereto shall be determined by the Company and the investment of such assets shall be made in accordance with the trust document. 7.2. Status of Trust. Participants shall have no direct or secured claim in any asset of the trust or in specific assets of their Employer and will have the status of general unsecured creditors of their Employer for any amounts due under this Plan. The assets and income of the trust will be subject to the claims of any Employer's creditors, but only to the extent that such assets and income are attributable to the contributions of that individual Employer. Article 8. Distributions 8.1. Distribution of Accounts. If a Participant's employment with his Employer and all Affiliates is terminated by reason of his death, the balance in the Participant's Account (determined as of the date on which the distribution is processed) shall be distributed to Participant's beneficiary as soon as administratively practicable after the end of the calendar quarter in which the Participant's death occurs. Such payment shall be made in the form of a lump sum payment. If such Participant is entitled to a Retirement Contribution for the Plan Year in which his death occurs that is not reflected in the Account balance so distributed to the Participant's beneficiary, the amount of such Retirement Contribution shall be distributed to the Participant's beneficiary as soon as administratively practicable after the end of the Plan Year in which the Participant's death occurs. If a Participant's employment with his Employer and all Affiliates is terminated for a reason other than his death, after he has completed five years of Service (as defined in the Qualified Plan), the vested portion of the balance in the Participant's Account (determined as of the date on which the distribution is processed) shall be distributed to the Participant (or, in the event of the Participant's death, to his beneficiary) as soon as administratively practicable after the end of the calendar quarter in which the Participant's termination of employment occurs and the unvested portion shall be forfeited. Such payment shall be made in the form of a lump sum payment. If such Participant is entitled to a Retirement Contribution for the Plan Year in which his employment terminates that is not reflected in the Account balance so distributed to the Participant, the amount of the vested portion of such Retirement Contribution shall be distributed to the Participant as soon as administratively practicable after the end of the Plan Year in which the Participant's termination of employment occurs. If a Participant's employment with his Employer and all Affiliates is terminated before the Participant has completed five years of Service (as defined in the Qualified Plan) for a reason other than his death, the balance in the Participant's Account shall be forfeited. 8.2. Involuntary Distributions. Notwithstanding the foregoing provisions of this Article 8, the Committee may on its own initiative authorize the Company to distribute to any Participant (or to a designated beneficiary in the event of the Participant's death) all or any portion of the Participant's Account. Such payment would be specifically authorized in the event that there is a change in tax law, a published ruling or similar announcement issued by the Internal Revenue Service, a regulation issued by the Secretary of the Treasury, a decision by a court of competent jurisdiction involving a Participant or a beneficiary, or a closing agreement made under Section 7121 of the Code that is approved by the Internal Revenue Service and involves a Participant, and the Committee determines that a Participant has or will recognize income for federal income tax purposes with respect to amounts deferred under this Plan prior to the time such amounts are paid to the Participant. 8.3. Designation of Beneficiaries. Each Participant may name any person (who may be named concurrently, contingently or successively) to whom the Participant's Account under the Plan is to be paid if the Participant dies before such Account is fully distributed. Each such beneficiary designation will revoke all prior designations by the Participant, shall not require the consent of any previously named beneficiary, shall be in a form prescribed by the Committee and will be effective only when filed with the Committee during the Participant's lifetime. If a Participant fails to designate a beneficiary before his death, as provided above, or if the beneficiary designated by a Participant dies before the date of the Participant's death or before payment of the Participant's Account, the Committee, in its discretion, may pay the Participant's Account (a) to the surviving spouse of such deceased Participant, if any, or (b) if there shall be no surviving spouse, the surviving children of such deceased Participant, if any, in equal shares, or (c) if there shall be no surviving spouse or children, to the executors or administrators of the estate of such deceased Participant, or (d) if no executor or administrator shall have been appointed for the estate of such deceased Participant within six months from the date of the Participant's death, to the person or persons who would be entitled under the intestate succession laws of the state of the Participant's domicile to receive the Participant's personal estate. Article 9. Administration of the Plan The Plan shall be administered by the Committee. The duties and authority of the Committee under the Plan shall include (a) the interpretation of the provisions of the Plan, (b) the adoption of any rules and regulations which may become necessary or advisable in the operation of the Plan, (c) the making of such determinations as may be permitted or required pursuant to the Plan, and (d) the taking of such other actions as may be required for the proper administration of the Plan in accordance with its terms. Any decision of the Committee with respect to any matter within the authority of the Committee shall be final, binding and conclusive upon the Company and each Participant, former Participant, designated beneficiary, and each person claiming under or through any Participant or designated beneficiary; and no additional authorization or ratification by the board of directors of the Company shall be required. Any action taken by the Committee with respect to any one or more Participants shall not be binding on the Committee as to any action to be taken with respect to any other Participant. A member of the Committee may be a Participant, but no member of the Committee may participate in any decision directly affecting his rights or the computation of his benefits under the Plan. Each determination required or permitted under the Plan shall be made by the Committee in the sole and absolute discretion of the Committee. Article 10. Amendment and Termination 10.1. Amendment. The Company shall have the right to amend the Plan by action of the board of directors of the Company (or a duly appointed delegate thereof) from time to time, except that no such amendment shall, without the consent of the Participant to whom deferred compensation has been credited to his Account under this Plan, adversely affect the right of the Participant (or his beneficiary) to receive payments of such deferred compensation under the terms of this Plan. 10.2. Plan Termination. The Plan may be terminated with respect to the Company or any Employer at any time by action of the board of directors of the Company (or a duly appointed delegate thereof) in its sole discretion. The Plan shall be automatically terminated with respect to any Employer upon the termination of the Qualified Plan with respect to such Employer pursuant to Section 15.3 of the Qualified Plan. Notwithstanding the foregoing, no termination of this Plan shall alter the right of a Participant (or his beneficiary) to payments of amounts previously credited to such Participant's Account under the Plan. Article 11. General Provisions 11.1. Non-Alienation of Benefits. A Participant's rights to the amounts credited to his Accounts under the Plan shall not be salable, transferable, pledgeable or otherwise assignable, in whole or in part, by the voluntary or involuntary acts of any person, or by operation of law, and shall not be liable or taken for any obligation of such person. Any such attempted grant, transfer, pledge or assignment shall be null and void and without any legal effect. 11.2. Withholding for Taxes. Notwithstanding anything contained in this Plan to the contrary, each Employer shall withhold from any distribution made under the Plan such amount or amounts as may be required for purposes of complying with the tax withholding provisions of the Code or any applicable State law for purposes of paying any tax attributable to any amounts distributable or creditable under the Plan. 11.3. Immunity of Committee Members. The members of the Committee may rely upon any information, report or opinion supplied to them by any officer of an Employer or any legal counsel, independent public accountant or actuary, and shall be fully protected in relying upon any such information, report or opinion. No member of the Committee shall have any liability to the Company or any Participant, former Participant, designated beneficiary, person claiming under or through any Participant or designated beneficiary or other person interested or concerned in connection with any decision made by such member of the Committee pursuant to the Plan which was based upon any such information, report or opinion if such member of the Committee relied thereon in good faith. 11.4. Plan Not to Affect Employment Relationship. Neither the adoption of the Plan nor its operation shall in any way affect the right and power of an Employer to dismiss or otherwise terminate the employment or change the terms of the employment or amount of compensation of any Participant at any time for any reason or without cause. By accepting any payment under this Plan, each Participant, former Participant, designated beneficiary and each person claiming under or through such person, shall be conclusively bound by any action or decision taken or made under the Plan by the Committee. 11.5. Notices. Any notice required to be given by the Company or the Committee hereunder shall be in writing and shall be delivered in person or by registered mail, return receipt requested. Any notice given by registered mail shall be deemed to have been given upon the date of delivery, correctly addressed to the last known address of the person to whom such notice is to be given. 11.6. Gender and Number; Headings. Wherever any words are used herein in the masculine gender they shall be construed as though they were also used in the feminine gender in all cases where they would so apply; and wherever any words are used herein in the singular form they shall be construed as though they were also used in the plural form in all cases where they would so apply. Headings of sections and subsections of the Plan are inserted for convenience of reference and are not part of the Plan and are not to be considered in the construction thereof. 11.7. Controlling Law. The Plan shall be construed in accordance with the internal laws of the State of Illinois, to the extent not preempted by any applicable federal law. 11.8. Successors. The Plan is binding on all persons entitled to benefits hereunder and their respective heirs and legal representatives, on the Committee and its successor and on any Employer and its successor, whether by way of merger, consolidation, purchase or otherwise. 11.9. Severability. If any provision of the Plan shall be held illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining provisions of the Plan, and the Plan shall be enforced as if the invalid provisions had never been set forth therein. IN WITNESS WHEREOF, IMC Global Inc. has caused its corporate seal to be hereunto affixed by its officers thereunto duly authorized this ______ day of ____________, 1999. IMC GLOBAL INC. By: (Corporate Seal) ATTEST: EX-10.III.(N) 5 FORM OF SUPPLEMENTAL RETIREMENT AND RESTORATION PLAN Exhibit 10.iii.(n) IMC GLOBAL INC. 1998 SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN, RESTORATION PLAN AND EXCESS BENEFIT PLAN TRUST Contents Page Article 2. Payments to Participants 5 Article 4. Payments to Company 7 Article 5. Management of the Trust Fund 7 Article 6. Investment Funds and Investment Managers 12 Article 7. Resignation or Removal of Trustee 14 Article 8. Amendment, Division or Termination 15 Article 9. Liability and Indemnification 16 Article 10. Miscellaneous 17 IMC GLOBAL INC. 1998 SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN, RESTORATION PLAN AND EXCESS BENEFIT PLAN TRUST This 1998 Supplemental Executive Retirement Plan, Restoration Plan and Excess Benefit Plan Trust (this "Trust") is effective this _____ day of _______________, 1998 (the "Effective Date"), by and between IMC Global Inc., a Delaware corporation (the "Company"), and Marshall & Ilsley Trust Company (the "Trustee"). W I T N E S S E T H: WHEREAS, the Company has adopted three nonqualified defined contribution plans known as the IMC Global Inc. 1998 Supplemental Executive Retirement Plan, the IMC Global Inc. 1998 Restoration Plan and the IMC Global Inc. 1998 Excess Benefit Plan (the "Plans"); and WHEREAS, the Company expects to incur liability under the terms of the Plans with respect to the individuals participating in the Plans; and WHEREAS, the Company wishes to establish a grantor trust (the "Trust") and to contribute to the Trust assets that shall be held therein, subject to the claims of the Company's creditors in the event of the Company's Insolvency, as herein defined, until paid to participants in the Plans and their beneficiaries (collectively, the "Participants") in such manner and at such times as specified in the Plans; and WHEREAS, it is the intention of the parties that this Trust shall constitute an unfunded arrangement and shall not affect the status of the Plans as unfunded plans for purposes of Title I of the Employee Retirement Income Security Act of 1974; and WHEREAS, it is the intention of Company to make contributions to the Trust to provide itself with a source of funds to assist it in meeting its liabilities under the Plans. NOW, THEREFORE, the parties do hereby establish the Trust and agree that the Trust shall be comprised, held, and disposed of as follows: Article 1. Establishment and Administration of the Trust and Company Contributions 1.1. Establishment. This Trust is hereby established for the benefit of Participants in the Plans, as determined in accordance with the applicable provisions of the Plans, to provide for the payment of benefits under the Plans on an unfunded, nonqualified basis. The Company, from time to time, may add additional plans and/or additional Participants to be covered by this Trust. Such a designation shall be in writing, signed by one or more members of the Committee, as defined in Section 1.7 herein, and filed with the Trustee. 1.2. Irrevocable. The Trust hereby established shall be irrevocable, subject to the provisions of Article 8 herein. 1.3. Status of the Trust. The Trust is intended to be a grantor trust, of which the Company is the grantor, within the meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended, and shall be construed accordingly. The principal of the Trust, and any earnings thereon, shall be held separate and apart from other funds of the Company and shall be used exclusively for the uses and purposes of Participants and general creditors as herein set forth. Participants shall have no preferred claim on, or any beneficial ownership interest in, any assets of the Trust. Any rights created under the Plans and this Trust shall be mere unsecured contractual rights of Participants against the Company. Any assets held by the Trust will be subject to the claims of the Company's general creditors under federal and state law in the event of Insolvency, as defined in Section 3.1 herein. 1.4. Company Contributions. The Company, in its sole discretion, may at any time, or from time to time, contribute cash or other property to the Trust in such amount as the Company determines. The Company shall have the right, at any time, and from time to time in its sole discretion, to substitute assets of equal fair market value for any assets held by the Trust. The Company shall execute any and all instruments necessary to vest the Trustee with full title to the property transferred to the Trust. 1.5. Determination of a Change in Control. The Board of Directors and the highest ranking officer of the Company shall have the duty to inform the Trustee in writing of the occurrence of a Change in Control of the Company. If any Participant (or person acting on behalf of any Participant), other than the Company's highest ranking officer, alleges in writing to the Trustee that a Change in Control has occurred, the Trustee shall determine whether a Change in Control has occurred. Unless the Trustee has actual knowledge that a Change in Control of the Company has occurred, or has received notice from the Company or any Participant (or person acting on behalf of any Participant) alleging that a Change in Control has occurred, the Trustee shall have no duty to inquire whether a Change in Control has occurred. The Trustee may in all events rely on such evidence concerning the Company's control as may be furnished to the Trustee and that provides the Trustee with a reasonable basis for making a determination concerning the Company's control. 1.6. Trustee's Acceptance. The Trustee accepts its duties and obligations as Trustee hereunder, agrees to accept delivery of funds delivered to it by the Company pursuant to this Article 1, and agrees to hold such funds (and any proceeds from the investment of such funds) in trust in accordance with the terms and conditions of this Trust. The Trustee shall have no right or obligation to compel the Company to make a deposit or contribution hereunder. 1.7. The Committee. The Board of Directors of the Company shall designate a committee (the "Committee") which shall have the powers, rights, and duties described herein and in the Plans. The Board of Directors will certify to the Trustee from time to time the person or persons who are acting as the members of the Committee. The Trustee may rely on the latest certificate received from the Board of Directors without further inquiry or verification. The Committee may delegate such of its powers, rights and duties hereunder as it deems appropriate to the plan administrator designated in the Plan. If for any period no persons are acting as members of the Committee, the Board of Directors of the Company shall act on behalf of, and shall have all of the powers, rights, and duties otherwise reserved to, the Committee. The Company warrants that all directions or authorizations by the Committee, whether for the payment of money or otherwise, will comply with the provisions of the Plan and this Trust. Article 2. Payments to Participants 2.1. Payment Schedule. As soon as administratively practicable following the end of each calendar quarter and as soon as administratively practicable following a Change in Control, the Committee shall deliver to the Trustee a schedule (the "Payment Schedule") that: (i) indicates the amounts payable in respect of the Participants under the Plans; (ii) provides a formula or other instructions acceptable to the Trustee for determining the amounts so payable; (iii) designates the manner and form in which such amount is to be paid (as provided for or available under the Plans); and (iv) designates the time of commencement for payment of such amounts. Except as otherwise provided herein, the Trustee shall make payments to the Participants in accordance with such Payment Schedule. Prior to a Change in Control, the Committee shall have the right to modify such schedule during the Plan Year, which modification, upon delivery to the Trustee, shall be binding upon the Trustee. Unless directed otherwise by the Committee, the Trustee shall make provisions for the reporting and withholding of any federal, state, or local taxes that may be required to be withheld with respect to the payment of benefits pursuant to the terms of the Plans and shall pay amounts withheld to the appropriate taxing authorities or determine that such amounts have been reported, withheld, and paid by the Company. In the event the Trustee determines that there are insufficient funds in the Trust to make full payments to all Participants as provided in the Payment Schedule or as otherwise determined hereunder, the Trustee shall immediately make a request to the Company for an infusion of sufficient additional assets into the Trust to fully fund the obligations. If no such Company asset contribution is made within a period deemed reasonable by the Trustee, the Trustee shall make payments to each Participant in an amount equal to the full payment due to such Participant under the Plans multiplied by a fraction, the numerator of which is the total amount available for distribution in the Trust, and the denominator of which is the total amount of aggregate liabilities to all Participants under the Plans. The Company will then be required to pay the balance of the Participant's benefits out of general Company assets. 2.2. Committee Determination of Benefits. The entitlement of a Participant to benefits under the Plans shall be determined by the Committee, and any claim for such benefits shall be considered and reviewed under the procedures set out in the Plans. If no such provision is contained in the underlying plan document, the procedures contained in Section 2.4 herein shall be followed. 2.3. Direct Payment of Benefits by the Company. The Company may make payment of benefits directly to Participants as they become due under the terms of the Plans. To the extent administratively practicable, the Company shall notify the Trustee of its decision to make payment of benefits directly to Participants prior to the time amounts are payable to Participants. In addition, if the principal of the Trust, and any earnings thereon, are not sufficient to make payments of benefits in accordance with the terms of the Plans, the Company shall make the balance of each such payment as it falls due. The Trustee shall notify the Committee where principal and earnings are not sufficient. The Committee may direct the Trustee in writing to reimburse the Company from the Trust Fund, as defined in Section 5.1 herein, for benefits paid directly to a Participant by the Company upon receipt by the Trustee of satisfactory evidence of such payment(s); provided, however, that the Trustee shall not reimburse the Company for such payment if the Trustee determines that, after making such reimbursement, the Trust Fund assets are insufficient to satisfy anticipated distributions therefrom. 2.4. Missing Persons. If any payment directed to be made by the Trustee from the Trust Fund is not claimed by the person entitled thereto, the Trustee shall notify the Committee of that fact. The Trustee thereafter shall have no obligation to search for or ascertain the whereabouts of any payee under this Trust. Article 3. Trustee Responsibility Regarding Payments to Participants When Company is Insolvent 3.1. Insolvency. The Trustee shall cease payment of benefits to Participants if the Company is Insolvent. The Company shall be considered "Insolvent" for purposes of this Trust if: (i) the Company is unable to pay its debts as they become due; or (ii) the Company is subject to a pending proceeding as a debtor under the United States Bankruptcy Code. 3.2. Claims of General Creditors. At all times during the continuance of this Trust, as provided in Articles 1 and 8 herein, the principal and income of the Trust shall be subject to the claims of general creditors of the Company under federal and state law as set forth below. (a) The Board of Directors and the highest ranking officer of the Company shall have the duty to inform the Trustee in writing of the Company's Insolvency. If a person claiming to be a creditor of the Company alleges in writing to the Trustee that the Company has become Insolvent, the Trustee shall determine whether the Company is Insolvent and, pending such determination, the Trustee shall discontinue payment of benefits to Participants. (b) Unless the Trustee has actual knowledge of the Company's Insolvency, or has received notice from the Company or a person claiming to be a creditor alleging that the Company is Insolvent, the Trustee shall have no duty to inquire whether the Company is Insolvent. The Trustee may in all events rely on such evidence concerning the Company's solvency as may be furnished to the Trustee and that provides the Trustee with a reasonable basis for making a determination concerning the Company's solvency. (c) If at any time the Trustee has determined that the Company is Insolvent, the Trustee shall discontinue payments to the Participants and shall hold the assets of the Trust for the benefits of the Company's general creditors. Nothing in this Trust shall in any way diminish any rights of Participants to pursue their rights as general creditors of the Company with respect to benefits due under the Plans or otherwise. (d) The Trustee shall resume the payment of benefits to Participants in accordance with Article 2 of this Trust only after the Trustee has determined that the Company is not Insolvent (or is no longer Insolvent). 3.3. Resumption of Payments to Participants. Provided that there are sufficient assets, if the Trustee discontinues the payment of benefits from the Trust pursuant to Section 3.2 hereof and subsequently resumes such payments, the first payment following such discontinuance shall include the aggregate amount of all payments due to Participants under the terms of the Plans for the period of such discontinuance, less the aggregate amount of any payment made to Participants by the Company in lieu of the payments provided for hereunder during any such period of discontinuance. Article 4. Payments to Company Except as provided in Section 2.3, Article 3, and Section 8.2 hereof, the Company shall have no right or power to direct the Trustee to return to the Company or to divert to others any of the Trust assets before all payments of benefits have been made to Participants pursuant to the terms of the Plans. Article 5. Management of the Trust Fund 5.1. The Trust Fund. Unless the context clearly implies or indicates otherwise, the term "Trust Fund" as of any date means all property of every kind then held under this Trust by the Trustee. 5.2. Trustee's General Powers, Rights, and Duties. With respect to the Trust Fund and subject only to the limitations expressly provided in this Trust (including the powers reserved to the Committee, and the powers, rights, and duties specifically allocated to an Investment Manager, if so appointed, as provided in Article 6 herein), or imposed by applicable law, the Trustee shall have the following powers, rights, and duties in addition to those vested in it elsewhere in this Trust or by law: (a) To invest and reinvest part or all of the Trust Fund in any real or personal property (including investments in any stocks, bonds, debentures, mutual fund shares (including shares of any fund from which the Trustee or any affiliate thereof receives an investment advisory fee or any other fee), notes, commercial paper, treasury bills, options, commodities, futures contracts, partnership interests, venture capital investments, any common, commingled, or collective trust funds, or pooled investment funds described in Section 5.3, any interest-bearing deposits held by any bank or similar financial institution, and any other real or personal property, regardless of whether any such investment is issued by or related to the Company) and to diversify such investments so as to minimize the risk of large losses unless, under the circumstances, it is clearly prudent not to do so. (b) To retain in cash such amounts as the Trustee considers advisable for payment of distributions, expenses and investment transfers and as are permitted by applicable law (without accrual of interest to the Trust Fund notwithstanding that the Trustee or any affiliate thereof may accrue interest on such cash balances) and to deposit any cash so retained in any depository (including any bank acting as trustee) which the Trustee may select. (c) To manage, sell, insure, and otherwise deal with all real and personal property held by the Trustee on such terms and conditions as the Trustee shall decide. (d) When directed by the Committee prior to a Change in Control or by an Investment Manager, as described in Section 6.2 herein, either prior to or after a Change in Control, to vote stock and other voting securities directly or by proxy (and to delegate the Trustee's powers and discretions with respect to such stock or other voting securities to any such proxy), to exercise subscription, conversion, and other rights and options (and make payments from the Trust Fund in connection therewith), to take any action and to abstain from taking any action with respect to any reorganization, consolidation, merger, dissolution, recapitalization, refinancing, and any other program or change affecting any property constituting a part of the Trust Fund as the Committee or the Investment Manager directs in accordance with this Trust. (e) To hold or register any property from time to time in the Trustee's name or in the name of a nominee or to hold it unregistered or in such form that title shall pass by delivery and, with the approval of the Committee, to borrow from anyone, including any bank acting as trustee, to the extent permitted by law, such amounts from time to time as the Trustee considers desirable to carry out this Trust (and to mortgage or pledge all or part of the Trust Fund as security). (f) When directed by the Committee or by an Investment Manager, as described in Section 6.2 herein, in either case prior to a Change in Control, to acquire, retain, or dispose of such investments as the Committee or the Investment Manager directs in accordance with this Trust. (g) To make payments from the Trust Fund to provide benefits that have become payable under the Plans pursuant to Article 2 herein, or that are required to be made to the general creditors of the Company as set forth in Section 3.2 herein. (h) Prior to a Change in Control, with the prior written consent of the Company, to begin, maintain, or defend any litigation reasonably necessary in connection with the administration of the Trust and the Company shall indemnify the Trustee against all reasonable expenses and liabilities sustained by the Trustee by reason of any such litigation. Following a Change in Control, the Trustee shall have this right, without the prior written consent of the Company. (i) To withhold, if the Trustee considers it advisable, all or any part of any payment required to be made hereunder as may be necessary and proper to protect the Trustee or the Trust Fund against any liability or claim on account of any estate, inheritance, income, or other tax, or assessment attributable to any amount payable hereunder, and to discharge any such liability with any part or all of such payment so withheld, provided that at least ten (10) business days prior to discharging any such liability with any amount so withheld the Trustee shall notify the Committee in writing of the Trustee's intent to do so. The Trustee shall not be either individually or severally liable for any taxes of any kind levied or assessed under the existing or future laws against the Trust assets. The Committee shall be responsible for: (i) providing information to the Trustee with respect to all taxes to be deducted and withheld from payments to Participants; (ii) furnishing to each person receiving payment or distribution from the Trust appropriate tax information evidencing such payment or distribution and the amount thereof; and (iii) preparing and filing all information reports and tax returns required to be filled with any federal, state, or local government agency or authority with respect to any payments made to any Participant hereunder. To the extent that any taxes are payable by the Trust to any federal, state, or local taxing authorities on account of earnings on Trust assets, the Company shall pay such taxes. (j) To maintain records reflecting all receipts and payments under this Trust and such other records as the Committee specifies and the Trustee agrees to, which records may be audited from time to time by the Committee or anyone named by the Committee. (k) To report to the Committee as of each Plan Year end, and at such other times as the Committee may request, the then net worth of the Trust Fund (that is, the fair market value of all assets held in the Trust, less liabilities known to the Trustee, other than liabilities to Participants and amounts payable from the Trust Fund to creditors who are not entitled to benefits under the Plans), determined (i) in the case of assets that are actively traded on an established market and other assets with a readily ascertainable fair market value, on the basis of such data and information as the Trustee considers reliable and (ii) in the case of assets without a readily ascertainable fair market value, as directed by the Committee or an Investment Manager. (l) To furnish periodic accounts to the Committee for such periods as the Committee may specify, showing all investments, receipts, disbursements, and other transactions involving the Trust Fund during the applicable period and the assets of the Trust Fund held at the end of that Plan Year. (m) To furnish the Company with such information in the Trustee's possession as the Company may need for tax or other purposes. The Company shall pay, prepare, file, and furnish all federal, state, and local tax deposits, returns, and reports required by any government agency or authority. (n) Prior to a Change in Control, with the prior written consent of the Company, to employ agents, attorneys, accountants, and other persons (who also may be employed by the Company, the Committee, or others), to delegate discretionary powers to such persons, and to reasonably rely upon information and advice furnished by such persons; provided that each such delegation and the acceptance thereof by each such person shall be in writing; and provided further that the Trustee may not delegate its responsibilities as to the management or control of the assets of the Trust Fund. Following a Change in Control, the Trustee shall have this right, without the prior written consent of the Company. (o) To perform all other acts which in the Trustee's judgment are appropriate for the proper management, investment, and distribution of the Trust Fund to the extent such duties have not been assigned to others as provided herein. (p) The Trustee may invest in securities (including stock or rights to acquire stock) or obligations issued by the Company. All rights associated with assets of the Trust shall be exercised by the Trustee or the person designated by the Trustee, and shall in no event be exercisable by or rest with Participants. Prior to a Change in Control, the Company shall have the right, at any time, and from time to time in its sole discretion, to substitute assets of equal fair market value for any asset held by the Trust. This right is exercisable by the Company in a nonfiduciary capacity without the approval or consent of any person in a fiduciary capacity. 5.3. Collective Investment Trusts. The Trustee (or, if so authorized, any Investment Manager appointed pursuant to Section 6.2) may invest any part or all of the Trust assets for which it has investment responsibility in any common, collective, or commingled trust fund or pooled investment fund that is maintained by a bank or trust company (including a bank or trust company acting as Trustee) provided such investments are consistent with applicable investment requirements and guidelines so established by the Committee pursuant to Section 6.1 herein. To the extent that any Trust assets are invested in any such fund, the provisions of the documents under which such common, collective, or commingled trust fund or pooled investment fund are maintained shall govern any investment therein. 5.4. Accounting. The Trustee shall keep accurate and detailed records of all deposits, investments, receipts, disbursements, and all other transactions required to be made, including such specific records as shall be agreed upon in writing between the Company and the Trustee within forty- five (45) calendar days following the close of each Plan Year and, if applicable, within forty-five (45) calendar days after the removal or resignation of the Trustee. The Trustee shall deliver to the Company a written account of its administration of the Trust during such Plan Year or during the period from the close of the last preceding Plan Year to the date of such removal or resignation setting forth all deposits, investments, receipts, disbursements, and other transactions effected by it, including a description of all securities and investments purchased and sold with the cost or net proceeds of such purchases or sales (accrued interest paid or receivable being shown separately), and showing all cash, securities, and other property held in the Trust at the end of such Plan Year or as of the date of such removal or resignation, as the case may be. The Trustee shall be entitled to hold and to commingle the assets of the Trust in one fund for investment purposes but at the direction of the Company prior to a Change in Control, the Trustee shall create one or more subaccounts. All such accounts, books, and records shall be open to inspection and audit at all reasonable times by the Company. 5.5. Common Fund. The Trustee shall not be required to make separate investments of the Trust Fund for the accounts of each Participant in the absence of such direction by the Committee, and may administer and invest the deposits made to the Trust by the Company as to the Plans as one Trust Fund. The Trustee also shall not be required to make any separate investments of the Trust Fund for the account of any general creditor of the Company prior to receipt of directions to make payments to such creditor in accordance with Section 3.2. 5.6. Compensation and Expenses. Reasonable compensation as may be agreed upon from time to time between the Committee and the Trustee, and all expenses (except those specifically described in the next sentence) reasonably incurred by the Trustee and the Committee in the administration of this Trust, including compensation to agents, actuaries, attorneys, accountants, and other persons employed by the Trustee or the Committee, as certified by them, shall be paid by the Company directly. To the extent such compensation and expenses are not paid by the Company within ninety (90) calendar days of delivery of an invoice for same by the Trustee, the Trustee may pay such compensation and expenses from the Trust Fund. Expenses solely attributable to investment of the Trust Fund (such as investment manager fees, load or other commission fees, brokerage, postage, express or insurance charges, and stock transfer stamps expenses) shall be paid from the Trust Fund to the extent not paid directly by the Company. 5.7. Insurance. The Trustee shall have, without exclusion, all powers conferred on trustees by applicable law, unless expressly provided otherwise herein; provided, however, that if an insurance policy is held as an asset of the Trust, unless specifically directed by the Committee in writing, the Trustee shall have no power to name a beneficiary of the policy other than the Trust, to assign the policy (as distinct from conversion of the policy to a different form) other than to a successor Trustee, or to loan to any person the proceeds of any borrowing against such policy. 5.8. Carrying on a Business. Notwithstanding any powers granted to the Trustee pursuant to this Trust or to applicable law, the Trustee shall not have any power that could give this Trust the objective of carrying on a business and dividing the gains therefrom within the meaning of Section 301.7701-2 of the Procedure and Administrative Regulations promulgated pursuant to the Internal Revenue Code. Article 6. Investment Funds and Investment Managers 6.1. Investment Funds. Prior to a Change in Control, the Committee or its agent may direct the Trustee to establish one or more separate investment accounts within the Trust Fund, each separate account being hereinafter referred to as an Investment Fund. Except as otherwise provided, the Trustee shall transfer to each such Investment Fund such portion of the assets of the Trust Fund as the Committee directs from time to time prior to a Change in Control, in accordance with the specific provisions of the Plans. Prior to a Change in Control, the Committee or its agent may establish, for the direction of the Trustee, guidelines, objectives, and restrictions regarding the investment of Trust assets or may direct the Trustee with respect to the purchase of specific assets within the separate accounts. The Trustee shall be under no duty to question, and shall not incur any liability on account of following, any direction of the Committee or its agent prior to a Change in Control. The Trustee shall be under no duty to review the investment guidelines, objectives, and restrictions established, or the specific investment directions given by the Committee for any Investment Fund. The Trustee shall have no responsibility for investment elections conveyed to it by the Committee or its agent and shall incur no liability on account of investing the assets of the Trust Fund in accordance with such directions. All interest, dividends, and other income received with respect to, and any proceeds received from the sale or other disposition of securities or other property held in, an Investment Fund shall be credited to and reinstated in such Investment Fund. All expenses of the Trust Fund which are allocable to a particular Investment Fund shall be so allocated and charged. Prior to a Change in Control and subject to the provisions of the Plan, the Committee may direct the Trustee to eliminate an Investment Fund or Funds, and the Trustee shall thereupon dispose of the assets of such Investment Fund and reinvest the proceeds thereof in accordance with the directions of the Committee. After the occurrence of a Change in Control, the Committee shall have none of the powers specified above in this Section 6.1. The Committee shall certify, at the request of the Trustee, the value of any securities or other property held in any Investment Fund, and such certification shall be regarded as a direction with regard to such valuation. The Trustee shall be entitled to conclusively rely upon such valuation for all purposes under this Trust. The Trustee shall have the right to request that some part or all of the directions made by the Committee be in writing and shall assume no liability hereunder for failure to act pursuant to directions which fail to conform to such request. 6.2. Investment Managers. Prior to a Change in Control the Committee, and after a Change in Control the Trustee, from time to time, may appoint and/or dismiss one or more independent Investment Managers, pursuant to a written investment management agreement describing the powers and duties of the Investment Manager, to direct the investment and reinvestment of all or a portion of the Trust Fund or an Investment Fund (hereinafter referred to as an Investment Account). The Committee shall furnish the Trustee with written notice of the appointment of each Investment Manager hereunder, and of the termination of any such appointment. Such notice shall specify the assets which shall constitute the Investment Account. The Trustee shall be fully protected in relying upon the effectiveness of such appointment and the Investment Manager's continuing satisfaction of the requirements set forth in the investment management agreement until it receives written notice from the Committee to the contrary. The Committee shall provide each Investment Manager appointed with respect to an Investment Fund with the investment guidelines for that fund and with any modifications in such investment guidelines made from time to time. Notwithstanding the fact that an Investment Manager may be appointed with responsibility for the management of an Investment Fund, the Trustee shall have the responsibility for the investment of cash balances held by it from time to time as a part of such Investment Fund in short-term cash equivalents (such as short-term commercial paper, treasury bills, and similar securities, and for this purpose, the Trustee may invest in any appropriate common, commingled, or collective short-term investment fund). In addition, the Trustee shall have the power, right, and duty to sell any such short-term investments as may be necessary to carry out the instructions of the Investment Manager with respect to the investment of the Investment Fund. The Trustee shall conclusively presume that each Investment Manager, under its investment management agreement, is entitled to act, in directing the investment and reinvestment of the Investment Account for which it is responsible, in its sole and independent discretion and without limitation, except for any limitations which from time to time the Committee and the Trustee agree (in writing) shall modify the scope of such authority. The Trustee shall have no liability: (a) For the acts or omissions of any Investment Manager or Managers; (b) For following directions, including investment directions of an Investment Manager or the Committee, which are given in accordance with this Trust; or (c) For any loss of any kind which may result by reason of errors made by the Investment Manager or the Committee in the division of the Trust Fund or Investment Fund into Investment Accounts. An Investment Manager shall certify, at the request of the Trustee, the value of any securities or other property held in any Investment Account managed by such Investment Manager, and such certification shall be regarded as a direction with regard to such valuation. The Trustee shall be entitled to conclusively rely upon such valuation for all purposes under this Trust. The Trustee shall have the right to request that some part or all of the directions made by an Investment Manager be in writing and shall assume no liability hereunder for failure to act pursuant to directions which fail to conform to such request. Article 7. Resignation or Removal of Trustee 7.1. Resignation or Removal of Trustee. The Trustee may resign at any time by giving thirty (30) calendar days' prior written notice to the Committee and the Investment Managers. The Company may remove a Trustee by giving thirty (30) calendar days' prior written notice to the Trustee and the Investment Managers provided that such removal shall not become effective until the time immediately preceding the appointment of a successor Trustee pursuant to Section 7.2. Also, the Company may not remove the Trustee for at least two (2) years following the occurrence of a Change in Control, unless a majority of Participants approve in writing of such removal. 7.2. Successor Trustee. In the event of the resignation or removal of the Trustee, a Successor Trustee, which or the parent of which has a market capitalization of at least $100,000,000, shall be appointed by the Company in writing as soon as practicable. Written notice of such appointment shall be given by the Company to the Trustee that is resigning or being removed (the "Predecessor Trustee") and the Investment Managers. 7.3. Duties of Predecessor Trustee and Successor Trustee. Upon the appointment of a Successor Trustee, the Predecessor Trustee shall transfer and deliver the assets of the Trust Fund to such Successor Trustee after reserving such reasonable amounts as it shall deem necessary to provide for any expenses, fees, or taxes then or thereafter chargeable against the Trust Fund. A Predecessor Trustee shall promptly furnish to the Committee and the Successor Trustee a final account of its administration of the Trust. A Successor Trustee shall succeed to the right and title of the Predecessor Trustee in the assets of the Trust Fund and the Predecessor Trustee shall deliver the property comprising the Trust Fund to the Successor Trustee together with any instruments of transfer, conveyance, assignment, and further assurances as the Successor Trustee may reasonably require. Each Successor Trustee shall have all the powers, rights, and duties conferred by this Trust as if named the initial Trustee. Subject to applicable law, no Successor Trustee shall be personally liable for any act or failure to act of a Predecessor Trustee. Article 8. Amendment, Division or Termination 8.1. Amendment. (a) This Trust may not be altered or amended in any substantive respect (including changing the irrevocable nature of the Trust as provided in Section 1.2 herein), or revoked or terminated by the Company in whole or in part, without the express written consent of all Participants; provided, however, that the Trust may be amended by written agreement between the Company and the Trustee, as may be necessary, to make nonsubstantive changes which have no effect upon the irrevocability of the Trust, the amount of any Participant's benefits, the time of receipt of benefits, the identity of any recipient of benefits, or the reversion of any assets to the Company prior to the Trustee's satisfaction of all the Trustee's obligations hereunder. (b) The duties and liabilities of the Committee, the Trustee, and each Investment Manager under this Trust cannot be changed without their written consent. 8.2. Division of Trust. The Committee may direct a separation of the Accounts of certain Participants under the Plans and the transfer of such Accounts to another plan. If such action is directed, the Committee shall cause to be determined and shall direct the Trustee to set apart that portion of the assets held under the Trust that is attributable to the Accounts of such Participants as are designated in such direction by the Committee. The portion of the assets held under the Trust so set apart shall, as directed by the Committee, either (a) continue to be held by the Trustee under such other plan for the benefit of such Participants, or (b) be transferred directly to the trustee of a separate trust established under such other plan and held in trust for the benefit of such Participants pursuant to the terms of such other plan. 8.3. Termination. (a) All the rights, titles, powers, duties, descriptions, and immunities imposed on or reserved to the Trustee, the Company, the Committee, the Board of Directors, and any Investment Managers shall continue in effect with respect to the Trust until all benefits payable to Participants under the Plans have been paid and all assets have been distributed by the Trustee under the Trust and the Plans. (b) The Trust shall not terminate until the date on which Participants are no longer entitled to benefits pursuant to the terms of the Plans. Upon termination of this Trust, the Trustee shall reserve such reasonable amounts as it may deem necessary to provide for the payment of expenses or fees then or thereafter chargeable to the Trust Fund. Upon termination of this Trust, the Trustee shall continue to have such of the powers provided in the Trust as are necessary or desirable for the orderly liquidation and distribution of the Trust Fund. Upon termination of the Trust, any assets remaining in the Trust shall be returned to Company. (c) Notwithstanding anything in this Trust to the contrary, in the event that there is a final determination by a court of competent jurisdiction that one or more Participants are taxable on the amounts in their Accounts prior to distribution of such amounts to them, the Committee may direct that the affected Plans be terminated and that the Account balances of all affected Participants be distributed to them by the Trustee. Article 9. Liability and Indemnification 9.1. Liabilities Mutually Exclusive. To the extent permitted by law, the Company, the Trustee, the Committee, the Board of Directors and each member thereof, and each Investment Manager shall be responsible only for its or their own acts or omissions. 9.2. Indemnification. The Company hereby agrees to indemnify and hold harmless the Trustee from and against any losses, damages, liabilities, claims, costs, or expenses (including reasonable attorneys' fees) which the Trustee may incur except by reason of the Trustee's negligence or willful misconduct. In making any distributions and taking any other action hereunder, the Trustee may rely upon and shall be fully protected in relying upon any notice, certificate, or other paper or written document provided by the Company or the Committee and reasonably believed to be genuine. 9.3. Trustee's Actions Conclusive. Except as otherwise provided by law, the Trustee's exercise or nonexercise of its powers and discretion in good faith shall be conclusive on all persons. No one shall be obliged to see to the application of any money paid or property delivered to the Trustee. The certificate of the Trustee that it is acting in accordance with this Trust will fully protect all persons dealing with the Trustee. If there is a disagreement between the Trustee and anyone as to any act or transaction reported in any accounting, the Trustee shall have the right to a settlement of its account by any court having jurisdiction over the Trust. Article 10. Miscellaneous 10.1. Severability. Any provision of this Trust prohibited by law shall be ineffective to the extent of any such prohibition, without invalidating the remaining provisions hereof. 10.2. Nonalienation. Benefits payable to Participants under this Trust may not be anticipated, assigned (either at law or in equity), alienated, pledged, encumbered or subjected to attachment, garnishment, levy, execution, or other legal or equitable process. 10.3. Governing Law. This Trust shall be governed by and construed in accordance with the laws of the state of Illinois, to the extent not preempted by federal law. 10.4. Evidence. Evidence required of anyone under this Trust shall be signed, made, or presented by the proper party or parties and may be by certificate, affidavit, document, or other information which the person acting on it considers pertinent and reliable. 10.5. Wavier of Notice. Any notice required under this Trust may be waived by the person entitled to such notice. 10.6. Counterparts. This Trust and any amendments hereto may be executed in two or more counterparts, any one of which will be an original without reference to the others. 10.7. Gender and Number. Except when otherwise indicated by the context, words denoting the masculine gender shall include the feminine, the singular shall include the plural, and the plural shall include the singular. 10.8. Scope of this Trust. This Trust will be binding on all persons entitled to benefits hereunder and their respective heirs and legal representatives, and upon the Company, the Committee, the Trustee, and any Investment Managers and their successors and assigns. 10.9. Statutory References. Any references in this Trust to a section of the Internal Revenue Code shall include any comparable section or sections of any future legislation that amends, supplements, or supersedes that section. 10.10. Merger of Trustee. If the Trustee at any time acting hereunder shall be merged or consolidated with, or shall sell or transfer substantially all of its assets and business to another corporation, state or federal, or shall be in any manner reorganized or reincorporated, then the corporation resulting therefrom, or the corporation to which such sale or transfer shall be made, shall be deemed to be the Trustee then acting hereunder. 10.11. Headings. The headings contained herein are inserted only as a matter of convenience and for reference and in no way define, limit, enlarge or describe the scope or intent of the Trust and in no way shall affect the Trust or the construction of any provision thereof. 10.12. Change in Control. For purposes of this Trust, "Change in Control" shall be deemed to have occurred upon the first to occur of the following: (a) the acquisition by any individual, entity or group (a "Person"), including any "person" within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, of beneficial ownership within the meaning of Rule 13d- 3 promulgated under the Exchange Act, of 15% or more of either (i) the then outstanding shares of common stock of the Company (the "Outstanding Common Stock") or (ii) the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors (the "Outstanding Voting Securities"); excluding, however, the following: (A) any acquisition directly from the Company (excluding any acquisition resulting from the exercise of an exercise, conversion or exchange privilege unless the security being so exercised, converted or exchanged was acquired directly from the Company), (B) any acquisition by the Company, (C) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (D) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of this Section 10.12. (b) individuals who, as of the date this Plan is approved by the Board of Directors constitute the Board of Directors (the "Incumbent Board") cease for any reason to constitute at least a majority of such Board; provided that any individual who becomes a director of the Company subsequent to the date this Plan is approved by the Board of Directors whose election, or nomination for election by the Company's stockholders, was approved by the vote of at least a majority of the directors then comprising the Incumbent Board shall be deemed a member of the Incumbent Board; and provided further, that any individual who was initially elected as a director of the Company as a result of an actual or threatened election contest, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act, or any other actual or threatened solicitation of proxies or consents by or on behalf of any Person other than the Board shall not be deemed a member of the Incumbent Board; (c) approval by the stockholders of the Company of a reorganization, merger or consolidation of the Company or sale or other disposition of all or substantially all of the assets of the Company (a "Corporate Transaction"); excluding, however, a Corporate Transaction pursuant to which (i) all or substantially all of the individuals or entities who are the beneficial owners, respectively, of the Outstanding Common Stock and the Outstanding Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than 60% of, respectively, the outstanding shares of common stock, and the combined voting power of the outstanding securities of such corporation entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or indirectly) in substantially the same proportions relative to each other as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Common Stock and the Outstanding Voting Securities, as the case may be, (ii) no Person (other than: the Company; any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company; the corporation resulting from such Corporate Transaction; and any Person which beneficially owned, immediately prior to such Corporate Transaction, directly or indirectly, 25% or more of the Outstanding Common Stock or the Outstanding Voting Securities, as the case may be) will beneficially own, directly or indirectly, 25% or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the outstanding securities of such corporation entitled to vote generally in the election of directors and (iii) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction; or (4) the consummation of a plan of complete liquidation or dissolution of the Company. For purposes of this definition, the term "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto. IN WITNESS WHEREOF, the Company and the Trustee have caused this Trust to be executed on their behalf and their respective seals to be hereunto affixed and attested by their respective officers thereunto duly authorized, as of the day and year first above written. IMC Global Inc. Marshall & Ilsley Trust Company By: By: Name: Name: Its: Its: EX-10.III.(P) 6 FORM OF EXECUTIVE SEVERANCE AGREEMENT Exhibit 10.iii.(p) EXECUTIVE SEVERANCE AGREEMENT This Executive Severance Agreement (the "Agreement) is dated as of __________________, 1999 between __________________ (the "Executive") and IMC Global Inc., a Delaware corporation (the "Company"). WHEREAS, the Company desires to retain the Executive as its Senior Vice President, Environment, Health and Safety and the Executive desires to continue in such position; and WHEREAS, the Company and the Executive desire to provide appropriate assurances for the Executive to continue to perform the Executive's duties and responsibilities thereby promoting the stability of the Company. NOW, THEREFORE, in consideration of the agreements and covenants contained herein, the sufficiency of which is acknowledged, the Executive and the Company hereby agree as follows: 1. Definitions. Each term defined herein shall be given its defined meaning wherever used in this Agreement unless the context requires otherwise. (a) "Base Salary" means the Executive's annualized base salary as adjusted from time to time. (b) "Cause" means the Executive (i) grossly neglects her duties, (ii) engages in misconduct; (iii) breaches a material provision of this Agreement, including, but not limited to, Section 4; (iv) willfully fails to cooperate fully with the Company in effecting a smooth transition of the Executive's duties and responsibilities to such person(s) as may be designated by the Company. Gross neglect means the willful failure to perform the essential functions of the Executive's job or the willful failure to carry out the Company's reasonable directions with respect to material duties after the Executive is notified in writing by the Company that the Executive is failing to perform these essential functions or failing to carry out the reasonable directions of the Company. Such notice shall specify the functions or directions that the Executive is failing to perform and what steps need to be taken to cure and shall set forth the reasonable time frame, which shall be at a minimum 45 days, within which to cure. "Misconduct" means embezzlement or misappropriation of corporate funds, or other acts of fraud, dishonesty, or self-dealing; provided, however, that the Executive shall be given notice and an opportunity within the next 45 days to explain her position and actions to the Company, which shall then make a final decision; any significant violation of any statutory or common law duty of loyalty to the Company; conviction for a felony; or any significant violation of Company policy or any inappropriate workplace conduct that seriously disrupts or interferes with Company operations; provided, however, that if the policy violation or inappropriate conduct can be cured, then the Executive shall be given written notice of the policy violation or inappropriate conduct and a reasonable opportunity to cure, which shall be at a minimum 45 days. (c) "Company" means IMC Global Inc. and its subsidiaries, as they may exist from time to time. (d) "Effective Date" means the date first set forth above. (e) "Good Reason" for termination of employment by the Executive shall mean any of the following reasons explained below in paragraphs 1, 2 and 3. In each case, to constitute a termination for Good Reason entitling the Executive to Severance Benefits as described in Section 3 of this Agreement, the following must occur: (i) Within 90 days after the Executive has or reasonably should have knowledge that Good Reason exists, the Executive must give the Company written notice specifying the grounds for her belief that Good Reason exists; (ii) The Company shall then have a reasonable opportunity, which shall be at least 45 days, to cure; and (iii) If the Company cures the Good Reason within the cure period, then the Executive shall have no right to terminate employment for Good Reason. If the Company does not cure the Good Reason within the cure period, then within 14 days of the completion of the cure period, the Executive may give written notice of her intent to terminate her employment for Good Reason. The effective date of such termination for Good Reason shall be two calendar months after the date of the notice to terminate. At its sole discretion, the Company shall have the right to accelerate the termination date by paying the Executive her base pay for the balance of the two-month notice period. 1. the continued failure by the Company, after notice and a reasonable opportunity to cure, to (i) maintain for the initial term of this Agreement the Executive's Base Salary at a rate equal to or higher than the rate in effect on the Effective Date and for any subsequent term of the Agreement maintain the Executive's Base Salary at a rate equal to or higher than the rate in effect on the Effective Date; provided, however, that during any such subsequent term, Good Reason shall not exist as the result of any decrease in Base Salary if such decrease is incident to a general reduction applied to corporate officers at a similar level as the Executive on a proportionate and nondiscriminatory basis; (ii) provide for continued participation on a comparable basis by the Executive in an annual bonus plan maintained by the Company in which corporate officers at a similar level as the Executive participate; (iii) provide for participation in stock option and other equity incentive plans or programs maintained by the Company from time to time in which corporate officers at a similar level as the Executive participate; (iv) provide for participation in all Company sponsored group or executive medical, dental, life, disability, retirement, profit-sharing, thrift, non-qualified, deferred compensation, and other plans maintained by the Company to the same extent as corporate officers at a similar level as the Executive participate; (v) provide vacation, and perquisites substantially equivalent to those provided by the Company to corporate officers at a similar level as the Executive; or (vi) obtain the express unconditional assumption of this Agreement as required by Section 8, it being understood that nothing contained in this clause alters the Company's obligations under Section 8 of this Agreement; or 2. a significant adverse change, without the Executive's written consent that continues after notice and a reasonable opportunity to cure, in working conditions or status, including but not limited to a significant adverse change in the nature or scope of the Executive's authority, powers, functions, duties or responsibilities; provided, however, a change in the Company's status such that it no longer has any equity securities registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended, or that it becomes a subsidiary of another entity which directly results in changes in the nature or scope of the Executive's authority, powers, functions, duties or responsibilities shall not in and of itself constitute Good Reason hereunder; or 3. a change, without the Executive's consent, in the Executive's primary employment location to a location that is more than 50 miles from the primary location of the Executive's employment as in effect immediately prior to the Effective Date. (f) "Severance Event" shall be deemed to have occurred if, and only if, during the Term of this Agreement, which includes the initial term and any extension or renewals as provided in Section 2, (i) the Executive's employment is terminated by the Company other than for Cause or upon the Executive's death or inability to perform the essential functions of her position with or without reasonable accommodation or (ii) the Executive terminates her employment for Good Reason. If, however, the Executive's employment is terminated whether by the Executive with or without Good Reason or by the Company with or without Cause in connection with a "change in control" of the Company, as such phrase is defined in Section 5 of this Agreement, such termination shall not constitute a Severance Event; provided, however, the Executive's employment shall not be considered to have terminated in connection with a change in control of the Company as so defined unless such change in control has occurred in such manner and such time as to have made Section 5 of this Agreement effective prior to the Executive's termination. 2. Term. The term of this Agreement shall commence on the Effective Date and shall terminate on the second anniversary of the Effective Date; provided, however, that unless the Company gives written notice of its intent to terminate the Agreement at least one calendar month prior to the second anniversary of the Effective Date, this Agreement shall renew automatically for an additional one year term and shall continue to renew automatically for additional one year terms unless written notice of the Company's intent to terminate the Agreement is given to the Executive at least one calendar month prior to the expiration of the then current term. 3. Severance Benefits. Upon the occurrence of a Severance Event and the execution of a general release (substantially in the form attached hereto as Exhibit A) of all claims against the Company and other related entities or persons without additional consideration, and upon the expiration of any applicable revocation period, the Executive shall be entitled to receive the following "Severance Benefits": (a) An amount equal to the target award for the Executive under the Company's Management Incentive Compensation Program ("MICP"), or successor annual bonus plan in effect from time to time, for the fiscal year in which the Severance Event Occurs reduced pro rata for that portion of the fiscal year not completed as of the end of the month in which the Severance Event occurs; (b) An amount equal to the target award for the Executive under the Company's 1996 Long-Term Incentive Plan, or successor long-term incentive plan in effect from time to time, for the fiscal year in which the Severance Event occurs reduced pro rata for that portion of the fiscal year not completed as of the end of the month in which the Severance Event occurs; (c) An amount equal to two times the Executive's then current Base Salary, payable in accordance with regular payroll procedures of the Company; (d) An amount equal to two times the highest annual bonus earned under the Company's Management Incentive Compensation Program, or successor annual bonus plan in effect from time to time, during the three consecutive complete bonus years immediately preceding the date on which the Severance Event occurs; provided, however, that in the event that the Executive's employment is terminated prior to the completion of three complete bonus years, any prorated annual bonus received by the Executive shall be annualized and the bonus years in which the Executive's employment commences or terminates shall be deemed to be "complete bonus years" for purposes of determining the highest annual bonus earned by the Executive during the three complete bonus years immediately preceding the date on which the Severance Event occurs; (e) If the Executive timely and appropriately exercises her right to continue her coverage under the Company's medical and dental plans as provided under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), then the Company will pay the employer portion (and the Executive will pay the employee portion) of such premiums for the Executive until the earlier of: (i) the expiration of the two year period following the date of the Severance Event and (ii) the date on which the Executive is no longer eligible to continue such coverage under clause 4980B(f)(2)(B)(ii), (iii), (iv) or (v) of COBRA. Except as provided in this paragraph, the Executive's continued participation and coverage under the group health insurance plans shall be governed by COBRA; and (f) The Company shall continue the Executive's coverage under its life and disability insurance policies until the earlier of (i) the expiration of the two year period following the date of termination and (ii) the date on which the Executive becomes eligible to participate in and receive similar benefits under a plan or arrangement sponsored by another employer or under any Company sponsored retirement plan. Participation shall be on the same terms and conditions as are applicable to active employees. Severance Benefits shall be subject to all applicable federal, state and local deductions and withholdings. Those Severance Benefits described in paragraphs (a) and (b) shall be paid in a lump sum within 30 days of the Severance Event. At the option of the Company, the present value of the Severance Benefits described in paragraphs 3 (c) and (d) above may be paid in a lump sum at any point during the Severance Benefits period. The Company's obligation to continue Severance Benefits shall cease immediately if the Company has or would have had grounds to terminate the Executive's employment immediately for Cause. In the event the Executive dies or becomes disabled before all Severance Benefits are paid to her, the remaining amounts due to her under Sections 3(c) and 3(d) shall be reduced by the proceeds the Executive's estate receives under any life insurance policy with respect to which the premiums are paid by the Company or any benefits the Executive receives under any Company disability policy; but subject to such reductions, those remaining amounts, if any, shall be paid to the Executive or her estate. If any family member of the Executive is receiving medical and/or dental coverage under Section 3(e) at the time of the Executive's death or disability and such family member constitutes a "qualified beneficiary" under COBRA, such medical and/or dental coverage shall continue in accordance with the requirements of COBRA, provided that such family member pays the full cost of the premium for such coverage. The Executive understands and acknowledges that the Severance Benefits constitute her sole benefits upon termination. 4. Exclusivity of Services and Confidential/ Proprietary Information. (a) Executive acknowledges that during her employment with the Company she has developed, acquired, and had access to and will develop, acquire and have access to trade secrets or other proprietary or confidential information belonging to the Company and that such information gives the Company a substantial business advantage over others who do not have such information. Accordingly, the Executive agrees to the following obligations that she acknowledges to be reasonably designed to protect the Company's legitimate business interests without unnecessarily or unreasonably restricting her post-employment opportunities: (i) during employment with the Company and for a period of two years following the Executive's termination of employment, regardless of the reason for the termination or by whom initiated, she will not engage or assist others in engaging in competition with the Company, directly or indirectly, whether as an employer, proprietor, partner, stockholder (other than the holder of less than 5% of the stock of a corporation the securities of which are traded on a national securities exchange or in the over-the-counter market), director, officer, employee, consultant, agent, or otherwise, in the business of producing and distributing potash, phosphate, animal feed ingredients or salt or any other significant business in which the Company is engaged or is preparing to engage in at the time of termination; (ii) during employment with the Company and for a period of two years following the Executive's termination of employment, regardless of the reason for the termination or by whom initiated, she will not solicit, in competition with the Company, directly or indirectly, any person who is a client, customer or prospect (as such terms are defined below) (including, without limitation, purchasers of the Company's products) for the purpose of performing services and/or providing goods and services of the kind performed and/or provided by the Company in the business of producing and distributing potash, phosphate, animal feed ingredients or salt or any other significant business in which the Company is engaged or is preparing to engage in at the time of termination; (iii) during employment with the Company and for a period of two years following the Executive's termination of employment, regardless of the reason for the termination or by whom initiated, she will not induce or persuade or attempt to induce or persuade any employee or agent of the Company to terminate her or her employment, agency, or other relationship with the Company in order to enter into any employment agency or other relationship in competition with the Company; (iv) the covenants contained in this Section 4(a) shall apply within any jurisdiction of North America, it being understood that the geographic scope of the business and strategic plans of the Company extend throughout North America and are not limited to any particular region thereof and that such business may be engaged in effectively from any location in such area; and (v) as used herein, the terms "client," "customer" and "prospect" shall be defined as any client, customer or prospect of any business in which the Company is or has been substantially engaged within the one year period prior to the Executive's termination of employment (a) to which or to whom the Executive submitted or assisted in the submission of a presentation or proposal of any kind on behalf of the Company; (b) with which or with whom the Executive had substantial contact relating to the business of the Company; or (c) about which or about whom the Executive acquired substantial confidential or other information as a result of or in connection with the Executive's employment, at any time during the one year period preceding the Executive's termination of employment for any reason. Notwithstanding the foregoing, if the Company consents in writing, it shall not be a violation of this Section 4(a) for the Executive to engage in conduct otherwise prohibited by this Section. (b) The Executive agrees that she will not at any time during employment or thereafter for the longest time permitted by applicable law, use, disclose, or take any action which may result in the use or disclosure of any trade secrets or other proprietary or confidential information of the Company, except to the extent that the Company may specifically authorize in writing. This obligation shall not apply when and to the extent that any trade secret, proprietary or confidential information of the Company becomes publicly available other than due to the Executive's act or omission. In connection with this Section 4, the Executive has executed and shall abide by the terms of the separate agreement attached hereto as Exhibit B. (c) The Executive agrees that upon termination of her employment she will immediately surrender and return to the Company all records and other documents obtained by her, entrusted to her, or otherwise in her possession or control during the course of her employment by the Company, together with all copies thereof; provided, however, that subject to Company review and authorization, the Executive may retain copies of such documents as necessary for the Executive's personal records for federal income tax purposes. (d) The Executive acknowledges that the provisions contained in this Section 4 are reasonable and necessary because of the substantial harm that would be caused to the Company by the Executive engaging in any of the activities prohibited or restricted herein. Nevertheless, it is the intent and understanding of each party hereto that if, in any action before any court, agency or other tribunal legally empowered to enforce the covenants contained in this Section 4, any term, restriction, covenant or promise contained therein is found to be unenforceable due to unreasonableness or due to any other reason, then such term, restriction, covenant or promise shall be deemed modified to the extent necessary to make it enforceable by such court or agency. (e) The Executive acknowledges that her breach of this Section 4 will result in immediate and irreparable harm to the Company's business interests, for which damages cannot be calculated easily and for which damages are an inadequate full remedy. Accordingly, and without limiting the right of the Company to pursue all other legal or equitable remedies available for the violation by the Executive of the covenants contained in this Section 4, it is expressly agreed that remedies other than injunctive relief cannot fully compensate the Company for the irreparable injury that the Company could suffer due to any such violation, threatened violation or continuing violation and that the Company shall be entitled to injunctive relief, without the necessity of proving actual monetary loss, to prevent any such violation, threatened violation or continuing violation thereof. 5. Change in Control. (a) Effective Date. For purposes of this Section 5, the term "Effective Date" shall mean the date on which a Change in Control of the Company (as defined in Section 5(i)) occurs. This Section 5 shall not become effective, and the Company shall have no obligation hereunder, if the employment of the Executive with the Company shall terminate prior to a Change in Control of the Company. If there is a Change in Control and this Section becomes effective, then this Section shall govern the terms and conditions of the Executive's employment and termination thereof and the provisions of Sections 1, 2, 3, and 4 of this Agreement shall no longer be effective. (b) Right to Change in Control Severance Benefits. The Executive shall be entitled to receive from the Company Change in Control Severance Benefits as described in Section 5(g) herein, if during the term of this Agreement there has been a Change in Control of the Company and there is a Termination (as defined in Section 5(f)) prior to the expiration of the Employment Term (as defined in Section 5(c)). (c) Employment Term. For purposes of this Section 5, the term "Employment Term" shall mean the period commencing on the Effective Date of this Section 5 and ending on the earlier to occur of (1) the last day of the month in which occurs the third anniversary of the Effective Date of this Section 5 or (2) the last day of the month in which the Executive attains mandatory retirement age pursuant to the terms of a mandatory retirement plan of the Company as such were in effect and applicable to the Executive immediately prior to the Effective Date of this Section 5. (d) Employment. The Company hereby agrees to continue the Executive in its employ, and the Executive hereby agrees to remain in the employ of the Company, until the expiration of the Employment Term. During the Employment Term, the Executive shall exercise such position and authority and perform such responsibilities as are commensurate with the position and authority being exercised and duties being performed by the Executive immediately prior to the Effective Date of this Section 5, which services shall be performed at the location where the Executive was employed immediately prior to the Effective Date of this Section 5 or at such other location as the Company may reasonably require; provided, that the Executive shall not be required to accept another location that she deems unreasonable in the light of her personal circumstances. (e) Compensation and Benefits. During the Employment Term, the Executive shall receive the following compensation and benefits: 1. She shall receive an annual base salary which is not less than her Base Salary immediately prior to the Effective Date of this Section 5, with the opportunity for increases, from time to time thereafter, which are in accordance with the Company's regular executive compensation practices. 2. She shall be eligible to participate on a reasonable basis, and to continue her existing participation, in annual incentive, stock option, restricted stock, long-term incentive performance and any other compensation plan which provides opportunities to receive compensation in addition to her Base Salary which is the greater of (i) the opportunities provided by the Company for executives with comparable duties or (ii) the opportunities under any such plans in which she was participating immediately prior to the Effective Date of this Section 5. 3. She shall be entitled to receive and participate in salaried employee benefits (including, but not limited to, medical, life and accident insurance, investment, stock ownership and disability benefits) and perquisites which are the greater of (i) the employee benefits and perquisites provided by the Company to executives with comparable duties or (ii) the employee benefits and perquisites to which she was entitled or in which she participated immediately prior to the Effective Date of this Section 5. 4. She shall be entitled to continue to accrue credited service for retirement benefits and to be entitled to receive retirement benefits under and pursuant to the terms of the Company's qualified retirement plan for salaried employees, the Company's supplemental executive retirement plan, and any successor or other retirement plan or agreement in effect on the Effective Date of this Section 5 in respect of her retirement, whether or not a qualified plan or agreement, so that her aggregate monthly retirement benefit from all such plans and agreements (regardless when she begins to receive such benefit) will be not less than it would be had all such plans and agreements in effect immediately prior to the Effective Date of this Section 5 continued to be in effect without change until and after she begins to receive such benefit. (f) Termination. The term "Termination" shall mean termination, prior to the expiration of the Employment Term, of the employment of the Executive with the Company for any reason other than death, disability (as described below), cause (as described below), or voluntary resignation (as described below). 1. The term "disability" means physical or mental incapacity qualifying the Executive for long-term disability under the Company's long-term disability plan. 2. The term "cause" means (i) the willful and continued failure of the Executive substantially to perform her duties with the Company (other than any failure due to physical or mental incapacity) after a demand for substantial performance is delivered to her by the Board of Directors which specifically identifies the manner in which the Board believes she has not substantially performed her duties or (ii) willful misconduct materially and demonstrably injurious to the Company. No act or failure to act by the Executive shall be considered "willful" unless done or omitted to be done by her not in good faith and without reasonable belief that her action or omission was in the best interest of the Company. The unwillingness of the Executive to accept any or all of a change in the nature or scope of her position, authorities or duties, a reduction in her total compensation or benefits, a relocation that she deems unreasonable in light of her personal circumstances, or other action by or request of the Company in respect of her position, authority or responsibility that she reasonably deems to be contrary to this Agreement, may not be considered by the Board of Directors to be a failure to perform or misconduct by the Executive. Notwithstanding the foregoing, the Executive shall not be deemed to have been terminated for cause for purposes of this Section 5 unless and until there shall have been delivered to her a copy of a resolution, duly adopted by a vote of three-quarters of the entire Board of Directors of the Company at a meeting of the Board called and held (after reasonable notice to the Executive and an opportunity for the Executive and her counsel to be heard before the Board) for the purpose of considering whether the Executive has been guilty of such a willful failure to perform or such willful misconduct as justifies termination for cause hereunder, finding that in the good faith opinion of the Board the Executive has been guilty thereof and specifying the particulars thereof. 3. The resignation of the Executive shall be deemed "voluntary" if it is for any reason other than one or more of the following: (a) The Executive's resignation or retirement (other than mandatory retirement, as aforesaid) is requested by the Company other than for cause; (b) Any significant change in the nature or scope of the Executive's position, authorities or duties from those described in Section 5(d) of this Agreement; (c) Any reduction in her total compensation or benefits from that provided in Section 5(e); (d) The breach by the Company of any other provision of this Section 5; or (e) The reasonable determination by the Executive that, as a result of a Change in Control of the Company and a change in circumstances in her position, she is unable to exercise the authorities and responsibility attached to her position and contemplated by Section 5(d) of this Agreement. 4. Termination that entitles the Executive to the payments and benefits provided in Section 5(g) shall not be deemed or treated by the Company as the termination of the Executive's employment or the forfeiture of her participation, award or eligibility for the purpose of any plan, practice or agreement of the Company referred to in Section 5(e). (g) Change in Control Severance Payments. In the event of and within 30 days following Termination, the Company shall pay to the Executive the following benefits (collectively, "Change in Control Severance Payments"): 1. Her Base Salary and all other benefits due her as if she had remained an employee pursuant to this Section 5 through the remainder of the month in which Termination occurs, less applicable withholding taxes and other authorized payroll deductions; 2. An amount equal to the target award for the Executive under the Company's annual bonus plan for the fiscal year in which Termination occurs, reduced pro rata for that portion of the fiscal year not completed as of the end of the month in which Termination occurs; provided, however, that if the Executive has deferred her award for such year under the plan, the payment due the Executive under this Paragraph (2) shall be paid in accordance with the terms of the deferral; 3. An amount equal to the target award for the Executive under the Company's long-term incentive plan for the fiscal year in which Termination occurs, reduced pro rata for that portion of the fiscal year not completed as of the end of the month in which Termination occurs; 4. A lump sum severance allowance in an amount which is equal to the sum of the amounts determined in accordance with the following subparagraphs (a) and (b): (a) an amount equal to three times the Executive's Base Salary at the rate in effect immediately prior to Termination; and (b) an amount equal to three times the highest annual bonus earned under the Company's Management Incentive Compensation Program, or successor annual bonus plan in effect from time to time, during the three consecutive complete bonus years immediately prior to Termination; provided, however, that in the event that the Executive's employment is terminated prior to the completion of three complete bonus years, any prorated annual bonus received by the Executive shall be annualized and the bonus years in which the Executive's employment commences or terminates shall be deemed to be "complete bonus years" for purposes of determining the highest annual bonus earned by the Executive during the three complete bonus years immediately prior to Termination. (h) Non-Competition and Confidentiality. The Executive agrees that: 1. There shall be no obligation on the part of the Company to provide any further Change in Control Severance Benefits (other than payments or benefits already earned or accrued) described in Section 5(g) if, when and so long as the Executive shall be employed by or otherwise engage in any business which is competitive with any business of the Company or of any of its subsidiaries, as such business existed as of the Effective Date of this Section 5, in which the Executive was engaged during her employment, and if such employment or activity is likely to cause serious damage to the Company or any of its subsidiaries; and 2. during and after the Employment Term, she will not divulge or appropriate to her own use or the use of others any secret or confidential information pertaining to the businesses of the Company or any of its subsidiaries obtained during her employment by the Company, it being understood that this obligation shall not apply when and to the extent any of such information becomes publicly known or available other than because of her act or omission. (i) Definition of "Change in Control". "Change in Control" of the Company means, and shall be deemed to have occurred upon, the first to occur of any of the following events: 1. the acquisition by any individual, entity or group (a "Person"), including any "person" within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), of beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act, of 15% or more of either (i) the then outstanding shares of common stock of the Company (the "Outstanding Common Stock") or (ii) the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors (the "Outstanding Voting Securities"); excluding, however, the following: (A) any acquisition directly from the Company (excluding any acquisition resulting from the exercise of an exercise, conversion or exchange privilege unless the security being so exercised, converted or exchanged was acquired directly from the Company), (B) any acquisition by the Company, (C) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (D) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (3) of this Section 5(i); 2. Individuals who, as of the effective date of this Section 5, constitute the Board of Directors (the "Incumbent Board") cease for any reason to constitute at least a majority of such Board; provided, that any individual who becomes a director of the Company subsequent to the effective date of this Section 5, whose election, or nomination for election by the Company's stockholders, was approved by the vote of at least a majority of the directors then comprising the Incumbent Board shall be deemed a member of the Incumbent Board; and provided further, that any individual who was initially elected as a director of the Company as a result of an actual or threatened election contest, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act, or any other actual or threatened solicitation of proxies or consents by or on behalf of any Person other than the Board shall not be deemed a member of the Incumbent Board; 3. approval by the stockholders of the Company of a reorganization, merger or consolidation of the Company or sale or other disposition of all or substantially all of the assets of the Company (a "Corporate Transaction"); excluding, however, a Corporate Transaction pursuant to which (i) all or substantially all of the individuals or entities who are the beneficial owners, respectively, of the Outstanding Common Stock and the Outstanding Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than 60% of, respectively, the outstanding shares of common stock, and the combined voting power of the outstanding securities of such corporation entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or indirectly) in substantially the same proportions relative to each other as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Common Stock and the Outstanding Voting Securities, as the case may be, (ii) no Person (other than: the Company; any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company; the corporation resulting from such Corporate Transaction; and any Person which beneficially owned, immediately prior to such Corporate Transaction, directly or indirectly, 25% or more of the Outstanding Common Stock or the Outstanding Voting Securities, as the case may be) will beneficially own, directly or indirectly, 25% or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the outstanding securities of such corporation entitled to vote generally in the election of directors and (iii) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction; or 4. the consummation of a plan of complete liquidation or dissolution of the Company. (j) Excise Tax Payments. If any of the payments to be made under Section 5 or any payments which are construed as being made under Section 5, will be subject to the tax (the "Excise Tax") imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code") (or any similar tax that may hereafter be imposed), the Company shall pay to the Executive at the time specified in Paragraph 1 below an additional amount (the "Gross-up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments (as hereinafter defined) and any federal, state and local income tax and Excise Tax upon the Gross- up Payment provided for by this paragraph, but before deduction for any federal, state or local income tax on the Change in Control Severance Payments, shall be equal to the Total Payments. 1. For purposes of determining whether any of the Change in Control Severance Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any other payments or benefits received or to be received by the Executive in connection with a Change in Control (as that term is defined in Section 5(i)) of the Company or the Executive's termination of employment (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any person whose actions result in a Change of Control of the Company or any person affiliated with the Company or such person) (which, together with the Change in Control Severance Payments, shall constitute the "Total Payments") shall be treated as "parachute payments" within the meaning of Section 280G(b)(2) of the Code, and all "excess parachute payments" within the meaning of Section 280G(b)(1) of the Code shall be treated as subject to the Excise Tax, unless in the opinion of tax counsel selected by the Company's independent auditors such other payments or benefits (in whole or in part) do not constitute parachute payments, or such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered within the meaning of Section 280G(b)(4) of the Code in excess of the base amount within the meaning of Section 280G(b)(3) of the Code or are otherwise not subject to the Excise Tax, (ii) the amount of the Total Payments which shall be treated as subject to the Excise Tax shall be equal to the lesser of (A) the total amount of the Total Payments or (B) the amount of excess parachute payments within the meaning of Section 280G(b)(1) of the Code (after applying clause (i) above), and (iii) the value of any non-cash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of Sections 280G(d)(3) and (4) of the Code. 2. For purposes of determining the amount of the Gross-up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation for the calendar year in which the Gross-up Payment is to be made and the applicable state and local income taxes at the highest marginal rate of taxation for the calendar year in which the Gross-up Payment is to be made, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time the Gross-up Payment is made, the Executive shall repay to the Company at the time that the amount of such reduction in Excise Tax is finally determined the portion of the Gross-up Payment attributable to such reduction (plus the portion of the Gross-up Payment attributable to the Excise Tax and federal and state and local income tax imposed on the portion of the Gross-up Payment being repaid by the Executive if such repayment results in a reduction in Excise Tax and/or a federal and state and local income tax deduction), plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time the Gross-up Payment is made (including by reason of any payment, the existence or amount of which cannot be determined at the time of the Gross-up Payment), the Company shall make an additional Gross-up Payment in respect of such excess (plus any interest payable with respect of such excess) at the time that the amount of such excess is finally determined. 3. The Gross-up Payment or portion thereof provided for in Paragraphs 1and 2 above shall be paid not later than the thirtieth day following payment of any amounts under this Section 5; provided, however, that if the amount of such Gross-up Payment or portion thereof cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company, of the minimum amount of such payments and shall pay the remainder of such payments (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined, but in no event later than the forty-fifth day after payment of any amounts under this Section 5. 4. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth day after demand by the Company (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code). 5. All Gross-up Payments will be paid to the Executive from the Trust established under the Trust Agreement between IMC Global Inc. and Wachovia Bank Trust Company, N.A., which has been established to protect payment obligations of the Company under this Agreement. Any repayment due the Company from the Executive as a result of the circumstances described in the last sentence of the preceding paragraph shall be made by the Executive after the Executive has received such excess amounts from the Trust. 6. If there are any changes in the Code which otherwise would or might affect the workings of this Section 5(j), then Section 5(j) shall be deemed to be revised in such a way as to provide to the Executive the maximum benefits she would be entitled to receive under the current language of Section 5(j) and the Code. (k) Enforcement Costs. The Company is aware that upon the occurrence of a Change in Control, the Board of Directors or a stockholder of the Company may then cause or attempt to cause the Company to refuse to comply with its obligations under this Section 5, or may cause or attempt to cause the Company to institute, or may institute, litigation seeking to have this Section 5 declared unenforceable, or may take, or attempt to take, other action to deny the Executive the benefits intended under this Section 5. In these circumstances, the purpose of this Section 5 could be frustrated. It is the intent of the parties that the Executive not be required to incur the legal fees and expenses associated with the protection or enforcement of her rights under this Section 5 by litigation or other legal action because such costs would substantially detract from the benefits intended to be extended to the Executive hereunder, nor be bound to negotiate any settlement of her rights hereunder under threat of incurring such costs. Accordingly, if at any time after the Effective Date of this Section 5, it should appear to the Executive that the Company is or has acted contrary to or is failing or has failed to comply with any of its obligations under this Section 5 for the reason that it regards this Section 5 to be void or unenforceable or for any other reason, or that the Company has purported to terminate her employment for cause or is in the course of doing so in either case contrary to this Section 5, or in the event that the Company or any other person takes any action to declare this Section 5 void or unenforceable, or institutes any litigation or other legal action designed to deny, diminish or to recover from the Executive the benefits provided or intended to be provided to her hereunder, and the Executive has acted in good faith to perform her obligations under this Section 5, the Company irrevocably authorizes the Executive from time to time to retain counsel of her choice at the expense of the Company to represent her in connection with the protection and enforcement of her rights hereunder, including without limitation representation in connection with termination of her employment contrary to this Section 5 or with the initiation or defense of any litigation or other legal action, whether by or against the Executive or the Company or any director, officer, stockholder or other person affiliated with the Company, in any jurisdiction. The reasonable fees and expenses of counsel selected from time to time by the Executive as hereinabove provided shall be paid or reimbursed to the Executive by the Company on a regular, periodic basis upon presentation by the Executive of a statement or statements prepared by such counsel in accordance with its customary practices, up to a maximum aggregate amount of $200,000. Counsel so retained by the Executive may be counsel representing other officers or key executives of the Company in connection with the protection and enforcement of their rights under similar agreements between them and the Company, and, unless in her sole judgement use of common counsel could be prejudicial to her or would not be likely to reduce the fees and expenses chargeable hereunder to the Company, the Executive agrees to use her best efforts to agree with such other officers or executives to retain common counsel. (l) Successors and Assigns. Except as otherwise provided herein, this Section 5 shall be binding upon and inure to the benefit of the Executive and his legal representatives, heirs, and assigns; provided, however, that in the event of the Executive's death prior to payment or distribution of all amounts, distributions, and benefits due him under this Section 5, each such unpaid amount and distribution shall be paid in accordance with this Section 5 to the person or persons designated by the Executive to the company to receive such payment or distribution and in the event the Executive has made no applicable designation, to the person or persons designated by the Executive as the beneficiary or beneficiaries of proceeds of life insurance payable in the event of the Executive's death under the Company's group life insurance plan. 6. Dispute Resolution. The Executive and the Company shall not initiate arbitration or other legal proceeding (except for any claim under Section 4) against the other party or against any directors, officers, employees, agents or representatives of the Company or its affiliates, relating in any way to this Agreement, to the Executive's retention by the Company, to the termination of this Agreement or of such retention, or to any or all other claims for employment or other discrimination under any federal, state or local law, regulation, ordinance or executive order until 30 days after the party against whom the claim(s) is made ("respondent") receives written notice from the claiming party of the specific nature of any purported claim(s) and, to the extent known or reasonably anticipated, the amount of any purported damages attributable to each such claim(s). The Executive and the Company further agree that if respondent submits the claiming party's claim(s) to the CPR Institute for Dispute Resolution or JAMS/Endispute for nonbinding mediation prior to the expiration of such 30 day period, the claiming party may not institute arbitration or other legal proceedings against respondent until the earlier of: (a) the completion of good-faith mediation efforts or (b) 90 days after the date on which the respondent received written notice of the claimant's claim(s). The mediation shall be conducted in Chicago, Illinois or such other location to which the parties may agree. The Company agrees to pay the cost of the mediator's services. Subject to the foregoing, the Executive and the Company agree that any and all claims or disputes relating to this Agreement, to the termination of this Agreement or to such retention, to the Executive's termination of employment or to her retention, that one party or that the Executive may have against any directors, officers, employees, agents, or representatives of the Company or its affiliates, including without limitation, claims for employment or other discrimination under any federal, state, or local law, regulation, ordinance, or executive order, shall be submitted for arbitration and resolved by an arbitrator selected in accordance with the rules and procedures of the CPR Institute for Dispute Resolution or JAMS/Endispute, it being understood and agreed that no more than one arbitrator shall be retained for any arbitration conducted hereunder. The arbitration proceeding shall be conducted in Chicago, Illinois or such other location to which the parties may agree. If either party pursues a claim and such claim results in an arbitrator's decision or award, both parties agree to accept such decision or award as final and binding, and judgment upon the decision or award rendered by the arbitrator may be entered in any court having jurisdiction thereof. The parties shall share the cost of the arbitrator's services. Notwithstanding any of the foregoing provisions of this Section, the Company may in its discretion immediately pursue any and all available legal and equitable remedies for the Executive's breach, threatened breach or continuing breach of any provision of Section 4 in any court, agency, or other tribunal of competent jurisdiction. 7. Entire Agreement, Amendment, Waiver. This Agreement constitutes the entire agreement between the Company and the Executive with respect to the subject matter hereof. This Agreement supersedes any prior agreements made between the parties with respect to the subject matter hereof. The parties may not amend this Agreement except by written instrument signed by both parties. No waiver by either party at any time of any breach by the other of any provision of this Agreement shall be deemed a waiver of similar or dissimilar provision at the same time or any prior or subsequent time. 8. Assumption. This Agreement shall inure to benefit of, and be binding upon, the successors and assignees of the Company. The Company shall require any successor or assignee, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all of the business or assets of the Company, expressly and unconditionally to assume and agree to perform the Company's obligations under this Agreement. 9. Notice. Any notice, request, or other communication required or permitted to be given hereunder shall be made to the addresses hereinafter set forth or to any other address designated by either of the parties hereto by notice similarly given: If to the Company: If to the Executive: Senior Vice President, Human Resources IMC Global Inc. 2100 Sanders Road Northbrook, IL 60062 All such notices, requests or other communications shall be sufficient if made in writing either (i) by personal delivery to the party entitled thereto, (ii) by registered or certified mail, return receipt requested or (iii) by express courier service. The notice, request or other communication shall be deemed effective upon personal delivery or upon actual or constructive receipt by the party entitled thereto if by registered or certified mail or express courier service; provided, however, that a notice, request or other communication received after regular business hours shall be deemed to be received on the next succeeding business day of the Company. 10. Severability. The provisions of this Agreement shall be regarded as durable, and if any provision or portion thereof is declared invalid or unenforceable by a court of competent jurisdiction, the validity and enforceability of the remainder and applicability thereof shall not be affected. 11. Applicable Law. This Agreement shall at all times be governed by and construed, interpreted and enforced in accordance with the internal laws (as opposed to the conflict of laws provisions) of the State of Illinois. IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by its duly authorized officer and the Executive has signed this Agreement as of the day and year first above written. IMC GLOBAL INC. By:________________________ __________________________ Title: Chairman of the Board of Directors and Chief Executive Officer EXHIBIT A WAIVER AND RELEASE OF CLAIMS In exchange for the Severance Benefits described in the attached Executive Severance Agreement (the "Agreement"), which I acknowledge I would not otherwise be entitled to receive, I freely and voluntarily agree to this WAIVER AND RELEASE OF CLAIMS ("WAIVER"): 1. My employment with IMC Global Inc. will terminate effective _______________________. 2. I acknowledge that the Severance Benefits described in the attached Agreement are the sole payments to which I am entitled and that I am not entitled to any additional severance payments. 3. I, and anyone claiming through me, hereby waive and release any and all claims that I may have ever had or that I may now have against IMC Global Inc., its parents, divisions, partnerships, affiliates, subsidiaries, and other related entities and their successors and assigns, and past, present and future officers, directors, employees, agents and attorneys of each of them in their individual or official capacity (hereinafter collectively referred to as "Released Parties"). Among the claims that I am waiving are claims relating to my employment or termination of employment, including, but not limited to, claims of discrimination in employment brought under the Age Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964, the Americans With Disabilities Act or other federal, state or local employment discrimination, employment, wage laws, ordinances or regulations or any common law or statutory claims of wrongful discharge or breach of contract or any other common law or statutory claims; whether for damages, lost wages or for any other relief or remedy. 4. I understand and agree that this WAIVER will be binding on me and my heirs, administrators and assigns. I acknowledge that I have not assigned any claims or filed or initiated any legal proceedings against any of the Released Parties. 5. Except as may be required by law, I agree that I will not disclose the existence or terms of this WAIVER to anyone except my accountant, attorney or spouse, each of whom shall also be bound by this confidentiality provision. 6. I understand that I have twenty-one (21) days to consider whether to sign this WAIVER and return it to B. Russell Lockridge, Senior Vice President, Human Resources of IMC Global Inc. IMC Global Inc. hereby advises me of my right to consult with an attorney before signing the WAIVER and I acknowledge that I have had an opportunity to consult with an attorney and have either held such consultation or have determined not to consult with an attorney. 7. I understand that I may revoke my acceptance of this WAIVER by delivering notice of my revocation to B. Russell Lockridge within seven (7) days of the day I sign the WAIVER. If I do not revoke my acceptance of this WAIVER within seven days of the day I sign it, it will be legally binding and enforceable. IMC GLOBAL INC. AGREED AND ACCEPTED: By: __________________________ ___________________________ Title: ________________________ ___________________________ Print Name Date:_________________________ Date:_______________________ EX-10.III.(Q) 7 EMPLOYMENT AGREEMENT Exhibit 10.iii.(q) EMPLOYMENT AGREEMENT THIS AGREEMENT between IMC Global Inc., a Delaware corporation (the "Company"), and E. Paul Dunn (the "Executive"), is made as of the 13th day of July, 1999, to become effective as provided below. WHEREAS, the Company wishes to attract and retain well-qualified executives and key personnel and to assure itself of the continuity of its management.; WHEREAS, the Executive is an officer or other key executive of the Company with significant management responsibilities in the conduct of its business; WHEREAS, the Company recognizes that the Executive is a valuable resource of the Company and the Company desires to be assured of the continued services of the Executive; WHEREAS, the Company is concerned that in the event of a possible or threatened change in control of the Company, uncertainties necessarily arise and the Executive may have concerns about the continuation of his employment status and responsibilities and may be approached by others offering competing employment opportunities, and the Company therefore desires to provide the Executive assurance as to the continuation of his employment status and responsibilities in such event; WHEREAS, the Company further desires to assure that, if a possible or threatened change in control should arise and the Executive should be involved in deliberations or negotiations in connection therewith, the Executive would be in a secure position to consider and participate in such transaction as objectively as possible in the best interests of the Company and to this end desires to protect the Executive from any direct or implied threat to his financial well being; WHEREAS, the Executive is willing to continue to serve as such but desires assurance that in the event of such a change in control he will continue to have the employment status and responsibilities he could reasonably expect absent such event and that in the event this turns out not to be the case he will have fair and reasonable severance protection on the basis of his service to the Company to that time. NOW, THEREFORE, it is hereby agreed by and between the parties as follows: 1. Operation of Agreement. The "effective date of this Agreement" shall be the date on which a change in control of the Company (as described in Section 2) occurs. This Agreement shall not become effective, and the Company shall have no obligation hereunder, if the employment of the Executive with the Company shall terminate prior to a change in control of the Company. The Executive shall have no right on account of this Agreement to be retained in the employ of the Company or to be retained in any particular position in the Company, unless and until a change in control has occurred. 2. Change in Control. The term "change in control" shall mean, and be deemed to have occurred as of the first day that any one or more of the following conditions have been satisfied. (a) the acquisition by any individual, entity or group (a "Person"), including any "person" within the meaning of Section 13 (d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), of beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act, of 15% or more of either (i) the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or, (ii) the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); excluding, however, the following: (A) any acquisition directly from the Company (excluding any acquisition resulting from the exercise of an exercise, conversion or exchange privilege unless the security being so exercised, converted or exchanged was acquired directly from the Company); (B) any acquisition by the Company, (C) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (D) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of this definition; (b) individuals who, as of the date hereof, constitute the Board of Directors (the "Incumbent Board") cease for any reason to constitute at least a majority of such Board; provided that any individual who becomes a director of the Company subsequent to the date hereof whose election, or nomination for election by the Company's stockholders, was approved by the vote of at least a majority of the directors then comprising the Incumbent Board shall be deemed a member of the Incumbent Board; and provided further, that any individual who was initially elected as a director of the Company as a result of an actual or threatened election contest, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act, or any other actual or threatened solicitation of proxies or consents by or on behalf of any Person other than the Board shall not be deemed a member of the Incumbent Board; (c) approval by the stockholders of the Company of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a "Corporate Transaction"); excluding, however, a Corporate Transaction pursuant to which (i) all or substantially all of the individuals or entities who are the beneficial owners, respectively, of the Outstanding Company Common Stock and the Outstanding Company Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than 60% of, respectively, the outstanding shares of common stock, and the combined voting power of the outstanding securities of such corporation entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or indirectly) in substantially the same proportions relative to each other as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may be, (ii) no Person (other than: the Company; any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company; the corporation resulting from such Corporate Transaction; and any Person which beneficially owned, immediately prior to such Corporate Transaction, directly or indirectly, 25% or more of the Outstanding Company Common Stock or the Outstanding Voting Securities as the case may be) will beneficially own, directly or indirectly, 25% or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the outstanding securities of such corporation entitled to vote generally in the election of directors, and (iii) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the Board of Directors of the corporation resulting from such Corporate Transaction; or (d) approval by the stockholders of the Company of a plan of complete liquidation or dissolution of the Company. 3. Employment. The Company hereby agrees to continue the Executive in its employ, and the Executive hereby agrees to remain in the employ of the Company, for the period commencing on the effective date of this Agreement and ending on the earlier to occur of (a) the last day of the month in which occurs the third anniversary of the effective date of this Agreement or (b) the last day of the month in which the Executive attains mandatory retirement age pursuant to the terms of a mandatory retirement plan of the Company as such were in effect and applicable to the Executive immediately prior to the effective date of this Agreement (the "Employment Period"). During the Employment Period, the Executive shall exercise such position and authority and perform such responsibilities as are commensurate with the position and authority being exercised and duties being performed by the Executive immediately prior to the effective date of this Agreement, which services shall be performed at the location where the Executive was employed immediately prior to the effective date of this Agreement or at such other location as the Company may reasonably require; provided that the Executive shall not be required to accept any such other location that he deems unreasonable in the light of his personal circumstances. 4. Compensation and Benefits. During the Employment Period, the Executive shall receive the following compensation and benefits: (a) He shall receive an annual base salary which is not less than his annual base salary immediately prior to the effective date of this Agreement, with the opportunity for increases, from time to time thereafter which are in accordance with the Company's regular executive compensation practices. (b) He shall be eligible to participate on a reasonable basis, and to continue his existing participation, in annual incentive, stock option, restricted stock, long-term incentive performance plans, and any other incentive compensation plan which provides opportunities to receive compensation in addition to his annual base salary, which are the greater of (i) the opportunities provided by the Company for executives with comparable duties or (ii) the opportunities under any such plans in which he was participating immediately prior to the effective date of this Agreement. (c) He shall be entitled to receive and participate in salaried employee benefits (including, but not limited to, medical, life and accident insurance, investment, stock ownership, and disability benefits) and perquisites which are the greater of (i) the employee benefits and perquisites provided by the Company to executives with comparable duties or (ii) the employee benefits and perquisites to which he was entitled or in which he participated immediately prior to the effective date of this Agreement. (d) He shall be entitled to continue to receive service credit for retirement benefits and to be entitled to receive retirement benefits under and pursuant to the terms of the Company's qualified retirement plan for salaried employees and any successor or other retirement plan or agreement in effect on the effective date of this Agreement in respect of his retirement, whether or not a qualified plan or agreement, so that his aggregate retirement benefit from all such plans and agreements (regardless of when he begins to receive such benefit) will be not less than it would be had all such plans and agreements in effect immediately prior to the effective date of this Agreement continued to be in effect without change until and after he begins to receive such benefit. 5. Termination. The term "Termination" shall mean termination, prior to the expiration of the Employment Period, of the employment of the Executive with the Company for any reason other than death, disability (as described below), cause (as described below), or voluntary resignation (as described below). (a) The term "disability" means physical or mental incapacity qualifying the Executive for long-term disability under the Company's long-term disability plan. (b) The term "cause" means (i) the willful and continued failure of the Executive substantially to perform his duties with the Company (other than any failure due to physical or mental incapacity) after a demand for substantial performance is delivered to him by the Board of Directors which specifically identifies the manner in which the Board believes he has not substantially performed his duties or (ii) willful misconduct materially and demonstrably injurious to the Company. No act or failure to act by the Executive shall be considered "willful" unless done or omitted to be done by him not in good faith and without reasonable belief that his action or omission was in the best interest of the Company. The unwillingness of the Executive to accept any or all of a change in the nature or scope of his position, authorities or duties, a reduction in his total compensation or benefits, a relocation that he deems unreasonable in light of his personal circumstances, or other action by or request of the Company in respect of his position, authority, or responsibility that he reasonably deems to be contrary to this Agreement, may not be considered by the Board of Directors to be a failure to perform or misconduct by the Executive. Notwithstanding the foregoing, the Executive shall not be deemed to have been terminated for cause for purposes of this Agreement unless and until there shall have been delivered to him a copy of a resolution, duly adopted by a vote of three-quarters of the entire Board of Directors of the Company at a meeting of the Board called and held (after reasonable notice to the Executive and an opportunity for the Executive and his counsel to be heard before the Board) for the purpose of considering whether the Executive has been guilty of such a willful failure to perform or such willful misconduct as justifies termination for cause hereunder, finding that in the good faith opinion of the Board the Executive has been guilty thereof and specifying the particulars thereof. (c) The resignation of the Executive shall be deemed "voluntary" if it is for any reason other than one or more of the following: (i) The Executive's resignation or retirement (other than mandatory retirement, as aforesaid) is requested by the Company other than for cause; (ii) Any significant change in the nature or scope of the Executive's position, authorities or duties from those described in Section 3; (iii) Any reduction in his total compensation or benefits from that provided in Section 4; (iv) The breach by the Company of any other provision of this Agreement; or (v) The reasonable determination by the Executive that, as a result of a change in control of the Company and a change in circumstances thereafter significantly affecting his position, he is unable to exercise the authorities and responsibilities attached to his position and contemplated by Section 3. (d) Termination that entitles the Executive to the payments and benefits provided in Section 6 shall not be deemed or treated by the Company as the termination of the Executive's employment or the forfeiture of his participation, award, or eligibility for the purpose of any plan, practice or agreement of the Company referred to in Section 4. 6. Termination Payments and Benefits. In the event of and within 30 days following Termination, the Company shall pay to the Executive: (a) His base salary and all other benefits due him as if he had remained an employee pursuant to this Agreement through the remainder of the month in which Termination occurs less applicable withholding taxes and other authorized payroll deductions; (b) An amount equal to the target award for the Executive under the Company's annual bonus plan for the fiscal year in which Termination occurs, reduced pro rata for that portion of the fiscal year not completed as of the end of the month in which Termination occurs, provided that if the Executive has deferred his award for such year under the Company's deferred compensation plan, the payment due the Executive under this Paragraph (b) shall be paid in accordance with the terms of the deferral; (c) An amount equal to the target award for the Executive under the Company's long-term incentive plan for the year in which Termination occurs, reduced pro rata for that portion of the fiscal year not completed as of the end of the month in which Termination occurs; and (d) A lump sum severance allowance in an amount which is equal to the sum of the amounts determined in accordance with the following subparagraphs (i) and (ii): (i) An amount equivalent to three times his annual base salary at the rate in effect immediately prior to Termination; and (ii) An amount equivalent to three times the highest annual bonus earned under the Company's Management Incentive Compensation Program, or successor bonus plan in effect from time to time, during the three consecutive complete bonus years immediately prior to Termination; provided, however, that in the event that the Executive's employment is terminated prior to the completion of three complete bonus years, any prorated annual bonus received by the Executive shall be annualized and the bonus years in which the Executive's employment commences or terminates shall be deemed to be "complete bonus years" for purposes of determining the highest annual bonus earned by the Executive during the three complete bonus years immediately prior to Termination. 7. Non-Competition and Confidentiality. The Executive agrees that: (a) there shall be no obligation on the part of the Company to provide any further payments or benefits (other than payments or benefits already earned or accrued) described in Section 6 if, when, and so long as the Executive shall be employed by or otherwise engage in any business which is competitive with any business of the Company or of any of its subsidiaries, as such business existed as of the effective date of this Agreement, in which the Executive was engaged during his employment, and if such employment or activity is likely to cause or causes serious damage to the Company or any of its subsidiaries; and (b) during and after the Employment Period, he will not divulge or appropriate to his own use or the use of others any secret or confidential information pertaining to the business of the Company or any of its subsidiaries obtained during his employment by the Company, it being understood that this obligation shall not apply when and to the extent any of such information becomes publicly known or available other than because of his act or omission. 8. Arrangements Not Exclusive or Limiting. The specific arrangements referred to herein are not intended to exclude or limit the Executive's participation in other benefits available to executive personnel generally, or to preclude or limit other compensation or benefits as may be authorized by the Board of Directors of the Company at any time, or to limit or reduce any compensation or benefit to which the Executive would be entitled but for this Agreement. 9. Enforcement Costs. The Company is aware that upon the occurrence of a change in control, the Board of Directors or a stockholder of the Company may then cause or attempt to cause the Company to refuse to comply with its obligations under this Agreement, or may cause or attempt to cause the Company to institute, or may institute, litigation seeking to have this Agreement declared unenforceable, or may take, or attempt to take, other action to deny the Executive the benefits intended under this Agreement. In these circumstances, the purpose of this Agreement could be frustrated. It is the intent of the parties that the Executive not be required to incur the legal fees and expenses associated with the protection or enforcement of his rights under this Agreement by litigation or other legal action because such costs would substantially detract from the benefits intended to be extended to the Executive hereunder, nor be bound to negotiate any settlement of his rights hereunder under threat of incurring such costs. Accordingly, if at any time after the effective date of this Agreement, it should appear to the Executive that the Company is or has acted contrary to or is failing or has failed to comply with any of its obligations under this Agreement for the reason that it regards this Agreement to be void or unenforceable or for any other reason, or that the Company has purported to terminate his employment for cause or is in the course of doing so in either case contrary to this Agreement, or in the event that the Company or any other person takes any action to declare this Agreement void or unenforceable, or institutes any litigation or other legal action designed to deny, diminish or to recover from the Executive the benefits provided or intended to be provided to him hereunder, and the Executive has acted in good faith to perform his obligations under this Agreement, the Company irrevocably authorizes the Executive from time to time to retain counsel of his choice at the expense of the Company to represent him in connection with the protection and enforcement of him rights hereunder, including without limitation representation in connection with termination of his employment contrary to this Agreement or with the initiation or defense of any litigation or other legal action, whether by or against the Executive or the Company or any director, officer, stockholder or other person affiliated with the Company, in any jurisdiction. The reasonable fees and expenses of counsel selected from time to time by the Executive as hereinabove provided shall be paid or reimbursed to Executive by the Company on a regular, periodic basis upon presentation by the Executive of a statement or statements prepared by such counsel in accordance with its customary practices, up to a maximum aggregate amount of $200,000. Counsel so retained by the Executive may be counsel representing other officers or key executives of the Company in connection with the protection and enforcement of their rights under similar agreements between them and the Company, and, unless in his sole judgment use of common counsel could be prejudicial to him or would not be likely to reduce the fees and expenses chargeable hereunder to the Company, the Executive agrees to use his best efforts to agree with such other officers or executives to retain common counsel. 10. Notices. Any notices, requests, demands and other communications provided for by this Agreement shall be in writing and personally delivered by hand or sent by registered or certified mail, if to the Executive, to him at the last address he has filed in writing with the Company or, if to the Company, to its corporate secretary at its principal executive office. 11. Non-Alienation. The Executive shall not have any right to pledge, hypothecate, anticipate, or in any way create a lien upon any amounts provided under this Agreement, and no payments or benefits due hereunder shall be assignable in anticipation of payment either by voluntary or involuntary acts or by operation of law. So long as the Executive lives, no person, other than the parties hereto, shall have any rights under or interest in this Agreement or the subject matter hereof. 12. Entire Agreement; Amendment. This Agreement constitutes the entire agreement superseding any prior agreement of the parties in respect of the subject matter hereof. No provision of this Agreement may be amended, waived, or discharged except by the mutual written agreement of the parties. The consent of any other person to any such amendment, waiver or discharge shall not be required. 13. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Company, its successors or assigns, by operation of law or otherwise, including without limitation any corporation or other entity or person which shall succeed (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business and/or assets of the Company, and the Company will require any successor, by agreement in form and substance satisfactory to the Executive, expressly to assume and agree to perform this Agreement. Except as otherwise provided herein, this Agreement shall be binding upon and inure to the benefit of the Executive and his legal representatives, heirs, and assigns; provided, however, that in the event of the Executive's death prior to payment or distribution of all amounts, distributions, and benefits due him hereunder, each such unpaid amount and distribution shall be paid in accordance with this Agreement to the person or persons designated by the Executive to the Company to receive such payment or distribution and in the event the Executive has made no applicable designation, to the person or persons designated by the Executive as the beneficiary or beneficiaries of proceeds of life insurance payable in the event of the Executive's death under the Company's group life insurance plan. 14. Governing Law. Except to the extent required to be governed by the law of the State of Delaware because the Company is incorporated under the laws of that state, the validity, interpretation, and enforcement of this Agreement shall be governed by the law of whichever of the State of Illinois or the State of Delaware that to the greater extent permits or does not prevent the enforcement of this Agreement in accordance with its terms. 15. Severability. In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect. 16. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together constitute one and the same instrument. IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by its duly authorized officer and the Executive has signed this Agreement as of the day and year first above written. IMC GLOBAL INC. E. PAUL DUNN By:________________________ __________________________ Title: Chairman of the Board of Directors and Chief Executive Officer EX-10.III.(R) 8 GROSS UP AGREEMENT Exhibit 10.iii.(r) July 13, 1999 E. Paul Dunn Vice President and Treasurer IMC Global Inc. 2100 Sanders Road Northbrook, Illinois 60062 Dear Paul: This Agreement is to assure you that in the event you become entitled to payments by operation of the Employment Agreement dated July 13, 1999 ("Employment Agreement") between you and IMC Global Inc. ("Global") due to a "Change in Control" (as that term is defined in the Employment Agreement) of Global, and if any of the payments to be made under the Employment Agreement or any payments which are construed as being made under the Employment Agreement, ("Agreement Payments") will be subject to the tax ("Excise Tax") imposed by Section 4999 of the Internal Revenue Code of 1986, as amended ("Code") (or any similar tax that may hereafter be imposed), Global shall pay to you (at the time specified in Paragraph (c) below) an additional amount ("Gross-up Payment") such that the net amount retained by you, after deduction of any Excise Tax on the Total Payments (as hereinafter defined) and any federal, state and local income tax and Excise Tax upon the Gross-up Payment provided for by this paragraph, but before deduction for any federal, state or local income tax on the Agreement Payments, shall be equal to the Total Payments. a) For purposes of determining whether any of the Agreement Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any other payments or benefits received or to be received by you in connection with a Change in Control of Global or your termination of employment (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with Global, any person whose actions result in a Change of Control of Global or any person affiliated with Global or such person) (which, together with the Agreement Payments, shall constitute the "Total Payments") shall be treated as "parachute payments" within the meaning of Section 280G(b)(2) of the Code, and all "excess parachute payments" within the meaning of Section 280G(b)(1) of the Code shall be treated as subject to the Excise Tax, unless in the opinion of tax counsel selected by Global's independent auditors such other payments or benefits (in whole or in part) do not constitute parachute payments, or such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered within the meaning of Section 280G(b)(4) of the Code in excess of the base amount within the meaning of Section 280G(b)(3) of the Code or are otherwise not subject to the Excise Tax, (ii) the amount of the Total Payments which shall be treated as subject to the Excise Tax shall be equal to the lesser of (a) the total amount of the Total Payments or (b) the amount of excess parachute payments within the meaning of Section 280G(b)(1) of the Code (after applying clause (i), above), and (iii) the value of any non-cash benefits or any deferred payment or benefit shall be determined by Global's independent auditors in accordance with the principles of Sections 280G(d)(3) and (4) of the Code. b) For purposes of determining the amount of the Gross-up Payment, you shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation for the calendar year in which the Gross-up Payment is to be made and the applicable state and local income taxes at the highest marginal rate of taxation for the calendar year in which the Gross-up Payment is to be made, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time the Gross- up Payment is made, you shall repay to Global at the time that the amount of such reduction in Excise Tax is finally determined the portion of the Gross-up Payment attributable to such reduction (plus the portion of the Gross-up Payment attributable to the Excise Tax and federal and state and local income tax imposed on the portion of the Gross-up Payment being repaid by you if such repayment results in a reduction in Excise Tax and/or a federal and state and local income tax deduction), plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time the Gross-up Payment is made (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-up Payment), Global shall make an additional Gross-up Payment in respect of such excess (plus any interest payable with respect of such excess) at the time that the amount of such excess is finally determined. c) The Gross-up Payment or portion thereof provided for in Paragraphs (a) and (b) above shall be paid not later than the thirtieth day following payment of any amounts under your Employment Agreement; provided, however, that if the amount of such Gross-up Payment or portion thereof cannot be finally determined on or before such day, Global shall pay to you on such day an estimate, as determined in good faith by Global, of the minimum amount of such payments and shall pay the remainder of such payments (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined, but in no event later than the forty-fifth day after payment of any amounts under the Employment Agreement. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by Global to you, payable on the fifth day after demand by Global (together with interest at the rate provided in Section 1274 (b)(2)(B) of the Code). All Gross-up Payments will be paid to you from the Trust established under the Trust Agreement between IMC Global Inc. and Wachovia Bank Trust Company, N.A., which has been established to protect payment obligations of Global under this Agreement. Any repayment due Global from you as a result of the circumstances described in the last sentence of the preceding paragraph shall be made by you after you have received such excess amounts from the Trust. This Agreement supersedes any and all previous agreements entered into between you and Global concerning Gross-up Payments. Global is pleased to be able to provide you with this additional assurance of economic protection in the event of a Change in Control. Please sign, date and return one original of this letter. Sincerely yours, /s/ Robert E. Fowler - --------------------- Robert E. Fowler, Jr. Chief Executive Officer I have read this Agreement and understand and accept its terms. Executive:____________________________ Date:______________________ EX-10.III.(S) 9 DEFERRED COMPENSATION PLAN Exhibit 10.iii.(s) IMC GLOBAL INC. DEFERRED COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS 1. Purpose The purpose of the Deferred Compensation Plan for Non- Employee Directors (the "Plan") is to attract and retain well-qualified persons who are not employees of IMC Global Inc. (the "Company") or any of its subsidiaries for service as directors of the Company by providing such persons with the opportunity to defer all or a portion of the compensation which they earn as directors of the Company. 2. Administration The Board of Directors of the Company (the "Board") shall have the authority to administer and interpret the provisions of the Plan and to prescribe forms and promulgate rules and regulations with respect thereto. All determinations of the Board with respect to the plan shall be final and binding upon all persons. 3. Eligibility Directors of the Company who are not employees of the Company or any of its subsidiaries are eligible to participate in the Plan. 4. Election to Defer (a) An election to defer, or to cease to defer, compensation earned as a director of the Company shall be effective only with respect to compensation earned in calendar years following the year in which the election is made. An election to defer shall specify the time of payment of the compensation subject to such election, plus interest credited thereon prior to the payment date. All elections shall be in writing and shall be made on such forms, at such time and in such manner as the Board may from time to time prescribe. (b) An election shall be binding upon, and shall inure to the benefit of the participant, the participant's designated beneficiary, the heirs, legatees and personal representatives of the participant and beneficiary and the successors and assigns of the Company. 5. Deferral of Compensation (a) Each participant may, with respect to compensation earned as a director of the Company, elect to have all or a portion of such compensation deferred and, together with the interest credited thereon, paid in cash in the manner set forth in paragraph 5(d) below. (b) A bookkeeping account shall be established for each participant. The account shall reflect the amount to which the participant is entitled in accordance with paragraph 5(c) below. (c) The account of a participant who elects to defer compensation shall be credited with the dollar amount of compensation so deferred on each date that the participant is entitled to payment for services as a director. Interest on the balance of the account shall be computed and credited quarterly on March 31, June 30, September 30 and December 31 of each year at the prime rate published in the "Money Rates" section of The Wall Street Journal on the first business day of the calendar quarter ending on such date plus two percentage points (2%). (d) Payment to the participant of amounts deferred pursuant to a deferral election, together with the interest credited thereon, shall be made in a single cash payment on the earlier of (i) the payment date specified in the participant's election or (ii) the month of January in the second calendar year following the participant's retirement or other termination of service as a director of the Company. 6. Payment in the Event of Participant's Death (a) Any of the deferred compensation which shall not have been paid to the participant during his or her lifetime shall be paid within 60 days after the participant's death to such person or persons as the participant may designate in writing to receive the same. The participant shall have the right during his or her lifetime to designate and to change the designation of the person or persons to whom the Company shall make any payments of deferred compensation remaining unpaid at the death of the participant. The Company shall rely upon the last of such written designations in its possession in making any such payments. (b) If any of the deferred compensation shall remain unpaid upon the death of the last to survive of the participant or the participant's beneficiary, the Company shall pay the aggregate amount thereof to the executor or administrator of the estate of the last to survive of the participant and the participant's beneficiary. 7. No Right of Assignment or Acceleration The right of the participant, and the participant's beneficiary, to receive deferred compensation is personal and is not subject to the acceleration or assignment. The Company shall have no liability for the payment of any of the deferred compensation to any other person or in any other manner than as provided in this Plan. 8. Amendment or Discontinuance The Board may amend, rescind or terminate the Plan as it shall deem advisable; provided, however, that no change shall be made with respect to compensation deferred under the Plan which would impair a participant's rights to such compensation without his or her consent. 9. Governing Law This Plan and all determinations made and actions taken pursuant hereto shall be governed by the laws of the State of Illinois pertaining to contracts made and to be performed wholly within such jurisdiction, except as federal law may apply. 10. Effective Date The Plan shall be effective with respect to compensation earned for service as a director of the Company on and after January 1, 1998. EX-10.III.(T) 10 FORM OF RESTORATION PLAN Exhibit 10.iii.(t) IMC GLOBAL INC. 1998 RESTORATION PLAN (Effective as of January 1, 1998) Contents Page Article 1. Introduction 1 Article 2. Definitions 1 Article 3. Eligibility 2 Article 4. Matching Contributions 3 Article 5. Profit Sharing Contributions 3 Article 6. Deemed Investment Earnings 4 Article 7. Establishment of Trust 5 Article 8. Distributions 5 Article 9. Administration of the Plan 7 Article 10. Amendment and Termination 7 Article 11. General Provisions 8 IMC GLOBAL INC. 1998 RESTORATION PLAN Article 1. Introduction 1.1. Title. The title of this Plan shall be the "IMC Global Inc. 1998 Restoration Plan." 1.2. Purpose. This Plan shall constitute an unfunded nonqualified deferred compensation arrangement established for the purpose of providing deferred compensation to a select group of management or highly compensated employees (as defined for purposes of Title I of ERISA) of the Company and adopting Affiliates. The Plan is intended to be maintained and administered in connection with the "IMC Global Inc. Profit Sharing and Savings Plan" for the benefit of selected employees of the Company and adopting Affiliates whose benefits under the Qualified Plan are restricted by the limitations of Sections 401(a)(17), 402(g) and 415 of the Code or are reduced as a result of voluntary deferrals of compensation under the "IMC Global Inc 1998 Voluntary Nonqualified Deferred Compensation Plan". Article 2. Definitions "Accounts" means the Matching Contributions Account and Profit Sharing Contributions Account maintained on behalf of a Participant. "Affiliate" means an entity that, together with the Company, is considered as a single employer under Section 414(b) or (c) of the Code. "Code" means the Internal Revenue Code of 1986, as amended. "Committee" means the committee described in Section 10.1 of the Qualified Plan which is a named fiduciary of and responsible for the administration of the Qualified Plan. "Company" means IMC Global Inc., a Delaware corporation. "Effective Date" means January 1, 1998. "Employer" means, both collectively and individually as determined by the context of the applicable provision, the Company and any Affiliate which adopts this Plan with the approval of the Company. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. "Matching Contributions" means the contributions made on behalf of a Participant pursuant to Section 4.1 of this Plan. "Matching Contributions Account" means the account maintained on behalf of each Participant which will represent the amount of the Matching Contributions made on behalf of such Participant pursuant to Section 4.1 of the Plan and the amount of the deemed investment earnings and losses on such Participant's Matching Contributions. "Participant" means any eligible employee of an Employer who is participating under the Plan pursuant to Article 3. "Permitted Investment" means such fund or type of investment as may be approved by the Committee from time to time for purposes of this Plan. "Plan" means this "IMC Global Inc. 1998 Restoration Plan". "Plan Year" means the calendar year. "Profit Sharing Contributions" means the contributions made on behalf of a Participant pursuant to Section 5.1 of this Plan. "Profit Sharing Contributions Account" means the account maintained on behalf of each Participant which will represent the amount of Profit Sharing Contributions made on behalf of such Participant pursuant to Section 5.1 of the Plan and the amount of deemed investment earnings and losses on such Participant's Profit Sharing Contributions. "Qualified Plan" means the "IMC Global Inc. Profit Sharing and Savings Plan," as amended from time to time. "Valuation Date" means the last day of each calendar quarter. Article 3. Eligibility The Committee shall designate, as of the Effective Date and as of the beginning of each Plan Year thereafter, each employee of an Employer who is eligible to participate in this Plan; provided, that only those employees of an Employer who are in a select group of management or are highly compensated (within the meaning of Title I of ERISA) may be designated as eligible to participate in this Plan. The Committee shall not designate any employee of an Employer as eligible to participate in the Plan for a Plan Year unless such employee: (i) is eligible to participate in the Qualified Plan for such Plan Year; and (ii) is in salary grade 20 or above or is otherwise selected in a nondiscriminatory manner by the Committee. Article 4. Matching Contributions 4.1. Matching Contributions. For each Plan Year, a Matching Contribution shall be credited to each Participant's Matching Contributions Account in an amount equal to (i) the excess of the amount of the matching contributions that would have been made with respect to the Employee Contributions and Salary Reduction Contributions (as defined in the Qualified Plan) of such Participant for such Plan Year if Employee Contributions and Salary Reduction Contributions had been made by the Participant under the Qualified Plan without regard to the limitations of Sections 401(a)(17), 402(g) and 415 of the Code and without regard to voluntary deferrals of compensation by the Participant under the IMC Global Inc. 1998 Voluntary Nonqualified Deferred Compensation Plan over the amount of the matching contributions actually made for the Participant under the Qualified Plan for such Plan Year, reduced by (ii) FICA withholding on the amount so determined. 4.2. Matching Contributions Account. The Committee shall establish and maintain a Matching Contributions Account for each Participant who is entitled to receive Matching Contributions under this Article 4. The Participant's Matching Contributions Account shall be a bookkeeping account maintained by the Company and shall reflect the amount of the Matching Contributions credited hereunder on behalf of the Participant. The amount of any deemed investment earnings and losses on the amounts reflected in a Participant's Matching Contributions Account shall be credited or charged to his Matching Contributions Account in accordance with Article 6. Article 5. Profit Sharing Contributions 5.1. Profit Sharing Contributions. For each Plan Year, a Profit Sharing Contribution shall be credited to the Profit Sharing Contributions Account of each Participant for whom a profit sharing contribution is made for such Plan Year under the Qualified Plan in an amount equal to (i) the excess of the amount of the profit sharing contribution that would have been made for the Participant under the Qualified Plan for such Plan Year if such profit sharing contribution had been made to the Qualified Plan without regard to the limitations of Sections 401(a)(17), 402(g) and 415 of the Code and without regard to voluntary deferrals of compensation by the Participant under the IMC Global Inc. 1998 Voluntary Nonqualified Deferred Compensation Plan over the amount of the profit sharing contribution actually made for the Participant under the Qualified Plan for the Plan Year, reduced by (ii) required FICA withholding on the amount so determined (if vested) and on the amount of any previously made Profit Sharing Contributions (and deemed investment earnings thereon) that have become vested during the Plan Year. 5.2. Profit Sharing Contributions Account. The Committee shall establish and maintain a Profit Sharing Contributions Account for each Participant who is entitled to receive Profit Sharing Contributions under this Article 5. The Participant's Profit Sharing Contributions Account shall be a bookkeeping account maintained by the Company and shall reflect the amount of the Profit Sharing Contributions credited hereunder on behalf of the Participant. The amount of any deemed investment earnings and losses on the amounts reflected in a Participant's Profit Sharing Contributions Account shall be credited or charged to his Profit Sharing Contributions Account in accordance with Article 6. Article 6. Deemed Investment Earnings6.1. (a) Permitted Investments. Each Participant may designate from time to time, in accordance with rules and procedures established by the Committee, that all or a portion of his Accounts be deemed to be invested in one or more Permitted Investments. (b) Receipts. Each Participant's Accounts shall be deemed to receive all interest, dividends, earnings and other property which would have been received with respect to a Permitted Investment deemed to be held in such Accounts if the Company actually owned such Permitted Investment. Cash deemed received with respect to a Permitted Investment shall be credited to the Accounts as of the date it would have been available for reinvestment if the Company actually owned the Permitted Investment. (c) Elections. All elections to be made by a Participant pursuant to this Article 6 shall be made only by such Participant; provided, that if such Participant dies before his entire Account balances are distributed pursuant to the terms of the Plan, or if the Committee determines that such Participant is legally incompetent or otherwise incapable of managing his own affairs, the Committee shall have the authority to itself make the elections pursuant to this Section 6.1 on behalf of such Participant, or designate such Participant's designated beneficiary, legal representative or some near relative of such Participant to make the elections pursuant to this Section 6.1 on behalf of such Participant. (d) Actual Investment Not Required. The Company need not actually make any Permitted Investment. If the Company should from time to time make any investment similar to a Permitted Investment, such investment shall be solely for the Company's own account and the Participant shall have no right, title or interest therein. Accordingly, each Participant is solely an unsecured creditor of the Company with respect to any amount distributable to him under the Plan. 6.2. Crediting of Contributions. The Company shall credit all Matching Contributions and all Profit Sharing Contributions made on behalf of a Participant pursuant to Article 4 and Article 5, respectively, to such Participant's Matching Contributions Account or Profit Sharing Contributions Account, as appropriate, within a reasonable period following the end of the Plan Year for which such contributions are made. Article 7. Establishment of Trust 7.1. Establishment of Trust. The Company may, in its sole discretion, establish a grantor trust (as described in Section 671 of the Code) for the purpose of accumulating assets to provide for the obligations hereunder. The assets and income of such trust shall be subject to the claims of the general creditors of an Employer hereunder, but only to the extent that such assets and income are attributable to the contributions of that individual Employer. The establishment of such a trust shall not affect the Employers' liability to pay benefits hereunder except that any such liability shall be offset by any payments actually made to a Participant under such a trust. In the event such a trust is established, the amount to be contributed thereto shall be determined by the Company and the investment of such assets shall be made in accordance with the trust document. 7.2. Status of Trust. Participants shall have no direct or secured claim in any asset of the trust or in specific assets of their Employer and will have the status of general unsecured creditors of their Employer for any amounts due under this Plan. The assets and income of the trust will be subject to the claims of any Employer's creditors, but only to the extent that such assets and income are attributable to the contributions of that individual Employer. Article 8. Distributions 8.1. Distribution of Matching Contributions Account. Each Participant shall at all times have a one hundred percent (100%) vested and nonforfeitable interest in his Matching Contributions Account. If a Participant's employment with his Employer and all Affiliates is terminated for any reason, including death, retirement, total and permanent disability, resignation or dismissal, the balance in the Participant's Matching Contributions Account (determined as of the Valuation Date on or immediately preceding the date on which the distribution is processed) shall be distributed to the Participant (or, in the event of the Participants's death, to his beneficiary) as soon as administratively practicable after the end of the calendar quarter in which the Participant's termination of employment occurs. Such payment shall be made in the form of a lump sum payment. If such Participant is entitled to a Matching Contribution for the Plan Year in which his employment terminates that is not reflected in the Matching Contributions Account balance so distributed to the Participant, the amount of such Matching Contribution shall be distributed to the Participant as soon as administratively practicable after the end of the Plan Year in which the Participant's termination of employment occurs. 8.2. Distribution of Profit Sharing Contributions Account. A Participant shall become one hundred percent (100%) vested in his Profit Sharing Contributions Account upon the completion of five years of Service (as defined in the Qualified Plan). If a Participant's employment with his Employer and all Affiliates is terminated by reason of his death, his retirement after attaining age 65 or after he has completed five years of Service (as defined in the Qualified Plan), the balance in the Participant's Profit Sharing Contributions Account (determined as of the Valuation Date on which the distribution is processed) shall be distributed to the Participant (or, in the event of the Participant's death, to his beneficiary) as soon as administratively practicable after the end of the calendar quarter in which the Participant's termination of employment occurs. Such payment shall be made in the form of a lump sum payment. If such Participant is entitled to a Profit Sharing Contribution for the Plan Year in which his employment terminates that is not reflected in the Profit Sharing Contributions Account balance so distributed to the Participant, the amount of such Profit Sharing Contribution shall be distributed to the Participant as soon as administratively practicable after the end of the Plan Year in which the Participant's termination of employment occurs. If a Participant's employment with his Employer and all Affiliates is terminated before the Participant has completed five years of Service (as defined in the Qualified Plan) for a reason other than his death or retirement after attaining age 65, the balance in the Participant's Profit Sharing Contributions Account shall be forfeited. 8.3. Involuntary Distributions. Notwithstanding the foregoing provisions of this Article 8, the Committee may on its own initiative authorize the Company to distribute to any Participant (or to a designated beneficiary in the event of the Participant's death) all or any portion of the Participant's Matching Contributions Account and Profit Sharing Contributions Account. Such payment would be specifically authorized in the event that there is a change in tax law, a published ruling or similar announcement issued by the Internal Revenue Service, a regulation issued by the Secretary of the Treasury, a decision by a court of competent jurisdiction involving a Participant or a beneficiary, or a closing agreement made under Section 7121 of the Code that is approved by the Internal Revenue Service and involves a Participant, and the Committee determines that a Participant has or will recognize income for federal income tax purposes with respect to amounts deferred under this Plan prior to the time such amounts are paid to the Participant. 8.4. Designation of Beneficiaries. Each Participant may name any person (who may be named concurrently, contingently or successively) to whom the Participant's Accounts under the Plan are to be paid if the Participant dies before such Accounts are fully distributed. Each such beneficiary designation will revoke all prior designations by the Participant, shall not require the consent of any previously named beneficiary, shall be in a form prescribed by the Committee and will be effective only when filed with the Committee during the Participant's lifetime. If a Participant fails to designate a beneficiary before his death, as provided above, or if the beneficiary designated by a Participant dies before the date of the Participant's death or before payment of the Participant's Accounts, the Committee, in its discretion, may pay the Participant's Accounts (a) to the surviving spouse of such deceased Participant, if any, or (b) if there shall be no surviving spouse, the surviving children of such deceased Participant, if any, in equal shares, or (c) if there shall be no surviving spouse or children, to the executors or administrators of the estate of such deceased Participant, or (d) if no executor or administrator shall have been appointed for the estate of such deceased Participant within six months from the date of the Participant's death, to the person or persons who would be entitled under the intestate succession laws of the state of the Participant's domicile to receive the Participant's personal estate. Article 9. Administration of the Plan The Plan shall be administered by the Committee. The duties and authority of the Committee under the Plan shall include (a) the interpretation of the provisions of the Plan, (b) the adoption of any rules and regulations which may become necessary or advisable in the operation of the Plan, (c) the making of such determinations as may be permitted or required pursuant to the Plan, and (d) the taking of such other actions as may be required for the proper administration of the Plan in accordance with its terms. Any decision of the Committee with respect to any matter within the authority of the Committee shall be final, binding and conclusive upon the Company and each Participant, former Participant, designated beneficiary, and each person claiming under or through any Participant or designated beneficiary; and no additional authorization or ratification by the board of directors of the Company shall be required. Any action taken by the Committee with respect to any one or more Participants shall not be binding on the Committee as to any action to be taken with respect to any other Participant. A member of the Committee may be a Participant, but no member of the Committee may participate in any decision directly affecting his rights or the computation of his benefits under the Plan. Each determination required or permitted under the Plan shall be made by the Committee in the sole and absolute discretion of the Committee. Article 10. Amendment and Termination 10.1. Amendment. The Company shall have the right to amend the Plan by action of the board of directors of the Company (or a duly appointed delegate thereof) from time to time, except that no such amendment shall, without the consent of the Participant to whom deferred compensation has been credited to any Account under this Plan, adversely affect the right of the Participant (or his beneficiary) to receive payments of such deferred compensation under the terms of this Plan. 10.2. Plan Termination. The Plan may be terminated with respect to the Company or any Employer at any time by action of the board of directors of the Company (or a duly appointed delegate thereof) in its sole discretion. The Plan shall be automatically terminated with respect to any Employer upon the termination of the Qualified Plan with respect to such Employer pursuant to Section 15.3 of the Qualified Plan. Notwithstanding the foregoing, no termination of this Plan shall alter the right of a Participant (or his beneficiary) to payments of amounts previously credited to such Participant's Accounts under the Plan. Article 11. General Provisions 11.1. Non-Alienation of Benefits. A Participant's rights to the amounts credited to his Accounts under the Plan shall not be salable, transferable, pledgeable or otherwise assignable, in whole or in part, by the voluntary or involuntary acts of any person, or by operation of law, and shall not be liable or taken for any obligation of such person. Any such attempted grant, transfer, pledge or assignment shall be null and void and without any legal effect. 11.2. Withholding for Taxes. Notwithstanding anything contained in this Plan to the contrary, each Employer shall withhold from any distribution made under the Plan such amount or amounts as may be required for purposes of complying with the tax withholding provisions of the Code or any applicable State law for purposes of paying any tax attributable to any amounts distributable or creditable under the Plan. 11.3. Immunity of Committee Members. The members of the Committee may rely upon any information, report or opinion supplied to them by any officer of an Employer or any legal counsel, independent public accountant or actuary, and shall be fully protected in relying upon any such information, report or opinion. No member of the Committee shall have any liability to the Company or any Participant, former Participant, designated beneficiary, person claiming under or through any Participant or designated beneficiary or other person interested or concerned in connection with any decision made by such member of the Committee pursuant to the Plan which was based upon any such information, report or opinion if such member of the Committee relied thereon in good faith. 11.4. Plan Not to Affect Employment Relationship. Neither the adoption of the Plan nor its operation shall in any way affect the right and power of an Employer to dismiss or otherwise terminate the employment or change the terms of the employment or amount of compensation of any Participant at any time for any reason or without cause. By accepting any payment under this Plan, each Participant, former Participant, designated beneficiary and each person claiming under or through such person, shall be conclusively bound by any action or decision taken or made under the Plan by the Committee. 11.5. Notices. Any notice required to be given by the Company or the Committee hereunder shall be in writing and shall be delivered in person or by registered mail, return receipt requested. Any notice given by registered mail shall be deemed to have been given upon the date of delivery, correctly addressed to the last known address of the person to whom such notice is to be given. 11.6. Gender and Number; Headings. Wherever any words are used herein in the masculine gender they shall be construed as though they were also used in the feminine gender in all cases where they would so apply; and wherever any words are used herein in the singular form they shall be construed as though they were also used in the plural form in all cases where they would so apply. Headings of sections and subsections of the Plan are inserted for convenience of reference and are not part of the Plan and are not to be considered in the construction thereof. 11.7. Controlling Law. The Plan shall be construed in accordance with the internal laws of the State of Illinois, to the extent not preempted by any applicable federal law. 11.8. Successors. The Plan is binding on all persons entitled to benefits hereunder and their respective heirs and legal representatives, on the Committee and its successor and on any Employer and its successor, whether by way of merger, consolidation, purchase or otherwise. 11.9. Severability. If any provision of the Plan shall be held illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining provisions of the Plan, and the Plan shall be enforced as if the invalid provisions had never been set forth therein. IN WITNESS WHEREOF, IMC Global Inc. has caused its corporate seal to be hereunto affixed by its officers thereunto duly authorized this ______ day of ____________, 1999. IMC GLOBAL INC. By: (Corporate Seal) ATTEST: EX-10.III.(U) 11 VOLUNTARY NONQUALIFIED DEFERRED COMPENSATION PLAN Exhibit 10.iii.(u) IMC GLOBAL INC. 1998 VOLUNTARY NONQUALIFIED DEFERRED COMPENSATION PLAN IMC Global Inc. has established this IMC Global Inc. Voluntary Nonqualified Deferred Compensation effective as of January 1, 1998, in order to enable eligible employees of IMC Global Inc. and its Affiliates to defer the receipt of all or a portion of their annual cash bonuses and up to one-half of their base salary and to be credited with interest on a tax favored basis on such deferred amounts until retirement, death, disability or other termination of employment. ARTICLE I DEFINITIONS 1.01 "Account" means the record of a Participant's interest in the Plan attributable to Participant Deferrals made on behalf of such Participant and hypothetical investment earnings thereon. 1.02 "Affiliate" means (a) a member of a controlled group of corporations of which the Company is a member or (b) an unincorporated trade or business which is under common control with the Company as determined in accordance with Code Section 414(c). For purposes hereof, a "controlled group of corporations" means a controlled group of corporations as defined in Code Section 1563(a), determined without regard to Code Sections 1563(a)(4) and 1563(e)(3)(C). 1.03 "Beneficiary" means the person or persons, natural or otherwise, designated by a Participant to receive any benefit payable under the Plan in the event of the Participant's death. To be effective, any such designation and any alteration or revocation thereof shall be in writing, in such form as the Plan Administrator may prescribe and shall be filed with the Plan Administrator prior to the Participant's death. If at the time a death benefit becomes payable no designation of Beneficiary is on file with the Plan Administrator, or if the designated Beneficiary does not survive the Participant, the Beneficiary shall be the Participant's surviving spouse, or in the event there is no such surviving spouse, the Participant's estate. 1.04 "Board" means the Board of Directors of the Company. 1.05 "Change in Control" shall be deemed to have occurred upon the first to occur of the following: (a) the acquisition by any individual, entity or group (a "Person"), including any "person" within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, of beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act, of 15% or more of either (i) the then outstanding shares of common stock of the Company (the "Outstanding Common Stock") or (ii) the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors (the "Outstanding Voting Securities"); excluding, however, the following: (A) any acquisition directly from the Company (excluding any acquisition resulting from the exercise of an exercise, conversion or exchange privilege unless the security being so exercised, converted or exchanged was acquired directly from the Company), (B) any acquisition by the Company, (C) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (D) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of this Section 1.05. (b) individuals who, as of the date this Plan is approved by the Board of Directors constitute the Board of Directors (the "Incumbent Board") cease for any reason to constitute at least a majority of such Board; provided that any individual who becomes a director of the Company subsequent to the date this Plan is approved by the Board of Directors whose election, or nomination for election by the Company's stockholders, was approved by the vote of at least a majority of the directors then comprising the Incumbent Board shall be deemed a member of the Incumbent Board; and provided further, that any individual who was initially elected as a director of the Company as a result of an actual or threatened election contest, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act, or any other actual or threatened solicitation of proxies or consents by or on behalf of any Person other than the Board shall not be deemed a member of the Incumbent Board; (c) approval by the stockholders of the Company of a reorganization, merger or consolidation of the Company or sale or other disposition of all or substantially all of the assets of the Company (a "Corporate Transaction"); excluding, however, a Corporate Transaction pursuant to which (i) all or substantially all of the individuals or entities who are the beneficial owners, respectively, of the Outstanding Common Stock and the Outstanding Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than 60% of, respectively, the outstanding shares of common stock, and the combined voting power of the outstanding securities of such corporation entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or indirectly) in substantially the same proportions relative to each other as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Common Stock and the Outstanding Voting Securities, as the case may be, (ii) no Person (other than: the Company; any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company; the corporation resulting from such Corporate Transaction; and any Person which beneficially owned, immediately prior to such Corporate Transaction, directly or indirectly, 25% or more of the Outstanding Common Stock or the Outstanding Voting Securities, as the case may be) will beneficially own, directly or indirectly, 25% or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the outstanding securities of such corporation entitled to vote generally in the election of directors and (iii) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction; or (d) the consummation of a plan of complete liquidation or dissolution of the Company. For purposes of this definition, the term "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto. 1.06 "Code" means the Internal Revenue Code of 1986, as from time to time amended. 1.07 "Company" means IMC Global Inc. 1.08 "Election Date" means with respect to a Plan Year December 15 of the immediately preceding Plan Year. 1.09 "Eligible Employee" means an employee of the Company or an Affiliate who is based in the United States of America, in grade 20 or above and is eligible to participate in the IMC Global Inc. Management Incentive Compensation Program. 1.10 "Final Distribution Date" means the date on which a Participant's active employment with the Company and all Affiliates terminates, whether by reason of retirement, death, long term disability or other termination of active employment. 1.11 "In-Service Distribution Date" means a date prior to a Participant's Final Distribution Date which is selected by the Participant for the payment of Participant Deferrals in accordance with rules and procedures established by the Plan Administrator. 1.12 "Participant" means each Eligible Employee who has elected to participate in the Plan. 1.13 "Participant Deferrals" means the amounts deferred by a Participant pursuant to Section 3.01. 1.14 "Plan" means the IMC Global Inc. 1998 Voluntary Nonqualified Deferred Compensation Plan. 1.15 "Plan Administrator" means such person or persons as may be designated by the Board to administer the Plan. 1.16 "Plan Year" means the calendar year. 1.17 "Trust" means the IMC Global Inc. 1998 Supplemental Executive Retirement Plan, Restoration Plan and Excess Benefit Plan Trust. 1.18 "Trustee" means Marshall & Ilsley Trust Company or any successor Trustee of the Trust. 1.19 "Valuation Date" means the last day of each calendar quarter. ARTICLE II PARTICIPATION An Eligible Employee shall become a Participant by electing, in accordance with procedures established by the Plan Administrator, to make Participant Deferrals pursuant to Section 3.01 hereof. ARTICLE III DEFERRALS 3.01 Participant Deferrals. Each Eligible Employee may elect, in accordance with rules and procedures established by the Plan Administrator, on or before the Election Date for a Plan Year, to make a Participant Deferral under the Plan equal to all or any portion (up to 100%) of the Eligible Employee's annual cash bonus for such Plan Year. Each Eligible Employee may also elect, in accordance with rules and procedures established by the Plan Administrator, on or before the Election Date for a Plan Year, to make Participant Deferrals equal to all or any portion (up to 50%) of the Eligible Employee's base salary for such Plan Year. Participant Deferrals under the Plan by a Participant shall reduce the amount of the applicable type of compensation otherwise payable currently to such Participant. 3.02 Company Contributions to Trust. As soon as practicable after the end of each Plan Year, and not later than 30 days after a Change in Control, the Company shall contribute to the Trustee to be held under the provisions of the Trust, but subject to the claims of the creditors of the Company in the event of the Company's insolvency as provided in the Trust, such amount as may be necessary to provide the Trust with assets for the Plan having a fair market value at least equal to the sum of the Account balances of all Participants as of the end of the Plan Year or the date of the Change in Control, whichever is applicable. Notwithstanding the transfer of contributions to the Trust, however, such deferred amounts shall remain obligations of the Company to the Participants and shall be reflected on the Company's books by separate accounting entries. The provisions of this Section 3.02 may not be amended after the date of a Change in Control without the written consent of a majority in both number and interest of the Participants in this Plan, other than those Participants who are both (i) not employed by the Company or a subsidiary as of the date of the Change in Control and (ii) not receiving nor could have commenced receiving benefits under the Plan as of the date of the Change in Control, both immediately prior to the Change of Control and at the date of such amendment. ARTICLE IV ACCOUNTS AND INVESTMENTS 4.01 Deferred Compensation Accounts. Participant Deferrals made by a Participant shall be credited to the Participant's Account as of the first day of the calendar quarter that includes the date(s) on which, but for the Participant's election to defer, such amounts would have been payable to the Participant. The amount in a Participant's Account shall also be credited as of each Valuation Date with interest at the prime rate published in the "Money Rates" section of The Wall Street Journal on the first business day of the calendar quarter ending on such Valuation Date plus two percentage points (2%). 4.02 Rollover of Previously Deferred Amounts. Amounts previously deferred as of December 31, 1997 by a Participant under the Company's prior deferred compensation arrangement, as set forth in the IMC Global Inc. Management Incentive Compensation Program, that have not been paid to the Participant, plus associated earnings, shall be credited to the Participant's Account as of January 1, 1998 and shall be credited with interest as of each Valuation Date thereafter as provided in Section 4.01. 4.03 Investment of Trust Funds. Amounts contributed to the Trust by the Company shall be invested by the Trustee in accordance with the provisions of the Trust; provided, however, that Trust investments need not reflect the interest to be credited to the Accounts of Participants, and the earnings or investment results of the Trust shall not affect the amounts to be credited to Participants' Accounts under the Plan. ARTICLE V DISTRIBUTION OF BENEFITS 5.01 Final Distribution Date. Upon a Participant's Final Distribution Date, the Participant (or the Participant's Beneficiary if the Participant is deceased) shall be paid the Participant's entire Account balance as of the Valuation Date coinciding with or next following the Final Distribution Date in a single lump sum payment as soon as practicable after such date; provided, however, that the Participant may elect, in accordance with rules and procedures established by the Plan Administrator, to be paid his or her Account balance in annual installments over a period of up to 10 years. 5.02 In-Service Distribution Date. Participant Deferrals to be paid on an In-Service Distribution Date, together with the interest credited thereon, shall be paid to the Participant as of the Valuation Date coinciding with or next following the In-Service Distribution Date in a single lump sum payment as soon as practicable after such date; provided, however, that the Participant may elect, in accordance with rules and procedures established by the Plan Administrator, to be paid such amounts in annual installments over a period of up to 10 years. ARTICLE VI PLAN ADMINISTRATION 6.01 Administration of Plan. The Company shall have the sole responsibility for making contributions to the Trust as provided under Article III and shall have the sole authority to amend or terminate, in whole or in part, this Plan at any time. The Plan Administrator shall have the sole responsibility for the administration of the Plan. The Company does not guarantee to any Participant in any manner the effect under any tax law or Federal or state statute of the Participant's participation in this Plan. 6.02 Claims Procedure. The Plan Administrator shall make all determinations as to the right of any person to a benefit under this Plan. Any denial by the Plan Administrator of a claim for benefits under the Plan by a Participant or Beneficiary shall be stated in writing by the Plan Administrator and shall set forth the specific reasons for the denial. In addition, the Plan Administrator shall afford a reasonable opportunity to any Participant or Beneficiary whose claim for benefits has been denied for a review of the decision denying the claim. 6.03 Powers and Duties of Plan Administrator. The Plan Administrator shall have such duties and powers as may be necessary to discharge its duties hereunder, including, but not by any way of limitation, the following: (a) to construe and interpret the Plan, decide all questions of eligibility and determine the amount, manner and time of payment of any benefits hereunder; (b) to prescribe procedures to be followed by Participants in filing elections or revocations thereof; (c) to prepare and distribute, in such manner as the Plan Administrator determines to be appropriate, information explaining the Plan; (d) to receive from the Company and from Participants such information as shall be necessary for the proper administration of the Plan; (e) to furnish the Company, upon request, such reports with respect to the administration of the Plan as are reasonable and appropriate; (f) to receive, review and keep on file (as it deems convenient and proper) reports of benefit payments by the Company and reports of disbursements for expenses directed by the Plan Administrator; and (g) to appoint individuals to assist in the administration of the Plan and any other agents it deems advisable, including legal counsel. The Plan Administrator shall have no power to add to, subtract from or modify any of the terms of the Plan, or to change or add to any benefits provided by the Plan, or to waive or fail to apply any requirements of eligibility for a benefit under the Plan. 6.04 Rules, Procedures and Decisions. The Plan Administrator may adopt such rules and procedures as it deems necessary, desirable or appropriate. All rules, procedures and decisions of the Plan Administrator shall be uniformly and consistently applied to all Participants in similar circumstances. When making a determination or calculation, the Plan Administrator shall be entitled to rely upon information furnished by a Participant, the Company or the legal counsel of the Company. 6.05 Authorization of Benefit Payments. The Plan Administrator shall issue directions to the Company or the Trustee concerning all benefits which are to be paid pursuant to the provisions of the Plan. 6.06 Indemnification of Plan Administrator. The Plan Administrator shall be indemnified by the Company against any and all liabilities arising by reason of any act or failure to act made in good faith pursuant to the provisions of the Plan, including expenses reasonably incurred in the defense of any claim relating thereto. ARTICLE VII MISCELLANEOUS 7.01 No Right to Employment, etc. Neither the creation of this Plan nor anything contained herein shall be construed as giving any Participant hereunder or other employees of the Company or any subsidiary any right to remain in the employ of the Company or any subsidiary. 7.02 Successors and Assigns. All rights and obligations of this Plan shall inure to, and be binding upon the successors and assigns of the Company. 7.03 Inalienability. Except so far as may be contrary to the laws of any state having jurisdiction in the premises, a Participant or Beneficiary shall have no right to assign, transfer, hypothecate, encumber, commute or anticipate his or her interest in any payments under this Plan and such payments shall not in any way be subject to any legal process to levy upon or attach the same for payment of any claim against any Participant or Beneficiary. 7.04 Incompetency. If any Participant or Beneficiary is, in the opinion of the Plan Administrator, legally incapable of giving a valid receipt and discharge for any payment, the Plan Administrator may, at its option, direct that such payment or any part thereof be made to such person or persons who in the opinion of the Plan Administrator are caring for and supporting such Participant or Beneficiary, unless it has received due notice of claim from a duly appointed guardian or conservator of the estate of the Participant or Beneficiary. A payment so made will be a complete discharge of the obligations under this Plan to the extent of and as to that payment, and neither the Plan Administrator nor the Company will have any obligation regarding the application of the payment. 7.05 Unfunded Plan. The rights and interests of a Participant with respect to the balance in the Participant's Account shall be solely those of a general creditor of the Company. It is intended that the Plan shall be an unfunded plan maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees. 7.06 Controlling Law. To the extent not preempted by the laws of the United States of America, the laws of the State of Illinois shall be the controlling state law in all matters relating to this Plan. 7.07 Severability. If any provisions of this Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of this Plan, but this Plan shall be construed and enforced as if the illegal and invalid provisions never had been included herein. 7.08 Gender and Number. Whenever the context requires or permits, the gender and number of words shall be interchangeable. 7.09 Expenses. The expenses of administering the Plan shall be paid by the Company. 7.10 Division of the Plan. The Plan Administrator may direct a separation of the Accounts of certain Participants under the Plan and the transfer of such Accounts to another plan. If such action is directed, the Plan Administrator shall cause to be determined and shall direct the Trustee to set apart that portion of the assets held under the Trust that is attributable to the Accounts of such Participants as are designated in such direction by the Plan Administrator. The portion of the assets held under the Trust so set apart shall, as directed by the Plan Administrator, either (a) continue to be held by the Trustee under such other plan for the benefit of such Participants, or (b) be transferred directly to the trustee of a separate trust established under such other plan and held in trust for the benefit of such Participants pursuant to the terms of such other plan. ARTICLE VIII AMENDMENT AND TERMINATION 8.01 Amendment to Conform with Law. The Company may by amendment make such changes in, additions to, and substitutions in the provisions of this Plan, to take effect retroactively or otherwise, as deemed necessary or advisable for the purpose of conforming this Plan to any present or future law relating to plans of this or a similar nature, and to the administrative regulations and rulings promulgated thereunder. 8.02 Other Amendments and Termination. The Company may amend or terminate this Plan at any time, without the consent of any Participant or Beneficiary. Notwithstanding the foregoing, this Plan shall not be amended or terminated so as to reduce or cancel the benefits which have accrued to a Participant or Beneficiary prior to the later of the date of adoption of the amendment or termination or the effective date thereof, and in the event of such amendment or termination, any such accrued benefit hereunder shall not be reduced or canceled. 8.03 Manner and Form of Amendment or Termination. Any amendment or termination of this Plan by the Company shall be made only by action of the Board or any officer of the Company duly authorized by the Board. Certification of any amendment or termination of this Plan shall be furnished to the Plan Administrator by the Company. 8.04 Notice of Amendment or Termination. The Plan Administrator shall notify Participants or Beneficiaries who are affected by any amendment or termination of this Plan within a reasonable time thereof. Dated: IMC GLOBAL INC. By: Name: Title: EX-10.III.(V) 12 FIRST AMENDMENT TO 1998 RESTORATION PLAN Exhibit 10.iii.(v) FIRST AMENDMENT TO THE IMC GLOBAL INC. 1998 RESTORATION PLAN WHEREAS, IMC Global Operations Inc. (the "Company") has heretofore adopted and maintains the IMC Global Inc. 1998 Restoration Plan (the "Plan"); and WHEREAS, the Company desires to amend the Plan in certain respects; NOW, THEREFORE, pursuant to the power of amendment contained in Section 10.1 of the Plan, the Plan is hereby amended, effective as of January 1, 1998, in the following respects: 1. The second sentence of Section 1.2 is amended to provide as follows: The Plan is intended to be maintained and administered in connection with the "IMC Global Inc. Profit Sharing and Savings Plan" for the benefit of selected employees of the Company and adopting Affiliates whose benefits under the Qualified Plan are restricted by the limitations of Sections 401(a)(17), 402(g) and 415 of the Code or are reduced as a result of voluntary deferrals of compensation under the "IMC Global Inc 1998 Voluntary Nonqualified Deferred Compensation Plan". 2. Section 4.1 is amended to provide as follows: 4.1. Matching Contributions. For each Plan Year, a Matching Contribution shall be credited to each Participant's Matching Contributions Account in an amount equal to (i) the excess of the amount of the matching contributions that would have been made with respect to the Employee Contributions and Salary Reduction Contributions (as defined in the Qualified Plan) of such Participant for such Plan Year if Employee Contributions and Salary Reduction Contributions had been made by the Participant under the Qualified Plan without regard to the limitations of Sections 401(a)(17), 402(g) and 415 of the Code and without regard to voluntary deferrals of compensation by the Participant under the IMC Global Inc. 1998 Voluntary Nonqualified Deferred Compensation Plan over the amount of the matching contributions actually made for the Participant under the Qualified Plan for such Plan Year, reduced by (ii) FICA withholding on the amount so determined. In addition, for the Plan Year ended December 31, 1998, a supplemental Matching Contribution shall be credited to each Participant's Matching Contributions Account in an amount equal to the difference between (i) the sum of 100% of the amount contributed for such Plan Year by such Participant pursuant to Sections 4.1(a) and 4.1(b) of the Qualified Plan that does not exceed 3% of the Participant's Compensation (as defined in the Qualified Plan) for such Plan Year and 50% of the amount contributed for such Plan Year by such Participant pursuant to Sections 4.1(a) and 4.1(b) of the Qualified Plan that exceeds 3% but does not exceed 6% of the Participant's Compensation (as defined in the Qualified Plan) for such Plan Year and (ii) the amount of Employer Matching Contributions (as defined in the Qualified Plan) contributed for the Participant under the Qualified Plan with respect to payroll periods ending in such Plan Year. 3. Section 5.1 is amended to provide as follows: 5.1. Profit Sharing Contributions. For each Plan Year, a Profit Sharing Contribution shall be credited to the Profit Sharing Contributions Account of each Participant for whom a profit sharing contribution is made for such Plan Year under the Qualified Plan in an amount equal to (i) the excess of the amount of the profit sharing contribution that would have been made for the Participant under the Qualified Plan for such Plan Year if such profit sharing contribution had been made to the Qualified Plan without regard to the limitations of Sections 401(a)(17), 402(g) and 415 of the Code and without regard to voluntary deferrals of compensation by the Participant under the IMC Global Inc. 1998 Voluntary Nonqualified Deferred Compensation Plan over the amount of the profit sharing contribution actually made for the Participant under the Qualified Plan for the Plan Year, reduced by (ii) required FICA withholding on the amount so determined (if vested) and on the amount of any previously made Profit Sharing Contributions (and deemed investment earnings thereon) that have become vested during the Plan Year. 4. Section 6.2 is amended to provide as follows: 6.2. Crediting of Contributions. The Company shall credit all Matching Contributions and all Profit Sharing Contributions made on behalf of a Participant pursuant to Article 4 and Article 5, respectively, to such Participant's Matching Contributions Account or Profit Sharing Contributions Account, as appropriate, within a reasonable period following the end of the Plan Year for which such contributions are made. 5. Section 8.1 is amended to provide as follows: 8.1. Distribution of Matching Contributions Account. Each Participant shall at all times have a one hundred percent (100%) vested and nonforfeitable interest in his Matching Contributions Account. If a Participant's employment with his Employer and all Affiliates is terminated for any reason, including death, retirement, total and permanent disability, resignation or dismissal, the balance in the Participant's Matching Contributions Account (determined as of the Valuation Date on or immediately preceding the date on which the distribution is processed) shall be distributed to the Participant (or, in the event of the Participants's death, to his beneficiary) as soon as administratively practicable after the end of the calendar quarter in which the Participant's termination of employment occurs. Such payment shall be made in the form of a lump sum payment. If such Participant is entitled to a Matching Contribution for the Plan Year in which his employment terminates that is not reflected in the Matching Contributions Account balance so distributed to the Participant, the amount of such Matching Contribution shall be distributed to the Participant as soon as administratively practicable after the end of the Plan Year in which the Participant's termination of employment occurs. 6. Section 8.2 is amended to provide as follows: 8.2. Distribution of Profit Sharing Contributions Account. A Participant shall become one hundred percent (100%) vested in his Profit Sharing Contributions Account upon the completion of five years of Service (as defined in the Qualified Plan). If a Participant's employment with his Employer and all Affiliates is terminated by reason of his death, his retirement after attaining age 65 or after he has completed five years of Service (as defined in the Qualified Plan), the balance in the Participant's Profit Sharing Contributions Account (determined as of the Valuation Date on which the distribution is processed) shall be distributed to the Participant (or, in the event of the Participant's death, to his beneficiary) as soon as administratively practicable after the end of the calendar quarter in which the Participant's termination of employment occurs. Such payment shall be made in the form of a lump sum payment. If such Participant is entitled to a Profit Sharing Contribution for the Plan Year in which his employment terminates that is not reflected in the Profit Sharing Contributions Account balance so distributed to the Participant, the amount of such Profit Sharing Contribution shall be distributed to the Participant as soon as administratively practicable after the end of the Plan Year in which the Participant's termination of employment occurs. If a Participant's employment with his Employer and all Affiliates is terminated before the Participant has completed five years of Service (as defined in the Qualified Plan) for a reason other than his death or retirement after attaining age 65, the balance in the Participant's Profit Sharing Contributions Account shall be forfeited. IN WITNESS WHEREOF, the Company has caused its corporate seal to be hereunto affixed by its officers thereunto duly authorized this _____ day of _____________, 1999. IMC GLOBAL OPERATIONS INC. By: Name: Title: (corporate seal) ATTEST: EX-12 13 COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES EXHIBIT 12 IMC Global Inc. Computation of Ratio of Earnings to Fixed Charges
Years Ended December 31 ------------------------------------------------ 1999 1998 1997 1996 1995 ------ ------ ------ ------ ------ Fixed charges: Interest charges $ 154.5 $ 161.1 $ 40.2 $ 43.6 $ 57.8 Rent expense 7.8 8.5 6.0 5.8 5.0 ------- ------- ------- ------- ------- Total fixed charges $ 162.3 $ 169.6 $ 46.2 $ 49.4 $ 62.8 ======= ======= ======= ======= ======= Earnings: Earnings (loss) from continuing operations before minority interest $(465.8) $ 216.9 $ 224.6 $ 388.7 $ 471.5 Interest charges 154.5 161.1 40.2 43.6 57.8 Rent expense 7.8 8.5 6.0 5.8 5.0 ------- ------- ------- ------- ------- Total earnings $(303.5) $ 386.5 $ 270.8 $ 438.1 $ 534.3 ======= ======= ======= ======= ======= Ratio of earnings to fixed charges (1.87) 2.28 5.86 8.87 8.51 Adjusted ratio of earnings to fixed charges 2.81(a) 3.19(b) 9.84(c) 10.59(d) 8.51 ======= ======= ======= ======= ======= (a)The adjusted ratio of earnings to fixed charges for the year ended December 31, 1999 excludes charges of $758.9 million resulting from the Company's restructuring program. (b)The adjusted ratio of earnings to fixed charges for the year ended December 31, 1998 excludes a charge of $195.1 million resulting from the Company-wide profit improvement program and $14.0 million as a result of the loss on the sale of IMC Vigoro. (c) The adjusted ratio of earnings to fixed charges for the year ended December 31, 1997 excludes a charge of $183.7 million related to the write-down of the historical carrying value of the Company's 25.0 percent interest in Main Pass. (d)The adjusted ratio of earnings to fixed charges for the year ended December 31, 1996 excludes a charge of $84.9 million related to the merger of The Vigoro Corporation in to a wholly-owned subsidiary of the Company.
EX-13 14 ANNUAL REPORT Exhibit 13 Financial Table of Contents Management's Discussion and Analysis of Financial Condition and Results of Operations p.27 Report of Management p.41 Report of Independent Auditors p.41 Consolidated Statement of Operations p.42 Consolidated Balance Sheet p.43 Consolidated Statement of Cash Flows p.44 Consolidated Statement of Stockholders' Equity p.45 Notes to Consolidated Financial Statements p.46 Quarterly Results (Unaudited) p.72 Five Year Comparison p.73 Introduction -------------------------- Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the financial statements and the accompanying notes. IMC Global Inc. (Company or IMC) is one of the world's leading producers of phosphate and potash crop nutrients, salt and animal feed ingredients. The Company's current operational structure consists of four continuing business units corresponding to its major product lines as follows: IMC Phosphates (Phosphates), IMC Potash (Potash), IMC Salt (Salt) and IMC Feed Ingredients (Feed Ingredients). As a result of the planned divestiture of IMC Chemicals (Chemicals), all financial information for Chemicals has been stated as discontinued operations. In early 2000, the Company decided to explore strategic options, including divestiture or a joint venture, for the Salt business unit and a production facility located in Ogden, Utah. Management's Discussion and Analysis of Financial Condition and Results of Operations highlights the primary factors affecting changes in the operating results of the Company's continuing operations during the three year period, excluding the impact of certain special charges. In 1999, the Company incurred special charges from continuing operations of $776.8 million, after tax and minority interest, or $6.78 per share, comprised of: (i) a $95.6 million, or $0.83 per share, restructuring charge related to a Company-wide rightsizing program (Rightsizing Program); (ii) a $35.0 million, or $0.31 per share, charge related to additional asset write-offs and environmental accruals; (iii) a $521.2 million, or $4.55 per share, charge resulting from a change in the method of evaluating the recoverability of goodwill; and (iv) a $125.0 million, or $1.09 per share, charge for deferred income taxes arising from a recent change in tax law. As a result of the special charges recorded in 1999, the Company expects to increase annual pre-tax earnings by an estimated $70.0 million, or $0.40 per share. The increase in earnings is anticipated to result from rightsizing and cost reduction initiatives including a Company-wide headcount reduction. In 1998, the Company incurred special charges from continuing operations of $123.3 million, after tax and minority interest, or $1.07 per share, comprised of: (i) a $113.4 million, or $0.99 per share, restructuring charge related to a Company-wide profit improvement program (Project Profit); (ii) a $9.1 million, or $0.08 per share, charge related to the Company's sale of IMC Vigoro (Vigoro) (Vigoro Sale); and (iii) $0.8 million, or $0.01 per share, of other charges. As a result of Project Profit, the Company is on target to achieve a reduction in operating costs in excess of $100.0 million over the two year period ending December 31, 2000, with $65.0 million realized in 1999. The reduction in costs resulted from the simplification of the business, shutdown of high-cost operations, exit from low-margin businesses and headcount reductions. In 1997, the Company incurred special charges from continuing operations of $112.2 million, after tax, or $1.19 per share, related to a write-down of the Company's 25.0 percent interest in Main Pass 299 (Main Pass) as a result of a merger with Freeport-McMoRan, Inc. (FTX) (FTX Merger). All of these special charges significantly impacted the results of continuing operations of the Company and are referred to throughout Management's Discussion and Analysis of Financial Condition and Results of Operations. For additional detail on these charges, see Note 2, "Change in Accounting for Goodwill," Note 3, "Restructuring and Other Charges," Note 5, "Other Divestitures," Note 6, "Acquisitions" and Note 12, "Income Taxes," of Notes to Consolidated Financial Statements. [Chart] Net Sales - --------- (In millions) 1999 1998 1997 ---- ---- ---- $2,369.3 $2,383.1 $2,116.0 [Chart] Gross Margins - ------------- (In millions) 1999(a) 1998(a) 1997 ---- ---- ---- $584.6 $721.9 $574.9 (a) Before special charges. [Chart] Earnings from Continuing Operations - ----------------------------------- (In millions) 1999(a) 1998(a) 1997(a) ---- ---- ---- $165.7 $233.1 $182.0 (a) Before special charges. Results of Operations Overview 1999 Compared to 1998 - --------------------- Net sales of $2,369.3 million in 1999 were essentially unchanged from $2,383.1 million in 1998. Gross margins in 1999 were $584.6 million, excluding special charges of $41.9 million, a decrease of 19 percent from comparable 1998 margins of $721.9 million, excluding special charges of $23.1 million. Earnings from continuing operations in 1999 were $165.7 million, or $1.45 per share, excluding special charges of $776.8 million, or $6.78 per share. Earnings from continuing operations in 1998 were $233.1 million, or $2.03 per share, excluding special charges of $123.3 million, or $1.07 per share. Sales and earnings from continuing operations for 1999 reflected significantly reduced phosphate pricing and lower phosphate and potash volumes compared to 1998. Partially offsetting the phosphate and potash reductions were higher salt sales and earnings, driven by a full year of operations of the salt business unit, which was acquired as part of the Harris Chemical Group, Inc. (Harris) acquisition in April 1998 (Harris Acquisition). The Company incurred a net loss in 1999 of $773.3 million, or $6.75 per share, including: (i) $776.8 million, or $6.78 per share, related to the special charges discussed above; (ii) $155.2 million, or $1.35 per share, of losses resulting from the Company's decision to sell the Chemicals business unit, exit the oil and gas business and adjust the loss on the disposal of IMC AgriBusiness (AgriBusiness); (iii) $0.5 million of extraordinary gains related to the early extinguishment of debt; and (iv) $7.5 million, or $0.07 per share, of charges related to a cumulative effect of a change in accounting principle. The Company incurred a net loss in 1998 of $9.0 million, or $0.08 per share, including: (i) $123.3 million, or $1.07 per share, related to the special charges discussed above; (ii) $121.8 million, or $1.07 per share, of losses from discontinued operations; and (iii) $3.0 million, or $0.03 per share, of extraordinary gains related to the early extinguishment of debt. See Note 1, "Summary of Significant Accounting Policies" and Note 4, "Discontinued Operations," of Notes to Consolidated Financial Statements. 1998 Compared to 1997 - --------------------- Net sales of $2,383.1 million in 1998 increased 13 percent from $2,116.0 million in 1997. Gross margins for 1998 were $721.9 million, excluding special charges of $23.1 million, an increase of 26 percent from comparable 1997 margins of $574.9 million. Earnings from continuing operations in 1998 were $233.1 million, or $2.03 per share, excluding the special charges of $123.3 million, or $1.07 per share, discussed above. Earnings from continuing operations in 1997 were $182.0 million, or $1.92 per share, excluding the special charges of $112.2 million, or $1.19 per share, discussed above. Sales and earnings from continuing operations for 1998 were driven by increased sales by Potash and Phosphates, which improved 13 percent and six percent, respectively, compared to 1997 amounts. In addition, sales and earnings for 1998 included the operations of Salt, which was acquired in April 1998. The Company incurred a net loss in 1998 of $9.0 million, or $0.08 per share, including: (i) $123.3 million, or $1.07 per share, related to the special charges discussed above; (ii) $121.8 million, or $1.07 per share, of losses from discontinued operations; and (iii) $3.0 million, or $0.03 per share, of extraordinary gains related to the early extinguishment of debt. The Company generated net earnings in 1997 of $62.9 million, or $0.67 per share, including: (i) $112.2 million, or $1.19 per share, related to the special charges discussed above; (ii) $18.0 million, or $0.19 per share, of earnings from discontinued operations; and (iii) $24.9 million, or $0.26 per share, of extraordinary charges related to the early extinguishment of debt. IMC Phosphates
Year ended December 31 %Increase(Decrease) 1999 1998 1997 1999 1998 ---- ---- ---- ---- ---- Net sales $1,332.4 $1,572.8 $1,484.8 (15) 6 Gross margins $ 224.4(c) $ 375.6(d) $ 298.7 (40) 26 As a percentage of net sales 17% 24% 20% Sales volumes (000 tons)(a) 6,699 7,313 7,105 (8) 3 Average DAP price per short ton(b) $ 160 $ 178 $ 176 (10) 1 (a)Sales volumes include tons sold captively and represent dry product tons, primarily DAP. (b)FOB plant. (c)Excludes special charges of $10.6 million. (d)Excludes special charges of $17.2 million.
1999 Compared to 1998 - -------------------- Phosphates' net sales of $1,332.4 million in 1999 decreased 15 percent from $1,572.8 million in 1998. Lower average sales realizations of concentrated phosphates, particularly diammonium phosphate (DAP), unfavorably impacted net sales by $125.0 million. DAP prices decreased throughout 1999 to a low, as of December 31, 1999, of approximately $130 per short ton as a result of the depressed agricultural economy. Decreased shipments of concentrated phosphates unfavorably impacted net sales by an additional $109.6 million. The majority of the volume decline resulted from decreased shipments of DAP and granular triple superphosphate (GTSP), which were lower by approximately nine percent and 16 percent, respectively. The decrease in domestic DAP and GTSP volumes was a result of lower agricultural commodity prices and the depressed agricultural economy. Internationally, decreased DAP volumes primarily resulted from reduced demand from lower crop purchases as a result of low grain prices and higher customer inventories. Gross margins in 1999 of $224.4 million, excluding special charges of $10.6 million, fell 40 percent from $375.6 million in 1998, excluding special charges of $17.2 million. The decrease was primarily a result of the decreased prices and volumes discussed above, partially offset by favorable raw material costs and savings realized from Project Profit. 1998 Compared to 1997 - -------------------- Phosphates' net sales of $1,572.8 million in 1998 increased six percent from $1,484.8 million in 1997. Increased shipments of concentrated phosphates contributed an additional $57.7 million to net sales. The majority of the volume growth came from increased domestic shipments of DAP and granular monoammonium phosphate (GMAP), which each increased 17 percent, partially offset by decreased GTSP volumes of 13 percent. The increase in DAP and GMAP volumes was primarily a result of a strong spring season, an increase in the number of supply contracts and spot sales to certain larger co-ops. The volume decrease in GTSP was primarily a result of the availability in the marketplace of aggressively priced imports. International sales volumes rose slightly compared to 1997 as increased shipments of GMAP and merchant acid were partially offset by decreased shipments of DAP. In addition, average sales realizations of concentrated phosphates, particularly DAP, favorably impacted net sales by $20.5 million. Net sales were also favorably impacted by $6.6 million due to higher domestic phosphate rock sales volumes. Gross margins in 1998 of $375.6 million, excluding special charges of $17.2 million, climbed 26 percent from $298.7 million in 1997, primarily as a result of the increased volumes and prices discussed above as well as favorable raw material costs. IMC Feed Ingredients
Year ended December 31 %Increase(Decrease) 1999 1998 1997 1999 1998 ---- ---- ---- ---- ---- Net sales $173.5 $164.4 $163.5 6 1 Gross margins $ 41.6(b) $ 30.6(c) $ 40.3 36 (24) As a percentage of net sales 24% 19% 25% Sales volumes (000 tons) 914 853 826 7 3 Average feed phosphates price per short ton(a) $ 209 $ 212 $ 217 (1) (2) (a) FOB plant. (b) Excludes special charges of $0.7 million. (c) Excludes special charges of $1.8 million.
1999 Compared to 1998 - --------------------- Sales for Feed Ingredients of $173.5 million in 1999 increased six percent compared to $164.4 million in 1998, primarily from improved volumes. Gross margins of $41.6 million in 1999, excluding special charges of $0.7 million, increased 36 percent compared to $30.6 million in 1998, excluding special charges of $1.8 million, primarily as a result of lower raw material costs and the higher volumes discussed above. 1998 Compared to 1997 - --------------------- Sales for Feed Ingredients of $164.4 million in 1998 increased slightly compared to $163.5 million in 1997. Gross margins of $30.6 million in 1998, excluding special charges of $1.8 million, decreased 24 percent compared to $40.3 million in 1997. This margin decrease was primarily a result of a change in the transfer price of phosphoric acid from Phosphates. IMC Potash
Year ended December 31 %Increase(Decrease) 1999 1998 1997 1999 1998 ---- ---- ---- ---- ---- Net sales $692.1 $700.1 $617.4 (1) 13 Gross margins $242.7(c) $283.3 $237.7 (14) 19 As a percentage of net sales 35% 40% 39% Sales volumes (000 tons)(a) 8,110 8,402 8,941 (3) (6) Average potash price per short ton(b) $ 82 $ 81 $ 70 1 16 (a) Sales volumes include tons sold captively. (b) FOB plant/mine. (c) Excludes special charges of $7.7 million.
1999 Compared to 1998 - --------------------- Potash's net sales of $692.1 million in 1999 decreased one percent from $700.1 million in 1998. This decline was attributable to unfavorable domestic volumes caused by lower agricultural demand due to low commodity prices for corn and soybean crops. Partially offsetting the unfavorable domestic volumes were increased export volumes to Asia and Latin America. Average potash sales realizations increased slightly in 1999 compared to prior year levels. Gross margins of $242.7 million in 1999, excluding special charges of $7.7 million, decreased 14 percent compared with $283.3 million in 1998, primarily as a result of the lower sales volumes discussed above, as well as higher Canadian provincial resource taxes, increased water control costs at the Esterhazy potash mine and higher natural gas costs. See Note 16, "Contingencies," of Notes to Consolidated Financial Statements. 1998 Compared to 1997 - --------------------- Potash's net sales increased 13 percent to $700.1 million in 1998 from $617.4 million in 1997. This increase resulted from acquisitions made by the Company as well as price increases during the year, partially offset by decreased volumes. Sales for 1998 included a full year of operating results for Western Ag-Minerals, which was acquired in September 1997. The Company also acquired a salt and potash production facility located in Ogden, Utah as part of the Harris Acquisition in April 1998. See Note 18, "Subsequent Events," of Notes to Consolidated Financial Statements. The incremental sales in 1998 from these two acquisitions was $80.0 million. Average sales realizations increased 16 percent as a result of price increases effective in March and September 1998. Sales volumes declined six percent as a result of a decrease in domestic shipments of nine percent, partially offset by an increase in international tonnage of five percent. Domestic sales volumes declined as a result of low demand for agricultural products due to an excellent harvest coupled with low commodity prices, while the increase in international shipments was attributable to greater potash exports to Brazil and China. The increase in average sales realizations, partially offset by decreased volumes, favorably impacted net sales by $3.0 million. Gross margins of $283.3 million in 1998 increased 19 percent compared with $237.7 million in 1997, primarily as a result of the acquisitions and price increases discussed above. IMC Salt
Year ended December 31 %Increase(Decrease) 1999 1998 1997(d) 1999 1998(d) ---- ---- ------- ---- ------- Net sales $321.7 $177.4 - 81 - Gross margins $103.7(c) $ 57.1 - 82 - As a percentage of net sales 32% 32% - Sales volumes (000 tons)(a) 11,511 5,761 - 100 - Average salt price per short ton(b) $ 28 $ 31 - (10) - (a) Sales volumes includes tons sold captively. (b) FOB plant/mine. (c) Excludes special charges of $5.6 million. (d) Acquired as part of the Harris Acquisition in April 1998.
The Salt business unit was acquired as part of the Harris Acquisition in April 1998; consequently, operating results for the year ended December 31, 1998 included only partial year activity. Pro forma net sales and gross margins, adjusted to include full-year operating results for 1998, were $267.3 million and $95.0 million, respectively. In early 2000, the Company decided to explore strategic options, including divestiture or a joint venture, for the Salt business unit. See Note 18, "Subsequent Events," of Notes to Consolidated Financial Statements. 1999 Compared to 1998 - --------------------- Salt's net sales increased 20 percent to $321.7 million in 1999 from comparable net sales of $267.3 million in 1998. The increase was attributable to higher 1999 volumes in the highway deicing, general trade and rock salt businesses which were impacted by the milder winter weather experienced during 1998. Gross margins of $103.7 million in 1999, excluding special charges of $5.6 million, increased nine percent from comparable gross margins of $95.0 million in 1998. The increase in 1999 margins was primarily a result of the volume increases discussed above. 1998 Compared to 1997 - --------------------- Salt's pro forma net sales and gross margins for 1998 were lower than comparable pre-acquisition amounts in 1997 of $299.6 million and $122.6 million, respectively, primarily due to the mild weather conditions in 1998. Selling, General and Administrative Expenses Selling, general and administrative expenses were $143.9 million, $140.7 million and $131.8 million in 1999, 1998 and 1997, respectively, excluding special charges of $20.6 million and $9.9 million in 1999 and 1998, respectively. The increase in 1999 compared to 1998 primarily resulted from a full year of operations for Salt. The increase in 1998 compared to 1997 primarily resulted from the Harris Acquisition, partially offset by an overall reduction in general corporate spending and the Vigoro Sale. See Note 5, "Other Divestitures" and Note 6, "Acquisitions," of Notes to Consolidated Financial Statements. Other (Income) Expense Other income consisted primarily of gains on sale of assets and foreign currency transactions. Interest Expense The decrease in interest expense in 1999 compared with 1998 was the result of payments of debt using proceeds received from the divestiture of AgriBusiness and cash flows from operations. The increase in interest expense in 1998 compared with 1997 was attributable to debt assumed as part of the Harris Acquisition and the issuance of additional debt to fund the acquisition. See "Capital Resources and Liquidity," as well as Note 4, "Discontinued Operations," Note 6, "Acquisitions" and Note 10, "Financing Arrangements," of Notes to Consolidated Financial Statements. Minority Interest Minority interest includes benefits related to special charges of $28.1 million and $31.6 million in 1999 and 1998, respectively. The decrease in minority interest in 1999 compared with 1998 was primarily attributable to significantly lower IMC-Agrico Company (IMC-Agrico) earnings in 1999 compared to 1998. The decrease in minority interest in 1998 compared to 1997 was primarily the result of the FTX Merger. See Note 6, "Acquisitions" and Note 7, "Minority Interest," of Notes to Consolidated Financial Statements. Income Taxes See Note 12, "Income Taxes," of Notes to Consolidated Financial Statements. Special Charges Restructuring Charges During the fourth quarter of 1999, the Company implemented the Rightsizing Program which was designed to simplify and focus the Company's core businesses. The key components of the Rightsizing Program are: (i) the shutdown and permanent closure of the Nichols and Payne Creek facilities at Phosphates resulting from an optimization program that will reduce rock and concentrate production costs through higher utilization rates at the lowest-cost facilities; (ii) an asset rightsizing program at Potash resulting from a recently revised mine plan; (iii) closure of a facility at Salt; and (iv) corporate and business unit headcount reductions. In conjunction with the Rightsizing Program, the Company recorded a special charge of $179.0 million, $95.6 million after tax and minority interest, or $0.83 per share, in the fourth quarter of 1999. For more details related to the Rightsizing Program, see Note 3, "Restructuring and Other Charges," of Notes to Consolidated Financial Statements. During the fourth quarter of 1998, the Company developed and began execution of Project Profit. Project Profit was comprised of four major initiatives: (i) the combination of certain activities within the Potash and Phosphates business units in an effort to realize certain operating and staff function synergies; (ii) restructuring of the phosphate rock mining, concentrated phosphate and salt production/distribution operations and processes in an effort to reduce costs; (iii) simplification of current business activities by eliminating businesses not deemed part of the Company's core competencies; and (iv) reduction of operational and corporate headcount. In conjunction with Project Profit, the Company recorded a special charge of $193.3 million, $113.4 million after tax and minority interest, or $0.99 per share, in the fourth quarter of 1998. For more details related to Project Profit, see Note 3, "Restructuring and Other Charges," of Notes to Consolidated Financial Statements. Write-down of Goodwill Effective October 1, 1999, the Company elected to change its method for assessing the recoverability of goodwill (not associated with impaired assets) from one based on undiscounted cash flows to one based on discounted cash flows. The Company believes the discounted cash flow approach is preferable because it is consistent with the basis used by the Company for investment decisions (acquisitions and capital projects) and takes into account the specific and detailed operating plans and strategies of each business and the timing of cash flows. The adoption of the discounted cash flow method may result in greater earnings volatility since any subsequent decreases in discounted cash flows of certain segments may result in the write-down of goodwill. As a result of the change to a discounted cash flow methodology, the Company recorded a non-cash write-down of goodwill of $521.2 million, or $4.55 per share, in the fourth quarter of 1999. See Note 2, "Change in Accounting for Goodwill," of Notes to Consolidated Financial Statements. Other Charges In the fourth quarter of 1999, the Company recorded a $125.0 million, or $1.09 per share, deferred tax provision for a tax basis difference related to the Company's investment in Phosphate Resource Partners Limited Partnership (PLP). This special charge was necessitated as a result of a change in the tax law in December 1999. See Note 12, "Income Taxes," of Notes to Consolidated Financial Statements. During the fourth quarter of 1999, and in connection with the Rightsizing Program, the Company undertook a detailed review of its accounting records and valuation of various assets and liabilities. As a result, the Company recorded a special charge of $58.8 million, $35.0 million after tax and minority interest, or $0.31 per share, related to asset write-offs and environmental accruals. Of the $58.8 million charge, $38.2 million was included in Cost of goods sold and $20.6 million was included in Selling, general and administrative expenses. See Note 3, "Restructuring and Other Charges," of Notes to Consolidated Financial Statements. In 1998, the Company sold the Vigoro business unit, a consumer lawn and garden and professional products business. In connection with this sale, the Company recorded a special charge of $14.0 million, $9.1 million after tax, or $0.08 per share. Of the $14.0 million charge, $4.1 million was included in Cost of goods sold and $9.9 million was included in Selling, general and administrative expenses. See Note 5, "Other Divestitures," of Notes to Consolidated Financial Statements. In 1997, and in connection with the FTX Merger, the Company relinquished its 25.0 percent interest in Main Pass to McMoRan Exploration Company (MMR), a newly formed public entity consisting of the former sulphur business of PLP and Main Pass. As a result, the Company recorded a special charge of $183.7 million, $112.2 million after tax, or $1.19 per share, to write-down the assets of Main Pass to their fair value. See Note 6, "Acquisitions," of Notes to Consolidated Financial Statements. Capital Resources and Liquidity ------------------------------- The Company generates significant cash from operations and has sufficient borrowing capacity to meet its operating and discretionary spending requirements. The Company generated $658.6 million of EBITDA in 1999 compared with $789.8 million in 1998. Management places significant emphasis on EBITDA as one of the key standards for measuring consolidated performance. Although EBITDA is a leading indicator used by management, it is not a replacement of measurement standards defined by and required by generally accepted accounting principles such as operating earnings, cash flows from operating activities and net income. Operating activities generated $458.4 million of cash in 1999 compared with $269.1 million in 1998. The increase of $189.3 million was primarily due to a decrease in working capital. The change in working capital was the result of a planned reduction in inventory and a decrease in receivables, partially offset by lower payables. Net cash provided by investing activities increased $778.8 million in 1999 from a use of funds of $709.7 million in 1998 to a source of funds of $69.1 million in 1999. The increase was primarily a result of a decrease in acquisitions, reduced capital expenditures and proceeds of $295.9 million from the sale of AgriBusiness and the Company's investment in the oil and gas business. Capital expenditures in 1999 were $248.4 million and consisted primarily of expanded potash capacity; salt business consolidation; and new computer system and production equipment upgrades. Capital expenditures in 1998 were $367.6 million and consisted primarily of mine expansion and development costs; oil and gas exploration and development; and system development and production equipment upgrades. The decrease of $119.2 million compared to 1998 was primarily a result of reduced mine expansion efforts and the absence in 1999 of expenditures for the discontinued operations of Chemicals as well as the oil and gas business. The Company estimates that its capital expenditures from continuing operations for 2000 will approximate $170.0 million, $150.0 million after minority interest, and will be financed primarily from operations. Cash used by financing activities increased $998.8 million in 1999 from a source of funds of $441.5 million in 1998 to a use of funds of $557.3 million in 1999. This increased use of funds was primarily due to net debt payments of $501.6 million in 1999 compared to net debt proceeds of $544.8 million in 1998. Total borrowings decreased by approximately $500.0 million in 1999, from $3,047.0 million at December 31, 1998 to $2,548.6 million at December 31, 1999, primarily as a result of using cash flows from operations and proceeds from the divestiture of AgriBusiness to reduce debt. As of December 31, 1999, the Company had the ability to borrow under a shelf registration statement which permits the issuance of approximately $750.0 million of securities. As of December 31, 1999, the Company also had $506.0 million of commercial paper outstanding supported by $1.0 billion of credit facilities. Net available borrowings under these credit facilities at December 31, 1999 were approximately $442.2 million. See Note 10, "Financing Arrangements," of Notes to Consolidated Financial Statements. The Company may acquire shares of its stock on an ongoing basis and is authorized as of December 31, 1999 to purchase up to 4.5 million shares. Additionally, in early 2000, the Company's Board of Directors authorized the purchase of up to an additional 5.4 million shares through the use of a forward stock repurchase program executed by a financial institution. Management considers market conditions, alternate uses of cash and shareholder returns, among other factors, when evaluating share repurchases. The Company believes that its cash, other liquid assets, operating cash flows and access to capital markets, taken together, provide adequate resources to fund ongoing operating requirements as well as future capital expenditures related to the expansion of and investment in existing businesses and development of new projects. [Chart] EBITDA(a) - --------- (In millions) 1999 1998 1997 ---- ---- ---- $658.6 $789.8 $464.5 (a)Earnings from continuing operations before special charges, minority interest, interest charges, taxes, depreciation, depletion and amortization and after PLP distribution. [Chart] Capital Expenditures - -------------------- (In millions) 1999 1998 1997 ---- ---- ---- $248.4 $367.6 $244.0 [Chart] Debt-to-Total Capitalization - ---------------------------- 1999 1998 1997 ---- ---- ---- 70.2% 62.1% 42.4% Market Risk ------------- The Company is exposed to the impact of interest rate changes on borrowings, fluctuations in the functional currency of foreign operations and the impact of fluctuations in the purchase price of natural gas, ammonia and sulphur consumed in operations, as well as changes in the market value of its financial instruments. The Company periodically enters into derivatives in order to minimize foreign currency risks, but not for trading purposes. The functional currency of all operations outside the United States is the respective local currency. Foreign currency translation effects are included in Accumulated other comprehensive income. The Company uses foreign currency forward exchange contracts, which typically expire within one year, to hedge transaction exposure related to assets and liabilities denominated in currencies other than the entities' functional currencies, including intercompany loans. Realized and unrealized gains and losses on foreign currency forward exchange contracts used to hedge the currency fluctuations on transactions denominated in foreign currencies and the offsetting realized and unrealized losses and gains on hedged transactions are recorded in Other income and expense. The Company had $93.6 million and $106.2 million of foreign currency forward exchange contracts outstanding as of December 31, 1999 and 1998, respectively. As of December 31, 1999 and 1998, the difference between the contract amounts and fair value was immaterial. The Company also uses foreign currency forward exchange contracts, which typically expire within one year, to reduce the exchange rate risk related to certain forecasted foreign currency transactions. The carrying amounts of these contracts are adjusted to their market values at each balance sheet date and recorded in Other income and expense. The Company had $156.5 million of foreign currency forward exchange contracts outstanding as of December 31, 1999, which are being used for the purpose described above. As of December 31, 1999, the difference between the contract amounts and fair value was immaterial. The Company conducted sensitivity analyses of its derivatives and other financial instruments assuming the following: (i) a one percentage point adverse change in interest rates on outstanding borrowings; (ii) a ten percent adverse change in foreign currency exchange rates; and (iii) a ten percent adverse change in the purchase price of natural gas, ammonia and sulphur all from their levels at December 31, 1999. Holding all other variables constant, the hypothetical adverse changes would not materially affect the Company's financial position. These analyses did not consider the effects of the reduced level of economic activity that could exist in such an environment and certain other factors. Further, in the event of a change of such magnitude, management would likely take actions to further mitigate its exposure to possible changes. However, due to the uncertainty of the specific actions that would be taken and their possible effects, the sensitivity analyses assume no changes in the Company's financial structure. Contingencies ------------- See Note 16, "Contingencies," of Notes to Consolidated Financial Statements. Environmental, Health and Safety Matters ---------------------------------------- The Company's Program The Company has adopted the following Environmental, Health and Safety (EHS) Policy (Policy): As a key to the Company's success, the Company is committed to the pursuit of excellence in health and safety, and environmental stewardship. Every employee will strive to continuously improve the Company's performance and to minimize adverse environmental, health and safety impacts. The Company will proactively comply with all environmental, health and safety laws and regulations. This Policy is the cornerstone of the Company's comprehensive EHS plan (EHS Plan) to achieve sustainable, predictable, measurable and verifiable EHS performance. Integral elements of the EHS Plan include: (i) improving the Company's EHS procedures and protocols; (ii) upgrading its related facilities and staff; (iii) performing baseline and verification audits; (iv) formulating improvement plans; and (v) assuring management accountability. The Company has phased in implementation of this EHS Plan and each facility is in a different stage of plan integration. The Company conducts audits to confirm that each facility has implemented the EHS Plan and has achieved regulatory compliance, continuous EHS improvement and integration of EHS management systems into day-to-day business functions. The Company produces and distributes crop and animal nutrients, salt and deicing products, boron-based chemicals and sodium-bicarbonate. These activities subject the Company to an ever-evolving myriad of international, federal, state, provincial and local EHS laws which regulate, or propose to regulate: (i) product content; (ii) use of products by both the Company and its customers; (iii) conduct of mining and production operations, including safety procedures used by employees; (iv) management and handling of raw materials; (v) air and water quality impacts by the Company's facilities; (vi) disposal of hazardous and solid wastes; and (vii) post-mining land reclamation. For new regulatory programs, it is difficult to ascertain future compliance obligations or estimate future costs until implementing regulations have been finalized and definitive regulatory interpretations have been adopted. The Company intends to respond to these regulatory requirements at the appropriate time by implementing necessary physical or procedural modifications. The Company has expended, and anticipates that it will continue to expend, substantial resources, both financial and managerial, to comply with EHS standards. In 2000, environmental capital expenditures will total approximately $56.5 million, primarily related to: (i) modification or construction of wastewater treatment areas in Florida; (ii) modification and construction projects associated with phosphogypsum stacks at the concentrates plants in Florida and Louisiana; and (iii) remediation of contamination at current or former operations. Additional expenditures for land reclamation activities will total approximately $15.5 million. In 2001, the Company expects environmental capital expenditures will be approximately $86.9 million and expenditures for land reclamation activities to be approximately $13.5 million. No assurance can be given that greater-than-anticipated EHS capital expenditures will not be required in 2000 or in the future. Based on current information, it is the opinion of management that the Company's contingent liability arising from EHS matters, taking into account established reserves, will not have a material adverse effect on the Company's financial position or results of operations. Product Requirements and Impacts - -------------------------------- The Company's primary businesses include the production and sale of crop and animal nutrients, salt and deicing products, boron-based chemicals and sodium-bicarbonate. International, federal, state and provincial standards: (i) require registration of many Company products before those products can be sold; (ii) impose labeling requirements on those products; and (iii) require producers to manufacture the products to formulations set forth on the labels. Various environmental, natural resource and public health agencies at all regulatory levels have begun evaluating alleged health and environmental impacts that might arise from the handling and use of products such as those manufactured by the Company. Most of these evaluations are in the initial stages. During 1999, the United States Environmental Protection Agency (EPA), the state of California, and The Fertilizer Institute each completed independent assessments of potential risks posed by crop nutrient materials. These assessments concluded that, based on the available data, crop nutrient materials generally do not pose harm to human health or the environment. Despite these conclusions, some agencies have implemented or are still considering standards that may modify customers' use of the Company's products because of the alleged impacts. It is unclear whether any further evaluations that may be conducted will result in additional regulatory requirements for the producing industries, including the Company or its customers. At this preliminary stage, the Company cannot estimate the potential impact of these standards on the market for the Company's products or on the expenditures that may be necessary to meet new requirements. Operating Requirements and Impacts - ---------------------------------- Permitting The Company holds numerous environmental, mining and other permits or approvals authorizing operation at each of its facilities. A decision by a government agency to deny or delay issuing an application for a new or renewed permit or approval, or to revoke or substantially modify an existing permit or approval, could have a material adverse effect on the Company's ability to continue operations at the affected facility. Expansion of Company operations also is predicated upon securing the necessary environmental or other permits or approvals. Recently, a number of organizations and community groups in a variety of locations have relied upon guidance and materials issued by the EPA to challenge federally authorized permits that these groups believe might have a disproportionate impact on minority or low-income communities. A challenge of this type at one of the Company's facilities, even though unfounded, could impact the ability of that facility to obtain timely permits. In addition, over the next two to six years, Phosphates will be continuing its efforts to obtain permits in support of its anticipated Florida mining operations at the Ona and Pine Level properties. These properties contain in excess of 100 million tons of phosphate rock reserves. For years, the Company has successfully permitted mining properties in Florida and anticipates that it will be able to permit these properties. Nevertheless, a denial of these permits or the issuance of permits with cost-prohibitive conditions would adversely impact the Company by preventing it from mining at Ona or Pine Level. Mining Operations In the last several years, regulatory agencies in the United States and Canada have undertaken a review of potential health impacts from diesel emissions on miners in underground mining operations. The Province of Ontario has adopted, and the United States Mine Safety and Health Administration has proposed, limits of exposure to diesel emissions for all underground mining operations including salt and potash. Moreover, in 1998, the National Institute for Occupational Safety and Health (NIOSH) began a multi-year study to determine whether exposure to exhaust generated by diesel equipment used in underground mining operations results in adverse, long-term health effects to miners. This study involves a review of Potash's two potash mines in Carlsbad, New Mexico. The Company cannot currently estimate the extent of expenditures that may be necessary to address conclusions of the NIOSH study, once completed, or additional regulatory standards that may arise. Management of Residual Materials Mining and processing potash, salt and phosphate generates residual materials that must be managed. Potash tailings, which contain primarily salt, iron and clay, are stored in surface disposal sites. Salt residuals are managed in piles. Phosphate mining residuals, such as overburden and sand tailings, are used in reclamation, while clay residuals are deposited in clay ponds. Phosphate processing generates phosphogypsum which is stored in phosphogypsum stack systems. The Company has incurred and will continue to incur significant costs to manage its potash, salt and phosphate residual materials in accordance with environmental laws, regulations and permit requirements. For potash and salt residuals in Saskatchewan, the Department of Environmental and Resource Management (Department) has required all mine operators to obtain approval of facility decommissioning and reclamation plans (Plans) that will apply once mining operations at any facility are terminated. These Plans must specify procedures for decommissioning all mine facilities and for handling potash and salt residual materials, including salt piles and potash tailings management areas. As part of these Plans, the Department will require operators to provide financial assurance that the Plans will be carried out. Along with other members of the Saskatchewan potash industry, the Company filed its Plans for its Saskatchewan potash mines in 1997. The Department rejected those potash industry Plans that did not provide for the underground disposal of all surface tailings. The potash industry is cooperating with the Department to evaluate technically feasible, cost-effective and environmentally responsible disposal. Costs for decommissioning in accordance with the Plans are likely to be significant. However, the Company does not anticipate expending such funds in the foreseeable future. Facility decommissioning will not occur until a facility has closed, and such closure is not imminent given the anticipated life of the Company's mines. Also, implementation of the Plans has been deferred until the Department and the industry can reach agreement over the appropriate technical approach for long-term potash tailings management. This approach may change as advances are made in tailings management technology. Changes also occur from time to time in rules and regulations governing tailings management. Finally, the Company will not be required to provide financial assurance until an appropriate assurance mechanism has been specified by the Department. For these reasons, the Company cannot predict with certainty the financial impact of these decommissioning requirements on the Company. Monitoring of the Company's Saskatchewan potash tailing management areas has indicated that some of these areas might have impacted local groundwater. The consequences of this impact are unknown and it is uncertain whether any corrective action will be required. As a result, management cannot currently estimate the financial impact that these groundwater results may have on the Company. IMC Salt's Saskatchewan salt mine also submitted its decommissioning plan in 1997. The plan provided for dissolution and underground reinjection of the facility's residual salt pile and was conditionally approved. The dissolution process has begun; however, the Department still has not specified the type of financial assurance that it will require the facility to provide. With regard to phosphate processing, Florida law may require Phosphates to close one or more of its unlined phosphogypsum stacks and/or associated cooling ponds after March 25, 2001 if the stack system or pond is demonstrated to cause an exceedance of Florida's groundwater quality standards. Phosphates has already begun closure activities at its unlined gypsum stack at its New Wales facility in Central Florida. Phosphates cannot predict at this time whether Florida law will require closure of any of its other stack systems. The costs of such closure and decommissioning could be significant. In addition, Phosphates currently operates an unlined cooling pond at New Wales. Monitoring indicates that discharges from the unlined cooling pond are within Florida groundwater standards. Phosphates received a permit in August 1999 to continue operating this pond through March 25, 2001. Over the past several years, the Company has successfully permitted this pond and anticipates that it will be able to obtain future permits. However, if Phosphates does not receive the permit, it will need to line or relocate the cooling pond, which is estimated to cost approximately $45.0 million. Restructuring Charges - --------------------- In connection with the Company's Rightsizing Program, Phosphates has discontinued mining or processing operations at a number of its facilities including the Payne Creek and Noralyn mines and the Nichols concentrates plant. Such discontinuation will trigger decommissioning, closure and reclamation requirements under a number of Florida regulations and Company permits. These activities are estimated to cost $41.0 million, for which reserves have been established. Although the Company believes that it has reasonably estimated these costs, additional expenditures could be required to address unanticipated environmental conditions as they arise. Remedial Activities - ------------------- Remediation at Company Facilities Many of the Company's formerly owned or current facilities have been in operation for a number of years. The historical use and handling of regulated chemical substances, crop and animal nutrients and additives, salt and by-product or process tailings at these facilities by the Company and predecessor operators have resulted in soil and groundwater contamination. In addition, through the FTX Merger, the Company assumed responsibility for contamination at some crop nutrient facilities that were owned or operated by FTX, PLP or their predecessors. At many of these facilities, spills or other unintended releases of regulated substances have occurred previously and potentially could occur in the future, possibly requiring the Company to undertake or fund cleanup efforts. In some instances, the Company has agreed, pursuant to consent orders with the appropriate governmental agencies, to undertake certain investigations, which currently are in progress, to determine whether remedial action may be required to address contamination. At other locations, the Company has entered into consent orders with appropriate governmental agencies to perform required remedial activities that will address identified site conditions. Expenditures for these known conditions currently are not expected to be material. However, material expenditures by the Company could be required in the future to remediate the contamination at these or at other current or former sites. The Company believes that, pursuant to several indemnification agreements, it is entitled to at least partial, and in many instances complete, indemnification for the costs that may be expended by the Company to remedy environmental issues at certain facilities. These agreements address issues that resulted from activities occurring prior to the Company's acquisition of facilities or businesses from parties including PPG Industries, Inc.; Kaiser Aluminum & Chemical Corporation; Beatrice Companies, Inc.; Estech, Inc.; ARCO; Conoco; The Williams Companies; Kerr-McGee Inc.; and certain other private parties. The Company has already received and anticipates receiving amounts pursuant to the indemnification agreements for certain of its expenses incurred to date as well as future anticipated expenditures. During 1999, under a consent order with the state of South Carolina, the Company successfully deconstructed its former fertilizer production facility in Spartanburg, South Carolina. Subsequently, the EPA performed an expanded site investigation (ESI) at this facility to determine whether the Company will be required to conduct any additional remedial activities. Because the results of that ESI have not been finalized, the Company cannot determine the cost of any remedial action that ultimately may be required. Recently, several attorneys purportedly representing 600 neighbors of the Spartanburg facility have expressed their intention to file suit against the Company for alleged personal injury and property damage. Until these suits are filed, the Company is unable to determine the magnitude of potential exposure; however, the Company intends to vigorously contest any actions that may be brought. Remediation at Third-Party Facilities Along with impacting the sites at which the Company has operated, parties have alleged that the Company's historic operations have resulted in contamination to neighboring off-site areas or third-party facilities. In some instances, the Company has agreed, pursuant to consent orders with appropriate governmental agencies, to undertake investigations, which currently are in progress, to determine whether remedial action may be required to address contamination. The Company's remedial liability at these sites, either alone or in the aggregate, currently is not expected to be material. As more information is obtained regarding these sites, this expectation could change. In September 1999, four plaintiffs filed Moore et al. vs. Agrico Chemical Company et al., a class-action lawsuit naming Agrico Chemical Company, FTX, PLP and a number of unrelated defendants. The suit seeks unspecified compensation for alleged property damage, medical monitoring, remediation of an alleged public health hazard and other appropriate damages purportedly arising from operation of the neighboring fertilizer and crop protection chemical facilities in Lakeland, Florida. Agrico Chemical Company owned the Landia portion of these facilities for approximately 18 months during the mid-1970s. Because the litigation is in its early stages, management cannot determine the magnitude of any exposure to the Company; however, the Company intends to vigorously contest this action and to seek any indemnification to which it may be entitled. Concurrent with this litigation, the EPA has undertaken on-site and off-site investigations of these facilities to determine whether any remediation of existing contamination may be necessary. Pursuant to an indemnification agreement with the Company, The Williams Companies have assumed responsibility for any costs that Agrico Chemical Company might incur for remediation as a result of the EPA's actions. Superfund - --------- The Comprehensive Environmental Response Compensation and Liability Act (Superfund) imposes liability, without regard to fault or to the legality of a party's conduct, on certain categories of persons who are considered to have contributed to the release of "hazardous substances" into the environment. Currently, the Company is involved or concluding involvement at less than 20 Superfund or equivalent state sites. The Company's remedial liability at these sites, either alone or in the aggregate, is not currently expected to be material. As more information is obtained regarding these sites and the potentially responsible parties involved, this expectation could change. Oil and Gas - ----------- Through the FTX Merger, the Company assumed responsibility for contamination and environmental impacts at a significant number of oil and gas facilities that were businesses operated by FTX, PLP or their predecessors. The Company recorded an additional $18.3 million, $10.8 million after tax, of environmental exit costs as a result of additional information which became available to the Company in the fourth quarter of 1999 concerning the Company's obligations with respect to previously owned oil and gas properties. The Company is currently involved in eight such claims, which allege destruction of marshland by oil and gas operations or contamination resulting from disposal of oil and gas residual materials. The Company's liability for these claims, either alone or in the aggregate, taking into account established reserves, is not expected to have a material adverse effect on the Company's financial position or results of operations. As more information is obtained regarding these claims or as new claims arise, this expectation could change. Year 2000 Disclosure -------------------- The Company completed its Year 2000 readiness initiatives and did not experience any significant problems. The Company does not anticipate any significant adverse business effects related to this issue. The Company incurred approximately $7.5 million in cumulative costs of projects dedicated solely to Year 2000 remediation. Recently Issued Accounting Guidance ----------------------------------- The Company does not believe that Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities," which the Company is required to adopt on January 1, 2001, will have a material impact on the Company's financial statements. Forward-Looking Statements -------------------------- All statements, other than statements of historical fact, contained within Management's Discussion and Analysis of Financial Condition and Results of Operations constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements include, but are not limited to, the following: general business and economic conditions in the agricultural industry or in localities where the Company or its customers operate; weather conditions; the impact of competitive products; pressure on prices realized by the Company for its products; constraints on supplies of raw materials used in manufacturing certain of the Company's products; capacity constraints limiting the production of certain products; difficulties or delays in the development, production, testing and marketing of products; difficulties or delays in receiving required governmental and regulatory approvals; market acceptance issues, including the failure of products to generate anticipated sales levels; difficulties in integrating acquired businesses and in realizing related cost savings and other benefits; the effects of and change in trade, monetary and fiscal policies, laws and regulations; foreign exchange rates and fluctuations in those rates; the costs and effects of legal proceedings, including environmental and administrative proceedings involving the Company; and other risk factors reported from time to time in the Company's Securities and Exchange Commission reports. Report of Management Management of IMC Global Inc. is responsible for the preparation, integrity and fair presentation of the financial information included in this report. The financial statements have been prepared in accordance with generally accepted accounting principles and necessarily include certain amounts that are based on management's estimates and judgment. Management is responsible for maintaining a system of internal accounting controls to provide reasonable assurance as to the integrity and reliability of the financial statements; the proper safeguarding and use of assets; and the accurate execution and recording of transactions. Such controls are based on established policies and procedures and are implemented by trained personnel. The system of internal accounting controls is monitored by the Company's internal auditors to confirm that the system is proper and operating effectively. The Company's policies and procedures prescribe that the Company and its subsidiaries are to maintain ethical standards and that its business practices are to be consistent with those standards. The Company's financial statements have been audited by Ernst & Young LLP (Ernst & Young), independent auditors. Their audit was conducted in accordance with auditing standards generally accepted in the United States and included consideration of the Company's internal control system. Management has made available to Ernst & Young all of the Company's financial records and related data, as well as minutes of the meetings of the Board of Directors. Management believes that all representations made to Ernst & Young were valid and appropriate. The Board of Directors, operating through its Audit Committee composed entirely of non-employee directors, provides oversight to the financial reporting process. The Audit Committee meets regularly with management, the internal auditors and Ernst & Young, jointly and separately, to review financial reporting matters, internal accounting controls and audit results to assure that all parties are properly fulfilling their responsibilities. Both Ernst & Young and the internal auditors have unrestricted access to the Audit Committee. /s/ J. Bradford James /s/ Anne M. Scavone - ---------------------------- ----------------------------- J. Bradford James Anne M. Scavone Executive Vice President and Vice President and Controller Chief Financial Officer Report of Independent Auditors To the Board of Directors and Stockholders of IMC Global Inc. We have audited the accompanying consolidated balance sheet of IMC Global Inc. as of December 31, 1999 and 1998 and the related consolidated statements of operations, cash flows and stockholders' equity for each of the three years in the period ended December 31, 1999. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of IMC Global Inc. as of December 31, 1999 and 1998, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 1999, in conformity with accounting principles generally accepted in the United States. As discussed in Note 2 to the financial statements, effective October 1, 1999 the Company changed its method for assessing the recoverability of goodwill. In addition, as discussed in Note 1 to the financial statements, the Company changed its method of accounting for start-up activities in 1999 to conform with SOP 98-5, "Reporting on the Costs of Start-Up Activities." /s/ Ernst & Young LLP --------------------- Ernst & Young LLP Chicago, Illinois January 31, 2000 Consolidated Statement of Operations In millions, except per share amounts
Year ended December 31 1999 1998 1997 ---- ---- ---- Net sales $2,369.3 $2,383.1 $2,116.0 Cost of goods sold 1,826.6 1,684.3 1,541.1 -------- -------- -------- Gross margins 542.7 698.8 574.9 Selling, general and administrative expenses 164.5 150.6 131.8 Goodwill write-down 521.2 - - Restructuring charges 175.2 176.1 - Main Pass write-down - - 183.7 -------- -------- -------- Operating earnings (loss) (318.2) 372.1 259.4 Interest expense 154.5 161.1 40.2 Other (income) expense, net (6.9) (5.9) (5.4) -------- -------- -------- Earnings (loss) from continuing operations before minority interest (465.8) 216.9 224.6 Minority interest (0.1) 24.4 124.4 -------- -------- -------- Earnings (loss) from continuing operations before income taxes (465.7) 192.5 100.2 Provision for income taxes 145.4 82.7 30.4 -------- -------- -------- Earnings (loss) from continuing operations (611.1) 109.8 69.8 Discontinued operations: Earnings (loss) from discontinued operations (43.5) 1.1 18.0 Estimated loss on disposal (111.7) (122.9) - -------- -------- -------- Total earnings (loss) from discontinued operations (155.2) (121.8) 18.0 -------- -------- -------- Earnings (loss) before extraordinary item and cumulative effect of a change in accounting principle (766.3) (12.0) 87.8 Extraordinary item - debt retirement 0.5 3.0 (24.9) Cumulative effect of a change in accounting principle (7.5) - - -------- ------- -------- Net earnings (loss) $ (773.3) $ (9.0) $ 62.9 ======== ======== ======== Basic and diluted earnings (loss) per share: Earnings (loss) from continuing operations $ (5.33) $ 0.96 $ 0.74 Total earnings (loss) from discontinued operations (1.35) (1.07) 0.19 Extraordinary item - debt retirement - 0.03 (0.26) Cumulative effect of a change in accounting principle (0.07) - - -------- -------- -------- Net earnings (loss) per share $ (6.75) $ (0.08) $ 0.67 ======== ======== ======== Basic weighted average number of shares outstanding 114.5 114.2 94.0 Diluted weighted average number of shares outstanding 114.5 114.8 94.7 See Notes to Consolidated Financial Statements
Consolidated Balance Sheet In millions, except share amounts
December 31 1999 1998 ---- ---- Assets - ------ Current assets: Cash and cash equivalents $ 80.8 $ 110.6 Receivables, net 254.2 421.5 Inventories, net 439.6 580.6 Net assets of discontinued operations held for sale - 273.3 Deferred income taxes 135.3 91.1 Other current assets 18.0 5.5 -------- -------- Total current assets 927.9 1,482.6 Property, plant and equipment, net 3,250.7 3,697.4 Net assets of discontinued operations held for sale 301.5 - Other assets 715.8 1,276.9 -------- -------- Total assets $5,195.9 $6,456.9 ======== ======== Liabilities and Stockholders' Equity - ------------------------------------ Current liabilities: Accounts payable $ 200.9 $ 255.9 Accrued liabilities 260.1 240.9 Short-term debt and current maturities of long-term debt 29.9 408.3 -------- -------- Total current liabilities 490.9 905.1 Long-term debt, less current maturities 2,518.7 2,638.7 Deferred income taxes 589.6 566.6 Other noncurrent liabilities 516.6 486.1 Stockholders' equity: Common stock, $1 par value, authorized 300,000,000 shares; issued 125,163,572 and 125,072,811 shares in 1999 and 1998, respectively 125.2 125.0 Capital in excess of par value 1,698.1 1,697.3 Retained earnings (deficit) (411.1) 400.6 Accumulated other comprehensive income (37.3) (66.3) Treasury stock, at cost, 10,676,276 and 10,738,520 shares in 1999 and 1998, respectively (294.8) (296.2) -------- -------- Total stockholders' equity 1,080.1 1,860.4 -------- -------- Total liabilities and stockholders' equity $5,195.9 $6,456.9 ======== ======== See Notes to Consolidated Financial Statements
Consolidated Statement of Cash Flows In millions
Year ended December 31 1999 1998 1997 ---- ---- ---- Cash Flows from Operating Activities Net earnings (loss) $ (773.3) $ (9.0) $ 62.9 Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: Goodwill write-down 521.2 - - Depreciation, depletion and amortization 232.5 251.7 183.2 Restructuring charges, net of cash paid 116.5 144.0 - Estimated losses on disposal of businesses 111.7 122.9 - Minority interest (2.5) 14.1 124.4 Main Pass write-down - - 112.2 Deferred income taxes 136.4 2.9 58.4 Other charges and credits, net 48.4 (38.4) 2.4 Changes in: Receivables 88.4 (18.2) (12.3) Inventories 68.8 (81.4) 3.9 Other current assets (14.2) (9.4) 2.1 Accounts payable (11.3) (64.9) (2.8) Accrued liabilities (59.3) (79.8) 29.0 Net current assets of discontinued (4.9) 34.6 - operations -------- --------- -------- Net cash provided by operating activities 458.4 269.1 563.4 -------- --------- -------- Cash Flows from Investing Activities Capital expenditures (248.4) (367.6) (244.0) Acquisitions, net of cash acquired (9.1) (393.3) (91.4) Proceeds from sale of businesses 295.9 44.8 - Proceeds from sale of investment 12.8 - - Proceeds from sale of property, plant and 17.9 6.4 8.8 equipment -------- --------- -------- Net cash provided by (used in) investing activities 69.1 (709.7) (326.6) -------- --------- -------- Net cash provided (used) before financing activities 527.5 (440.6) 236.8 -------- --------- -------- Cash Flows from Financing Activities Cash distributions to unitholders of PLP (21.5) (11.0) - Cash distributions from IMC-Agrico to PLP - - (146.4) Payments of long-term debt (189.7) (1,303.1) (515.9) Proceeds from issuance of long-term debt, net 80.4 2,370.2 805.3 Changes in short-term debt, net (392.3) (522.3) (127.7) Increase (decrease) in securitization of accounts receivable, net - (61.5) 6.0 Stock options exercised and restricted stock awards 2.4 8.9 5.5 Cash dividends paid (36.6) (36.6) (29.7) Purchase of treasury stock - (3.1) (187.5) -------- --------- -------- Net cash provided by (used in) financing activities (557.3) 441.5 (190.4) -------- --------- -------- Net change in cash and cash equivalents (29.8) 0.9 46.4 Cash and cash equivalents - beginning of year 110.6 109.7 63.3 -------- --------- -------- Cash and cash equivalents - end of year $ 80.8 $ 110.6 $ 109.7 ======== ========= ======== See Notes to Consolidated Financial Statements
Consolidated Statement of Stockholders' Equity In millions, except per share amounts
Capital Accumulated in excess Retained other Total Outstanding Common of par earnings comprehensive Treasury stockholders' Comprehensive shares stock value (deficit) income stock equity income(loss) ----------- ------ --------- --------- ------------- -------- ------------- ------------- Balance at December 31, 1996 96.1 $ 101.6 $ 936.1 $ 413.0 $ (17.2) $(107.3) $1,326.2 Net earnings - - - 62.9 - - 62.9 $ 62.9 Foreign currency translation adjustment - - - - (13.6) - (13.6) (13.6) Dividends ($0.32 per share) - - - (29.7) - - (29.7) Stock options exercised 0.3 0.3 5.2 - - - 5.5 Issuance of common stock pursuant to acquisitions 22.7 22.7 749.0 - - 0.2 771.9 Purchase of treasury shares (5.1) - - - - (187.5) (187.5) ----- ------- -------- ------- ------- ------- -------- ------- Balance at December 31, 1997 114.0 124.6 1,690.3 446.2 (30.8) (294.6) 1,935.7 49.3 ======= Net loss - - - (9.0) - - (9.0) (9.0) Foreign currency translation adjustment - - - - (35.5) - (35.5) (35.5) Dividends ($0.32 per share) - - - (36.6) - - (36.6) Stock options exercised and restricted stock awards 0.4 0.4 7.0 - - 1.5 8.9 Purchase of treasury shares (0.1) - - - - (3.1) (3.1) ----- ------- -------- ------- ------- ------- -------- ------- Balance at December 31, 1998 114.3 125.0 1,697.3 400.6 (66.3) (296.2) 1,860.4 (44.5) ======= Net loss - - - (773.3) - - (773.3) (773.3) Foreign currency translation adjustment - - - - 29.0 - 29.0 29.0 Dividends ($0.32 per share) - - - (36.6) - - (36.6) Stock options exercised and restricted stock awards 0.2 0.2 0.8 - - 1.4 2.4 Other - - - (1.8) - - (1.8) ----- ------- -------- ------- ------- ------- -------- ------- Balance at December 31, 1999 114.5 $ 125.2 $1,698.1 $(411.1) $ (37.3) $(294.8) $1,080.1 $(744.3) ===== ======= ======== ======= ======= ======= ======== ======= See Notes to Consolidated Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The consolidated financial statements include the accounts of the Company and all subsidiaries which are more than 50.0 percent owned and controlled. Prior to its disposition in the fourth quarter of 1999, the Company's interest in a multi-year oil and natural gas exploration program with MMR (Exploration Program) was proportionately consolidated by PLP at a rate of 56.4 percent of the exploration costs and 47.0 percent of the profits derived from oil and gas producing properties. Additionally, prior to its disposal in 1997, the Company proportionately consolidated its 25.0 percent interest in the sulphur operations of Main Pass. All significant intercompany accounts and transactions are eliminated in consolidation. Certain amounts in the consolidated financial statements for periods prior to December 31, 1999 have been reclassified to conform to the current presentation. As discussed in more detail in Note 4, "Discontinued Operations," Chemicals, AgriBusiness and the Company's oil and gas business have been presented as discontinued operations. Use of Estimates Management is required to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Revenue Recognition Revenue is recognized by the Company upon the transfer of title to the customer, which is generally at the time product is shipped. For certain export shipments, transfer of title occurs outside of the United States. Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents which are reflected at their approximate fair value. Concentration of Credit Risk Domestically, the Company sells its products to manufacturers, distributors and retailers primarily in the midwestern and southeastern United States and to governmental bodies such as states, provinces, counties and municipalities located in the Great Lakes region of the United States and Canada. Internationally, the Company's phosphate and potash products are sold primarily through two North American export associations. No single customer or group of affiliated customers accounted for more than ten percent of the Company's net sales. Inventories Inventories are valued at the lower-of-cost-or-market (net realizable value). Cost for substantially all of the Company's inventories is calculated on a cumulative annual-average basis. Property, Plant and Equipment/Other Assets Property (including mineral deposits), plant and equipment, including assets under capital leases, are carried at cost. Cost of significant assets includes capitalized interest incurred during the construction and development period. Expenditures for replacements and improvements are capitalized; maintenance and repair expenditures, except for repair and maintenance overhauls (Turnarounds), are charged to operations when incurred. Expenditures for Turnarounds are deferred when incurred and amortized into cost of goods sold on a straight-line basis, generally over an 18-month period. Turnarounds are large-scale maintenance projects that are performed regularly, usually every 18 to 24 months. Turnarounds are necessary to maintain the operating capacity and efficiency rates of the production plants. The deferred portion of Turnaround expenditures is classified in Other assets. Depreciation and depletion expenses for mining operations, including mineral deposits, are determined using the units-of-production method based on estimates of recoverable reserves. Other asset classes or groups are depreciated or amortized on a straight-line basis over their estimated useful lives as follows: buildings, ten to 45 years; machinery and equipment, three to 25 years; and leasehold improvements, over the lesser of the remaining useful life of the asset or the remaining term of the lease. Goodwill, representing the excess of purchase cost over the fair value of net assets of acquired companies, is generally amortized using the straight-line method over 40 years. At December 31, 1999 and 1998, goodwill, included in Other assets, totaled $535.9 million and $1,064.2 million, respectively. See Note 2, "Change in Accounting for Goodwill" and Note 6, "Acquisitions," for further detail regarding goodwill. Using the methodology prescribed in SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," the Company reviews long-lived assets and the related intangible assets for impairment whenever events or changes in circumstances indicate the carrying amounts of such assets may not be recoverable. Once an indication of a potential impairment exists, recoverability of the respective assets is determined by comparing the forecasted undiscounted net cash flows of the operation to which the assets relate, to the carrying amount, including associated intangible assets, of such operation. If the operation is determined to be unable to recover the carrying amount of its assets, then intangible assets are written down first, followed by the other long-lived assets of the operation, to fair value. Fair value is determined based on discounted cash flows or appraised values, depending upon the nature of the assets. Accrued Environmental Costs The Company produces and distributes crop and animal nutrients, salt and deicing products, boron-based chemicals and sodium- bicarbonate. These activities subject the Company to an ever- evolving myriad of international, federal, state, provincial and local EHS laws, which regulate, or propose to regulate: (i) product content; (ii) use of products by both the Company and its customers; (iii) conduct of mining and production operations, including safety procedures used by employees; (iv) management and handling of raw materials; (v) air and water quality impacts by the Company's facilities; (vi) disposal of hazardous and solid wastes; and (vii) post-mining land reclamation. Compliance with these laws often requires the Company to incur costs. The Company has contingent environmental liabilities arising from three sources: facilities currently or formerly owned by the Company or its predecessors; facilities adjacent to currently or formerly owned facilities; and third-party Superfund sites. At facilities currently or formerly owned by the Company or its corporate predecessors, including FTX, PLP and their corporate predecessors, the historical use and handling of regulated chemical substances, crop and animal nutrients and additives, salt and by-product or process tailings, have resulted in soil and groundwater contamination, sometimes requiring the Company to undertake or fund cleanup efforts. Of the environmental costs discussed above, the following environmental costs are charged to operating expense: fines, penalties and certain remedial action to address violations of the law; remediation of properties that are currently or were formerly owned or operated by the Company, or its predecessors, when those properties do not contribute to current or future revenue generation; and liability for remediation of facilities adjacent to currently or formerly owned facilities or for third-party Superfund sites. Contingent environmental liabilities are recorded for environmental investigatory and non-capital remediation costs at identified sites when litigation has commenced or a claim or assessment has been asserted or is imminent and the likelihood of an unfavorable outcome is probable. The Company cannot determine the cost of any remedial action that ultimately may be required at unknown sites, sites currently under investigation, sites for which investigations have not been performed, or sites at which unanticipated conditions are discovered. Derivatives The Company is exposed to the impact of interest rate changes on borrowings, fluctuations in the functional currency of foreign operations and the impact of fluctuations in the purchase price of natural gas, ammonia and sulphur consumed in operations, as well as changes in the market value of its financial instruments. The Company periodically enters into derivatives in order to minimize foreign currency risks, but not for trading purposes. The functional currency of all operations outside the United States is the respective local currency. Foreign currency translation effects are included in Accumulated other comprehensive income. The Company uses foreign currency forward exchange contracts, which typically expire within one year, to hedge transaction exposure related to assets and liabilities denominated in currencies other than the entities' functional currencies, including intercompany loans. Realized and unrealized gains and losses on foreign currency forward exchange contracts used to hedge the currency fluctuations on transactions denominated in foreign currencies and the offsetting realized and unrealized losses and gains on hedged transactions are recorded in Other income and expense. The Company had $93.6 million and $106.2 million of foreign currency forward exchange contracts outstanding as of December 31, 1999 and 1998, respectively. As of December 31, 1999 and 1998, the difference between the contract amounts and fair value was immaterial. The Company also uses foreign currency forward exchange contracts, which typically expire within one year, to reduce the exchange rate risk related to certain forecasted foreign currency transactions. The carrying amounts of these contracts are adjusted to their market values at each balance sheet date and recorded in Other income and expense. The Company had $156.5 million of foreign currency forward exchange contracts outstanding as of December 31, 1999, which are being used for the purpose described above. As of December 31, 1999, the difference between the contract amounts and fair value was immaterial. Adoption of SOP 98-5 In April 1998, the American Institute of Certified Public Accountants issued Statement of Position (SOP) 98-5, "Reporting on the Costs of Start-Up Activities," which mandated that costs related to start-up activities be expensed as incurred, effective January 1, 1999. Prior to the adoption of SOP 98-5, the Company capitalized its start-up costs (i.e., pre-operating costs). The Company adopted the provisions of SOP 98-5 in its financial statements beginning January 1, 1999 and, accordingly, recorded a charge for the cumulative effect of an accounting change of $7.5 million, or $0.07 per share, after tax and minority interest, in order to expense start-up costs that had been previously capitalized. The future impact of SOP 98-5 is not expected to be material to the Company's operating results. Recently Issued Accounting Guidance The Company does not believe that SFAS No. 133, which the Company is required to adopt effective January 1, 2001, will have a material impact on the Company's financial statements. 2. CHANGE IN ACCOUNTING FOR GOODWILL Effective October 1, 1999, the Company elected to change its method for assessing the recoverability of goodwill (not associated with impaired assets) from one based on undiscounted cash flows to one based on discounted cash flows. The Company believes that using the discounted cash flow approach to assess the recoverability of goodwill is preferable because it is consistent with the methodology used by the Company to evaluate investment decisions (acquisitions and capital projects) and takes into account the specific and detailed operating plans and strategies and the timing of cash flows of each business. The discount rate used in determining discounted cash flows was a rate corresponding to the Company's weighted-average cost of capital. This change represents a change in accounting principle, which is indistinguishable from a change in estimate. As a result of the change to a discounted cash flow methodology, the Company recorded a non-cash write-down of goodwill of $521.2 million, or $4.55 per share, in the fourth quarter of 1999. This charge represented the amount required to write-down the carrying amount of goodwill to the Company's estimate, as of October 1, 1999, of the estimated future discounted cash flows of the businesses to which the goodwill relates using the methodology described below. Effective October 1, 1999, the Company's accounting policy for assessing the recoverability of goodwill is as follows: The Company evaluates the recoverability of goodwill by estimating the future discounted cash flows of the businesses to which the goodwill relates. This evaluation is made whenever events or changes in circumstances indicate the carrying amount may not be recoverable. Estimated cash flows are determined by disaggregating the Company's business segments to an operational and organizational level for which meaningful identifiable cash flows can be determined. When estimated future discounted cash flows are less than the carrying amount of the net long-lived assets (tangible and identifiable intangible) and related goodwill, impairment losses of goodwill are charged to operations. Impairment losses, limited to the carrying amount of goodwill, represent the excess of the sum of the carrying amount of the net long- lived assets (tangible and identifiable intangible) and goodwill in excess of the discounted cash flows of the business being evaluated. In determining the estimated future cash flows, the Company considers current and projected future levels of income as well as business trends, prospects and market and economic conditions. Prior to October 1, 1999, the assessment of recoverability and measurement of impairment of goodwill was based on undiscounted cash flows. 3. RESTRUCTURING AND OTHER CHARGES 1999 Restructuring Charge ------------------------- During the fourth quarter of 1999, the Company announced and began implementing the Rightsizing Program which was designed to simplify and focus the Company's core businesses. The key components of the Rightsizing Program are: (i) the shutdown and permanent closure of the Nichols and Payne Creek facilities at Phosphates resulting from an optimization program that will reduce rock and concentrate production costs through higher utilization rates at the lowest- cost facilities; (ii) an asset rightsizing program at Potash resulting from a recently revised mine plan; (iii) closure of a facility at Salt; and (iv) corporate and business unit headcount reductions. In conjunction with the Rightsizing Program, the Company recorded a special charge of $179.0 million, $95.6 million after tax and minority interest, or $0.83 per share, in the fourth quarter of 1999. The Rightsizing Program (shown below in tabular format) primarily relates to the following: Asset Impairments The Rightsizing Program included the disposal of property, plant and equipment, as well as the write-down to fair value of assets as a result of the decision to close certain facilities and forgo or abandon certain mineral properties. In order to determine the write-down of assets affected by the Rightsizing Program, and in accordance with SFAS No. 121, the Company performed an assessment of future cash flows and, accordingly, adjusted the assets to their appropriate fair values. The majority of the impairment occurred at Phosphates' Florida production facilities where property, plant and equipment were written down by approximately $41.1 million to reflect fair value. The phosphate mine and plant closures resulted from a facilities optimization program that will reduce rock and concentrate production costs through higher utilization rates at the lowest- cost facilities. The write-down of impaired assets primarily consisted of certain facilities and associated production equipment. The remaining $1.0 million of the asset impairment charge was recorded at Salt for the permanent closure of an evaporation plant. Additionally, $8.6 million of property, plant and equipment, and $6.5 million of mineral reserves which were deemed unrecoverable, were written off at Potash. Non-Employee Exit Costs As a result of the decision to permanently close certain Phosphate facilities described above, the Company recorded a charge of $45.1 million for closure costs. The closure costs included approximately $40.4 million for incremental environmental land reclamation of the surrounding mined-out areas with the remainder for demolition costs. The Company expects the demolition and closure activities to be essentially completed by the end of 2005. In addition, demolition and closure costs were necessary for the plant closure at the Salt location discussed above, in the amount of $1.9 million. Other various non-employee exit costs totaled $5.5 million. Employee Headcount Reductions As part of the Rightsizing Program, headcount reductions were implemented throughout the Company. The majority of these reductions were a result of the closing and/or exiting of production operations, as discussed above. To facilitate headcount reductions, certain locations offered a voluntary retirement program for eligible employees. In addition, certain involuntary eliminations of positions, which were communicated prior to December 31, 1999, were necessary in order to achieve desired staffing levels. A total of 1,128 employees were terminated with 835 having left the Company by the end of December 31, 1999. The Company recorded a charge of $34.2 million for severance benefits related to these employee headcount reductions. Virtually all severance payments will be disbursed subsequent to December 31, 1999. As a result of the employee terminations necessitated by the Rightsizing Program, settlement, curtailment and special termination charges of $15.8 million were recorded in accordance with SFAS No. 88, "Employers' Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits." The related liabilities have been classified in Other noncurrent liabilities. See Note 11, "Pension Plans and Other Benefits." Inventories and Spare Parts of Exited Facilities The Rightsizing Program included a major reduction in production assets primarily used in the Phosphates business. The reduction was accomplished through the permanent shutdown of two phosphate facilities. Given the reduction in facilities and the resulting decrease in production, historical levels of spare parts inventory that had been maintained at these facilities were no longer necessary or warranted. Therefore, Phosphates recorded a charge of $12.4 million for the write-down of excess spare parts inventory which will be disposed. In addition, Potash and Salt recorded similar write-downs of $2.8 million and $0.3 million, respectively. Phosphates recorded charges of approximately $3.8 million to reduce the carrying value of finished goods inventories on-hand to net realizable value at December 31, 1999, as a result of the facilities closures discussed above. Details of the 1999 restructuring charge were as follows:
Activity ---------------- 1999 Remaining Restructuring Accrual at Charge Cash Paid Non-Cash December 31, 1999 ------------- --------- -------- ----------------- Asset impairments: Facilities closed prior to December 31, 1999 $ 42.1 $ - $ 42.1 $ - Other asset write-offs 15.1 - 15.1 - Non-employee exit costs: Demolition and closure costs 47.0 0.4 - 46.6 Other 5.5 - - 5.5 Employee headcount reductions: Severance benefits 34.2 5.4 - 28.8 Settlement, curtailment and special termination benefits 15.8 - 15.8 - Inventories and spare parts of exited businesses: Spare parts inventories 15.5 - 15.5 - Finished goods inventories 3.8 - 3.8 - ------ ------ ------ ------ Total $179.0 $ 5.8 $ 92.3 $ 80.9 ====== ====== ====== ======
All restructuring charges have been recorded as a separate line item on the Consolidated Statement of Operations, except for the finished goods inventory write-down of $3.8 million which was recorded in Cost of goods sold. 1998 Restructuring Charge ------------------------- During the fourth quarter of 1998, the Company developed and began execution of Project Profit. Project Profit was comprised of four major initiatives: (i) the combination of certain activities within the Potash and Phosphates business units in an effort to realize certain operating and staff function synergies; (ii) restructuring of the phosphate rock mining, concentrated phosphate and salt production/distribution operations and processes in an effort to reduce costs; (iii) simplification of the current business activities by eliminating businesses not deemed part of the Company's core competencies; and (iv) reduction of operational and corporate headcount. In conjunction with Project Profit, the Company recorded a special charge of $193.3 million, $113.4 million after tax and minority interest in the fourth quarter of 1998. Project Profit (shown below in tabular format) primarily related to the following: Asset impairments Project Profit included the removal of property, plant and equipment, as well as the write-down to fair value of those assets rendered unusable due to the decision to close certain facilities and forgo or abandon certain mineral properties. In order to determine the write-down of assets affected by Project Profit, and in accordance with SFAS No. 121, the Company performed an assessment of future cash flows and, accordingly, adjusted the assets to their appropriate fair values. The majority of the impairment occurred at Phosphates' Florida production facilities where property, plant and equipment was written down by approximately $64.4 million to fair value. Phosphates developed a new strategic mine plan (Mine Plan) which identified asset reductions, lower operating costs and optimal phosphate rock management as key drivers in the restructuring of operations. The write-down of impaired assets in connection with the Mine Plan primarily consisted of facilities, production equipment, operating supplies, land and mineral reserves. Salt recorded an $11.2 million write-down of property, plant and equipment at its Kansas and Canadian locations, as a result of the decision to consolidate certain facilities and achieve operating efficiencies. The majority of the write-down related to production equipment. An additional $0.4 million of asset impairments was recorded at Feed Ingredients for the permanent closure of a limestone rock production facility. The total asset impairment charges of $76.0 million included $31.8 million pertaining to assets which continued to be utilized until their respective disposal dates, primarily within the first nine months of 1999. The estimated fair value of these assets, which was depreciated over their respective remaining periods of service, reflected estimated operating net cash flows until disposition. As of December 31, 1999, all of these assets have been sold or abandoned. Non-employee exit costs In accordance with the objective of the Mine Plan, to optimize phosphate rock management, Phosphates decided to permanently close a high-cost phosphate rock mine. As a result of this decision, the Company recorded a charge of $18.4 million for the demolition and other incremental costs of closure of the mine. These closure costs included approximately $15.5 million for incremental environmental land reclamation of the surrounding mined-out areas. The demolition and closure activities were still in process at the end of 1999 with an estimate of completion during 2001. The Company also decided to close certain production operations in connection with Project Profit, principally the uranium and urea operations of Phosphates. This decision was based on an analysis of the future outlook for these products, taking into consideration whether the operations were part of the Company's core businesses. These operations were determined to be non-core businesses and the Company recorded charges of approximately $12.8 million for demolition and/or closure, including environmental costs, of the uranium and urea production facilities. Additionally, environmental and/or closure costs of $2.4 million were recognized for the closure of one of the Company's evaporated salt production facilities. The Company estimates the demolition and closure activities will be completed by the end of 2000. In connection with Project Profit, the Company decided to discontinue its transportation of ammonia from Louisiana to its phosphate operations in Florida. This decision was based on current market conditions which secured the availability of ammonia to the Company and which made the high-cost transportation of ammonia from Louisiana to Florida unnecessary. As a result, the Company recorded a charge of $13.2 million for the net present value of costs associated with permanently idling leased equipment used in the transportation of ammonia from Louisiana. Other various exit costs totaled $7.3 million. Employee headcount reductions As part of Project Profit, headcount reductions were implemented at the Phosphates, Feed Ingredients, Salt and Potash operations, as well as at the Company's corporate headquarters. Certain of these reductions were a result of the closing and/or exiting of production operations, as discussed above. To facilitate headcount reductions, the Company offered a voluntary retirement program for eligible employees. In addition, certain involuntary eliminations of positions, which were communicated prior to December 31, 1998, were necessary in order to achieve desired staffing levels. A total of 185 employees accepted the voluntary retirement plan by December 31, 1998, with 112 of those employees having left the Company as of that date. At December 31, 1999, no voluntarily severed employees were remaining. Additionally, a total of 454 employees were involuntarily terminated and left the Company by the end of February 1999. Virtually all severance payments were disbursed prior to December 31, 1999 with the remaining payments to be disbursed during the first quarter of 2000. As a result of the employee terminations necessitated by Project Profit, settlement, curtailment and special termination charges of $19.7 million were recorded in accordance with SFAS No. 88. The related liabilities were classified in Other noncurrent liabilities. See Note 11, "Pension Plans and Other Benefits." Inventories and spare parts of exited businesses Phosphates recorded charges of approximately $17.2 million to reduce the carrying value of finished goods inventories on-hand to net realizable value at December 31, 1998, as a result of the decision to exit certain businesses. Project Profit included a major reduction in production assets primarily used in the Phosphates business. The reduction was accomplished through the permanent shutdown of select mining facilities as well as a cut-back in concentrate facilities. Given the reduction in facilities and the resulting decrease in production, historical levels of spare parts inventory that had been maintained by the Company were no longer necessary or warranted. Therefore, the Company recorded a charge of $8.7 million for the write-down of spare parts inventory. Activity related to accruals for Project Profit in 1999 was as follows:
Accrual at Accrual at January 1, 1999 Cash Paid December 31, 1999 --------------- --------- ----------------- Non-employee exit costs: Demolition and closure costs $ 33.6 $ 6.7 $ 26.9 Idled leased transportation equipment 13.2 4.4 8.8 Other 5.3 3.3 2.0 Employee headcount reductions: Severance benefits 17.4 17.0 0.4 ------ ------ ------ Total $ 69.5 $ 31.4 $ 38.1 ====== ====== ======
All restructuring charges were recorded as a separate line item on the Consolidated Statement of Operations, except for the finished goods inventory write-down of $17.2 million which was recorded in Cost of goods sold. Other Charges During the fourth quarter of 1999, and in connection with the Rightsizing Program, the Company undertook a detailed review of its accounting records and valuation of various assets and liabilities. As a result, the Company recorded a special charge of $58.8 million, $35.0 million after tax and minority interest, or $0.31 per share, related to asset write-offs and environmental accruals. Of the $58.8 million charge, $38.2 million was included in Cost of goods sold and $20.6 million was included in Selling, general and administrative expenses. 4. DISCONTINUED OPERATIONS IMC Chemicals In December 1998, the Company signed a definitive agreement to sell its Chemicals business unit with the Company retaining an ongoing minority economic interest, and based on the terms of the agreement, recorded a pre-tax charge of $44.1 million for the estimated loss on sale. The sale was not completed during 1999 and in December 1999, the Company received Board of Director approval for a plan to sell the entire business unit. The Company is in discussion with potential buyers, and anticipates a sale to be completed by mid-2000. An adjustment to the estimated loss on disposal of $138.1 million, $85.6 million after tax, was recorded in the fourth quarter of 1999. The Consolidated Statement of Operations has been restated to report the operating results of Chemicals as discontinued operations in accordance with Accounting Principles Board (APB) Opinion No. 30, "Reporting the Results of Operations." Interest expense has been allocated to discontinued operating results based on the portion of third party debt that is specifically attributable to Chemicals and amounted to $27.6 million and $14.9 million in 1999 and 1998, respectively. In addition, $13.7 million of allocated interest expected to be incurred in 2000 was included in the estimated loss on sale. The discontinued operations of Chemicals resulted in a tax benefit of $24.9 million in 1999 and tax expense of $1.3 million in 1998. For 1999 and 1998, Chemicals' revenues were $402.8 million and $311.8 million, respectively. Oil and Gas Operations In the fourth quarter of 1999, the Company decided to discontinue its oil and gas business which primarily consisted of PLP's interest in the Exploration Program. The Company sold its interest, through PLP, in the Exploration Program for proceeds of $32.0 million. The loss on disposal of $22.4 million, $6.7 million after tax and minority interest of $4.6 million and $11.1 million, respectively, was recorded in the fourth quarter of 1999. The Consolidated Statement of Operations has been restated to report the operating results of the oil and gas business as discontinued operations in accordance with APB No. 30. The discontinued oil and gas business resulted in tax benefits of $8.1 million and $4.1 million in 1999 and 1998, respectively. For 1999 and 1998, the revenues from oil and gas operations were $7.0 million and $1.3 million, respectively. In addition, $18.3 million, $10.8 million after tax, of environmental exit costs were recorded in 1999 as a result of additional information which became available to the Company in the fourth quarter concerning the Company's obligations with respect to previously owned oil and gas properties. IMC AgriBusiness In April 1999, the Company sold its AgriBusiness retail and wholesale distribution business unit and received $263.9 million of proceeds which were used to reduce the amount of the Company's outstanding indebtedness. In accordance with APB No. 30, an estimated loss on disposal of $74.2 million, after tax, was recorded in the fourth quarter of 1998. The Company recorded an adjustment to the loss on disposal of $19.4 million, after tax, in the fourth quarter of 1999. The operating results of AgriBusiness are included in the Consolidated Statement of Operations as discontinued operations. Interest expense has been allocated to discontinued operations based on the portion of the Company's short-term borrowing program that is specifically attributable to AgriBusiness and amounted to $13.2 million and $13.3 million in 1998 and 1997, respectively. Income taxes associated with the discontinued operations of AgriBusiness were $2.9 million and $13.1 million for 1998 and 1997, respectively. For 1998 and 1997, AgriBusiness' revenues were $787.0 million and $872.6 million, respectively. For financial reporting purposes, the assets and liabilities of discontinued operations to be sold, net of the estimated loss on disposal, have been classified as Net assets of discontinued operations held for sale. See the table below for the detail of these assets and liabilities.
December 31 1999(a) 1998(b) ------- ------- Assets: Receivables, net $ 106.0 $ 63.7 Inventories, net 50.7 157.1 Other current assets 4.0 0.5 Property, plant and equipment, net 231.7 130.4 Other assets 6.5 6.0 ------- ------- Total assets 398.9 357.7 Liabilities: Accounts payable 55.9 69.8 Accrued liabilities 31.9 11.1 Other noncurrent liabilities 9.6 3.5 ------- ------- Total liabilities 97.4 84.4 ------- ------- Net assets of discontinued operations held for sale $ 301.5 $ 273.3 ======= ======= (a)Represents net assets of Chemicals held for sale. (b)Represents net assets of AgriBusiness held for sale.
5. OTHER DIVESTITURES IMC Vigoro In June 1998, the Company sold the Vigoro business unit for $44.8 million. In connection with this transaction, the Company recorded a special charge of approximately $14.0 million, $9.1 million after tax benefits. Of the $14.0 million charge, $4.1 million was included in Cost of goods sold and $9.9 million was included in Selling, general and administrative expenses. 6. ACQUISITIONS All acquisitions discussed below were accounted for under the purchase method of accounting and, accordingly, results of operations for the acquired businesses have been included in the Company's Consolidated Statement of Operations since the respective dates of acquisition. Common stock issued in 1997 for acquisitions was $771.9 million. Liabilities assumed in acquisitions were $1,628.8 million and $357.5 million in 1998 and 1997, respectively. Harris In April 1998, the Company acquired Harris for approximately $1.4 billion. Under the terms of the acquisition, the Company purchased all Harris equity for approximately $450.0 million in cash and assumed approximately $1.0 billion of debt. The purchase price was allocated to acquired assets and liabilities based on estimated fair values at the date of acquisition. This allocation resulted in an excess of purchase price over identifiable net assets acquired, or goodwill, of $326.0 million being recorded at the time of acquisition. FTX In December 1997, the Company completed the FTX Merger which resulted in the dissolution of FTX. In connection with the FTX Merger, each share of common stock of FTX was exchanged for 0.90 share of the Company's common stock plus one-third of a warrant, with each whole warrant entitling the holder to purchase one share of the Company's common stock for $44.50 per share. As a result of the transaction, 22.7 million shares were issued at an average market price of $32.28 per share. The warrants, which are publicly traded on the New York Stock Exchange and expire on the third anniversary of the FTX Merger, were valued at $3.56 per warrant. As a result of the FTX Merger, goodwill of $747.5 million was recorded at the time of the merger. The FTX Merger resulted in the Company relinquishing its 25.0 percent interest in Main Pass to MMR, a newly formed public entity consisting of the former sulphur business of PLP and Main Pass. In connection with the FTX Merger in 1997, the Company recorded a special charge of $183.7 million, $112.2 million after tax, or $1.19 per share, included in Operating earnings, to write-down the assets of Main Pass to their fair value. As a result of the Company's change in methodology for assessing the recoverability of goodwill, a non-cash write-down of Harris and FTX goodwill of $89.2 million and $432.0 million, respectively, was recorded in the fourth quarter of 1999. See Note 2, "Change in Accounting for Goodwill." Other Business Acquisitions In 1997, the Company acquired several smaller businesses, including a potash mine and processing facility (Western Ag-Minerals); several retail distribution operations (Frankfort Supply, Sanderlin, Crop-Maker, So-Green and Hutson Ag Services, Inc.); and a storage terminal company (Hutson Company, Inc.). Total cash payments for these acquisitions were $91.4 million, and approximately 0.2 million shares of common stock of the Company were issued for $7.9 million. Hutson Company, Inc. and the retail distribution operations were part of AgriBusiness which was subsequently sold by the Company in April 1999. See Note 4, "Discontinued Operations." 7. MINORITY INTEREST Minority interest included in the Consolidated Statement of Operations included $28.1 million and $31.6 million in 1999 and 1998, respectively, of benefits related to special charges. See Note 3, "Restructuring and Other Charges." Prior to the FTX Merger, minority interest primarily consisted of PLP's 43.5 percent interest in IMC-Agrico. Subsequent to the FTX Merger, minority interest was largely comprised of the public unitholders' interest in PLP (majority-owned and consolidated by the Company since the FTX Merger), including an effective 21.1 percent minority interest in IMC-Agrico. 8. EARNINGS PER SHARE Common shares issuable upon the exercise of options and warrants are not included in the computation of diluted earnings per share in 1999 because the Company had a net loss from continuing operations and, therefore, the effect of their inclusion would be antidilutive. The difference between the number of basic and diluted weighted average shares outstanding in 1998 and 1997 was due to dilutive employee stock options. Stock options to purchase approximately 4.6 million and 3.1 million shares of common stock in 1998 and 1997, respectively, and warrants to purchase approximately 8.4 million shares of common stock in 1998 and 1997, were not included in the computation of diluted earnings per share, because the exercise price was greater than the average market price of the Company's common stock and, therefore, the effect of their inclusion would be antidilutive. 9. DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS
Receivables: 1999 1998 ---- ---- Trade $ 235.1 $ 349.4 Non-trade 25.0 78.5 ------- ------- 260.1 427.9 Less: Allowances 5.9 6.4 ------- ------- Receivables, net $ 254.2 $ 421.5 ======= ======= The carrying amount of accounts receivable was equal to the estimated fair value of such assets due to their short maturity. Inventories: 1999 1998 ---- ---- Products (principally finished) $ 358.7 $ 468.2 Operating materials and supplies 97.8 136.3 ------- ------- 456.5 604.5 Less: Allowances 16.9 23.9 ------- ------- Inventories, net $ 439.6 $ 580.6 ======= ======= Property, plant and equipment: 1999 1998 ---- ---- Land $ 97.5 $ 104.6 Mineral properties and rights 1,392.5 1,431.7 Buildings and leasehold improvements 503.7 615.9 Machinery and equipment 3,069.0 3,520.8 Construction-in-progress 165.9 244.4 -------- -------- 5,228.6 5,917.4 Accumulated depreciation and depletion (1,977.9) (2,220.0) -------- -------- Property, plant and equipment, net $3,250.7 $3,697.4 ======== ========
As of December 31, 1999, idle facilities of the Company included two concentrated phosphate plants, which will remain closed subject to improved market conditions. The net book value of these facilities totaled $ 57.0 million. In the opinion of management, the net book value of the Company's idle facilities is not in excess of the net realizable value.
Other assets: 1999 1998 ---- ---- Goodwill $ 535.9 $1,064.2 Other 179.9 212.7 -------- -------- Other assets $ 715.8 $1,276.9 ======== ======== The decrease in Other assets was primarily due to the write-down of goodwill in the fourth quarter of 1999. See Note 2, "Change in Accounting for Goodwill." Accrued liabilities: 1999 1998 ---- ---- Restructuring $ 108.7 $ 36.7 Interest 43.9 47.1 Payroll and employee benefits 38.9 62.5 Other 68.6 94.6 -------- ------- Accrued liabilities $ 260.1 $ 240.9 ======== ======= Other noncurrent liabilities: 1999 1998 ---- ---- Employee and retiree benefits $ 237.6 $ 234.7 Environmental 115.9 114.3 Restructuring 39.8 44.6 Other 123.3 92.5 -------- ------- Other noncurrent liabilities $ 516.6 $ 486.1 ======== =======
10.FINANCING ARRANGEMENTS Total indebtedness as of December 31, 1999 was $2,548.6 million, a $498.4 million decrease from total indebtedness as of December 31, 1998 of $3,047.0 million. The reduction in total indebtedness resulted from payments of debt using cash flows from operations and proceeds from the divestiture of AgriBusiness. Short-term borrowings were $10.6 million and $397.0 million as of December 31, 1999 and 1998, respectively, which primarily consisted of commercial paper, revolving credit facilities and vendor financing arrangements. The weighted average interest rate on short-term borrowings was 5.5 percent and 6.1 percent for 1999 and 1998, respectively. Long-term debt as of December 31 consisted of the following:
1999 1998 ---- ---- Notes and debentures due 2001-2018, with interest rates ranging from 6.50% to 10.75% $1,724.1 $1,730.2 Corporate commercial paper 506.0 596.9 Industrial revenue bonds, maturing through 2022, with interest rates ranging from 3.50% to 7.525% 90.0 92.8 Revolving credit facilities, variable rates 67.9 66.8 Other debt 150.0 163.3 -------- -------- 2,538.0 2,650.0 Less: Current maturities 19.3 11.3 -------- -------- Total long-term debt, less current maturities $2,518.7 $2,638.7 ======== ========
Substantially all outstanding commercial paper is classified as long-term because it is supported by a long-term credit facility. In December 1999, the Company renewed, amended and restated its $350.0 million short-term credit facility, extending the maturity date to December 2000, and amended and restated its $650.0 million long-term credit facility maturing in December 2002 (collectively, Credit Facilities). Commitment fees associated with the short-term and long-term facilities are 10.0 basis points and 11.0 basis points, respectively. The amount available for borrowing under the Credit Facilities is reduced by the balance of outstanding commercial paper, letters of credit and guarantees. As of December 31, 1999, the Company had a total of $506.0 million of commercial paper outstanding and $1.0 billion of commercial paper back-up facilities. Net available borrowings, under the Credit Facilities, as of December 31, 1999 were $442.2 million. Outstanding letters of credit as of December 31, 1999 totaled $51.8 million. These Credit Facilities contain provisions which: (i) restrict the Company's ability to dispose of a substantial portion of its consolidated assets; (ii) limit the creation of additional liens on the Company's and its subsidiaries' assets; and (iii) limit the Company's subsidiaries' incurrence of debt. These Credit Facilities also contain a leverage ratio test and other covenants. The Company, through various subsidiaries, also maintains the following credit facilities: (i) a $100.0 million, five-year revolving credit facility maturing in December 2002 (Canadian Facility); (ii) a 50.0 million Australian Dollar, two-year revolving credit facility maturing in September 2000 and a 25.0 million Australian Dollar, five-year term loan facility maturing in September 2003 (Australian Facilities); and (iii) a 45.0 million Pound Sterling, five-year revolving credit facility maturing in December 2003 (European Facility). In December 1999, the Company amended the Canadian and European Facilities to conform their covenants to the amended and restated Credit Facilities' covenants. As of December 31, 1999, $67.9 million was outstanding under the European Facility, while there were no outstanding obligations under the Canadian Facility or the Australian Facilities. Commitment fees associated with the Canadian Facility, the Australian Facilities and the European Facility are 11.0 basis points, 30.0 basis points and 30.0 basis points, respectively. The Company currently guarantees the payment of $75.0 million principal amount of industrial revenue bonds due 2015 issued by the Florida Polk County Industrial Development Authority (Polk County Bonds). As a result of the FTX Merger, the Company is not in technical compliance with one covenant in such guarantee. The Company has notified the Bank of New York, trustee for holders of the Polk County Bonds, regarding this issue. The holders of the Polk County Bonds have not sought to accelerate the Polk County Bonds or requested that any other action be taken. Because solicitation of a unanimous waiver of the technical default is impractical, the Company currently intends to take no action. The Company does not believe that any acceleration, redemption or refinancing of the Polk County Bonds would have a material adverse effect on the Company and its subsidiaries, taken as a whole, because the Company believes it would be able to repay the Polk County Bonds from available sources of liquidity. As of December 31, 1999, the estimated fair value of long-term debt was approximately $70.0 million less than the carrying amount of such debt. The fair value was calculated in accordance with the requirements of SFAS No. 107, "Disclosures of Fair Value of Financial Instruments," and was estimated by discounting the future cash flows using rates currently available to the Company for debt instruments with similar terms and remaining maturities. Extraordinary gains of $0.5 million and $3.0 million in 1999 and 1998, respectively, and extraordinary charges of $24.9 million in 1997, related to the early extinguishment of debt. Cash interest payments were $186.1 million, $145.4 million and $56.8 million for 1999, 1998 and 1997, respectively. Scheduled maturities, excluding commercial paper borrowings and the revolving credit facilities, are as follows:
2000 $ 29.9 2001 $ 251.0 2002 $ 307.7 2003 $ 214.1 2004 $ 11.7 Thereafter $1,160.3
11.PENSION PLANS AND OTHER BENEFITS The Company has non-contributory pension plans for a majority of its employees. Benefits are based on a combination of years of service and compensation levels, depending on the plan. Generally, contributions to the United States plans are made to meet minimum funding requirements of the Employee Retirement Income Security Act of 1974, while contributions to Canadian plans are made in accordance with Pension Benefits Acts, instituted by the provinces of Saskatchewan and Ontario. Certain employees in the United States and Canada, whose pension benefits exceed Internal Revenue Code and Revenue Canada limitations, respectively, are covered by supplementary non-qualified, unfunded pension plans. The plans' assets consist mainly of corporate equity securities, United States government securities, corporate debt securities and units of participation in a collective short-term investment fund. Effective January 1, 1998, the Company transitioned from a defined benefit pension plan to a defined contribution plan for certain employees who elected to do so (Transition). The Company accounted for the Transition in accordance with SFAS No. 88. The impact of the curtailment as a result of the Transition was not material. The Company also provides certain health care benefit plans for certain retired employees (Benefit Plans). The Benefit Plans may be either contributory or non-contributory and contain certain other cost-sharing features such as deductibles and coinsurance. The Benefit Plans are unfunded. Employees are not vested and such benefits are subject to change. The following table sets forth pension and postretirement obligations and plan assets for the Company's defined benefit plans, based on a September 30 measurement date, as of December 31:
Pension Benefits Other Benefits 1999 1998 1999 1998 ---- ---- ---- ---- Change in benefit obligation: Benefit obligation as of January 1 $ 426.4 $ 391.8 $ 197.8 $ 175.3 Service cost 12.4 10.6 2.6 2.6 Interest cost 29.3 27.5 12.9 11.0 Plan amendment (2.0) 6.1 - 4.1 Effect of settlements (8.6) (31.0) - - Actuarial (gain) loss (36.7) 41.3 (20.3) 17.2 Benefits paid (27.2) (48.1) (10.8) (9.1) Acquisitions - 36.4 - - Other 5.9 (1.2) 4.5 (3.3) Curtailments (12.4) (7.0) (7.3) - ------- ------- ------- ------- Benefit obligation as of December 31 $ 387.1 $ 426.4 $ 179.4 $ 197.8 ======= ======= ======= ======= Change in plan assets: Fair value as of January 1 $ 350.9 $ 380.8 $ - $ - Actual return 72.0 0.5 - - Company contribution 16.6 37.5 10.6 9.1 Effect of settlements (11.6) (57.9) - - Acquisitions - 38.1 - - Asset transfer (2.3) - - - Benefits paid (27.2) (48.1) (10.8) (9.1) Other 1.7 - 0.2 - ------- ------- ------- ------- Fair value as of December 31 $ 400.1 $ 350.9 $ - $ - ======= ======= ======= ======= Funded status of the plan $ 13.0 $ (75.5) $(179.4) $(197.8) Unrecognized net (gain) loss (14.7) 74.5 (13.1) 7.4 Unrecognized transition liability (asset) 0.1 20.7 (1.5) (1.6) Unrecognized prior service benefit (cost) 17.9 (0.5) (6.5) (5.3) ------- ------- ------- ------- Prepaid (accrued) benefit cost $ 16.3 $ 19.2 $(200.5) $(197.3) ======= ======= ======= ======= Amounts recognized in the consolidated balance sheet: Prepaid benefit cost $ 56.9 $ 69.7 $ - $ 17.1 Accrued benefit liability (42.4) (64.8) (200.5) (214.4) Intangible asset 1.8 14.3 - - ------- ------- ------- ------- Total recognized $ 16.3 $ 19.2 $(200.5) $(197.3) ======= ======= ======= =======
The acquisition amounts relate to pension liabilities and assets assumed in conjunction with the Harris Acquisition. The curtailment and settlement amounts included in the tables above were primarily recorded as part of the Rightsizing Program and the sale of AgriBusiness in 1999 and Project Profit in 1998. See Note 3, "Restructuring and Other Charges," Note 4, "Discontinued Operations" and Note 6, "Acquisitions." Amounts applicable to the Company's pension plan with accumulated benefit obligations in excess of plan assets were as follows:
1999 1998 ---- ---- Projected benefit obligation $ 134.0 $ 191.4 Accumulated benefit obligation $ 93.6 $ 147.0 Fair value of plan assets $ 78.9 $ 96.3
The Company's actuarial assumptions were as follows:
Pension Benefits Other Benefits 1999 1998 1999 1998 ---- ---- ---- ---- Discount rate 7.75% 7.0% 7.75% 7.0% Expected return on plan assets 9.5% 9.9% - - Rate of compensation increase 5.0% 5.0% - -
For measurement purposes, a 6.8 percent annual rate of increase in the per capita cost of covered pre-65 health care benefits was assumed for 1999, decreasing gradually to 4.7 percent in 2004 and thereafter; and a 7.1 percent annual rate of increase in the per capita cost of covered post-65 health care benefits was assumed for 1999, decreasing gradually to 5.0 percent in 2004 and thereafter. The components of net pension and other benefits expense were:
Pension Benefits Other Benefits 1999 1998 1997 1999 1998 1997 ---- ---- ---- ---- ---- ---- Service cost for benefits earned during the year $ 12.4 $ 10.6 $ 13.0 $ 2.6 $ 2.6 $ 1.9 Interest cost on projected benefit obligation 29.3 27.5 18.3 12.9 11.0 5.3 Return on plan assets (33.6) (33.5) (18.1) - - - Net amortization and deferral 5.1 2.8 2.8 (0.9) (1.4) (1.8) Curtailments and settlements 6.3 19.4 2.8 (0.7) 0.5 - ------ ------ ------ ------ ------ ------ Net pension and other benefits expense $ 19.5 $ 26.8 $ 18.8 $ 13.9 $ 12.7 $ 5.4 ====== ====== ====== ====== ====== ======
The assumed health care cost trend rate has a significant effect on the amounts reported. A one-percentage-point change in the assumed health care cost trend rate would have the following effects: One One Percentage Percentage Point Point Increase Decrease ------------- ------------- Effect on total service and interest cost components $ 0.9 $ (0.7) Effect on postretirement benefit obligation $ 10.0 $ (9.5)
The Company has defined contribution and pre-tax savings plans (Savings Plans) for certain of its employees in the United States and Canada. Under each of the Savings Plans, participants are permitted to defer a portion of their compensation. Company contributions to the Savings Plans are based on a percentage of employee contributions. In 1998, the Company added a profit sharing feature to the Savings Plans for salaried and non-union hourly employees as a replacement for traditional pension plans. The Company contribution to the new profit sharing feature is based on the employee's age and pay and the Company's financial performance. The expense attributable to these Savings Plans was $14.5 million, $18.1 million and $8.5 million in 1999, 1998 and 1997, respectively. In addition, the Company provides benefits such as workers' compensation and disability to certain former or inactive employees after employment but before retirement. 12.INCOME TAXES Two of the Company's three potash operations that are subject to Canadian taxes, IMC Kalium Canada Ltd. and IMC Central Canada Potash Inc., are included in the consolidated United States federal income tax return filed by the Company. Deferred income taxes reflect the net tax effects of temporary differences between the amounts of assets and liabilities for accounting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax liabilities and assets as of December 31 were as follows:
1999 1998 ---- ---- Deferred tax liabilities: Property, plant and equipment $ 733.7 $ 824.2 Partnership tax basis difference 125.0 - Other liabilities 209.0 132.1 -------- -------- Total deferred tax liabilities 1,067.7 956.3 Deferred tax assets: Alternative minimum tax credit carryforwards 149.8 137.4 Net operating loss carryforwards 90.6 96.7 Postretirement and postemployment benefits 51.6 45.8 Foreign tax credit carryforward 25.3 24.6 Reclamation and decommissioning accruals 38.7 22.3 Sale of AgriBusiness - 20.0 Restructuring charges 171.7 58.1 Other assets 146.5 136.0 -------- -------- Subtotal 674.2 540.9 Valuation allowance (60.8) (60.1) -------- -------- Total deferred tax assets 613.4 480.8 -------- -------- Net deferred tax liabilities $ 454.3 $ 475.5 ======== ========
As of December 31, 1999, the Company had alternative minimum tax credit carryforwards of approximately $149.8 million, net operating loss carryforwards in the amount of $226.6 million, foreign tax credit carryforwards in the amount of $25.3 million, investment tax credit and other general business credit carryforwards in the amount of $10.7 million and a carryover of charitable contributions in the amount of $8.7 million. The alternative minimum tax credit carryforwards can be carried forward indefinitely. The net operating loss carryforwards have expiration dates ranging from 2003 through 2011. The foreign tax credit carryforwards have expiration dates ranging from 2001 through 2003 . The investment tax credit and other general business credit carryforwards have expiration dates ranging from 2000 through 2006. The charitable contributions carryover has expiration dates ranging from 2000 through 2001. Due to the uncertainty of the realization of certain tax carryforwards, the Company has established a valuation allowance against these carryforward benefits in the amount of $60.8 million. Some of these carryforward benefits may be subject to limitations imposed by the Internal Revenue Code. Except to the extent that valuation allowances have been established, the Company believes these limitations will not prevent the carryforward benefits from being realized. A change in the tax law in December 1999 necessitated the recording of a $125.0 million deferred tax liability for a tax basis difference related to the Company's investment in PLP. The provision for income taxes from continuing operations for the years ended December 31 consisted of the following:
1999 1998 1997 ---- ---- ---- Current: Federal $ 18.4 $ 25.7 $ 11.9 State and local 8.1 2.3 3.7 Foreign 80.4 43.1 48.3 106.9 71.1 63.9 Deferred: Federal 41.5 (20.7) (37.0) State and local 9.9 (2.9) (8.4) Foreign (12.9) 35.2 11.9 38.5 11.6 (33.5) Provision for income taxes $ 145.4 $ 82.7 $ 30.4 The components of earnings from continuing operations before income taxes, and the effects of significant adjustments to tax computed at the federal statutory rate, were as follows: 1999 1998 1997 ---- ---- ---- Domestic earnings (loss) $(581.5) $ 32.9 $ (5.0) Foreign earnings 115.8 159.6 105.2 ------- ------- ------- Earnings (loss) from continuing operations before income taxes $(465.7) $ 192.5 $ 100.2 ======= ======= ======= Computed tax at the federal statutory rate of 35% $(163.0) $ 67.4 $ 35.1 Foreign income and withholding taxes 47.8 40.9 4.9 Percentage depletion in excess of basis (39.5) (26.1) (9.5) Partnership tax basis difference 125.0 - - State income taxes, net of federal income tax benefit (4.3) (0.3) (3.0) Benefit of foreign sales corporation (7.9) (4.4) (5.6) Write-down and amortization of goodwill 191.1 8.8 - Other items (none in excess of 5% of computed tax) (3.8) (3.6) 8.5 ------- ------- ------- Provision for income taxes $ 145.4 $ 82.7 $ 30.4 ======= ======= ======= Effective tax rate n/m 43.0% 30.3% ======= ======= ======= n/m not meaningful The following supplemental information presents earnings from continuing operations before income taxes, excluding special charges, and the related reconciliation of the effective income tax rate before the impact of such special charges: 1999 1998 1997 ---- ---- ---- Domestic earnings $ 121.6 $ 210.4 $ 178.7 Foreign earnings 143.5 159.6 105.2 -------- ------- ------- Earnings from continuing operations before income taxes $ 265.1 $ 370.0 $ 283.9 ======= ======= ======= Computed tax at the federal statutory rate of 35% $ 92.8 $ 129.5 $ 99.4 Foreign income and withholding taxes 44.7 41.2 4.9 Percentage depletion in excess of basis (41.0) (26.1) (9.5) State income taxes, net of federal income tax benefit 5.9 6.4 4.0 Benefit of foreign sales corporation (7.9) (4.4) (5.6) Amortization of goodwill 8.7 8.8 - Other items (none in excess of 5% of computed tax) (3.8) (18.5) 8.7 ------- ------- ------- Provision for income taxes $ 99.4 $ 136.9 $ 101.9 ======= ======= ======= Effective tax rate 37.5% 37.0% 35.9% ======= ======= =======
The Company has no present intention of remitting undistributed earnings of foreign subsidiaries aggregating $445.5 million as of December 31, 1999, and accordingly, no deferred tax liability has been established relative to these earnings. If these amounts were not considered permanently reinvested, a deferred tax liability of $52.1 million would have been required. Income taxes paid, net of refunds received, were $93.4 million, $84.9 million and $51.6 million for 1999, 1998 and 1997, respectively. 13.CAPITAL STOCK Pursuant to a Stockholder Rights Plan adopted by the Company in May 1999, a dividend of one preferred stock purchase right (Right) for each outstanding share of common stock of the Company was issued on June 21, 1999, to stockholders of record on that date. The Stockholder Rights Plan replaced a prior plan that expired on June 21, 1999. Under certain conditions, each Right may be exercised to purchase one one-thousandth of a share of Series D Junior Participating Preferred Stock, par value $1 per share, at a price of $90, subject to adjustment. Each one one-thousandth share of this preferred stock is designed to participate in dividends and vote on essentially equivalent terms with a whole share of common stock. The Rights generally become exercisable apart from the common stock only if a person or group acquires 15 percent or more of the outstanding common stock or commences a tender offer for 15 percent or more of the outstanding common stock. After the acquisition by a person or group of 15 percent or more of the outstanding common stock, or a tender offer for 15 percent or more of the outstanding common stock, each Right will entitle the holder (other than the person making the acquisition or tender offer, whose rights become null and void) to purchase, at the then-current exercise price of the Right, a number of shares of common stock having a market value at that time of twice the exercise price. If the Company is acquired in a merger or other business combination transaction, or 50 percent or more of its consolidated assets or earnings power are sold after a person or group has become the owner of 15 percent or more of the Company's outstanding common stock, each holder of a Right will have the right to receive, upon exercise of the Right, the number of shares of common stock of the acquiring company that at the time of the transaction will have a market value of two times the exercise price of the Right. The Rights may be redeemed at a price of $0.01 per Right under certain circumstances prior to their expiration on June 21, 2009. No event during 1999 made the Rights exercisable. 14.STOCK PLANS The Company has various stock option plans (Stock Plans) under which it may grant non-qualified stock options, stock appreciation rights (SARs) and restricted stock awards to officers and key managers of the Company, accounted for under APB Opinion No. 25, "Accounting for Stock Issued to Employees." The Company also has a non-qualified stock option plan for non-employee directors. The Stock Plans, as amended, provide for the issuance of a maximum of 16.3 million shares of common stock of the Company which may be authorized but unissued shares or treasury shares. Under the terms of the Stock Plans, the option price per share may not be less than 100 percent of the fair market value on the date of the grant. Stock options and SARs granted under the Stock Plans extend for ten years and generally become exercisable either 50 percent one year after the date of the grant and 100 percent two years after the date of the grant, or in one-third increments: one-third one year after the date of the grant, two-thirds two years after the date of the grant and 100 percent three years after the date of the grant. In conjunction with the FTX Merger, outstanding FTX stock options for officers and key managers were converted into options of the Company to acquire approximately 1.4 million Company shares at a weighted average exercise price of $25.02 per share. Outstanding FTX stock options for non-employee directors of FTX were converted into options of the Company to acquire approximately 0.1 million Company shares at a weighted average exercise price of $18.50 per share. Additionally, FTX SARs and stock incentive units (SIUs) were converted into approximately 0.1 million Company SARs and approximately 0.2 million Company SIUs based on the Company's common stock at weighted average exercise prices of $15.63 and $24.44 per share, respectively. Due to change of control provisions, all converted FTX options, SARs and SIUs were considered fully vested at the date of the FTX Merger. See Note 6, "Acquisitions." Officers and key managers also may be awarded stock and/or cash upon achievement of specified objectives, generally over three-year periods, under a 1996 long-term incentive plan. Final payouts are made at the discretion of the Compensation Committee of the Company's Board of Directors whose members are not participants in this plan. Approximately $4.9 million, $7.5 million and $8.6 million was charged to earnings in 1999, 1998 and 1997, respectively, for performance awards earned for the relevant three-year period under the 1996 long-term incentive plan. Excluding the SARs and SIUs converted in conjunction with the FTX Merger discussed above, there were no SARs granted in 1999, 1998 or 1997. For the SARs, a total of 26,586 shares, 69,357 shares and 8,525 shares were exercised in 1999, 1998 and 1997, respectively. For the SIUs, a total of 286 shares and 49,663 shares were exercised in 1999 and 1998, respectively. There were no exercises during 1997, as SIUs did not exist at the Company prior to the FTX Merger. When exercised, all SARs and SIUs are settled with cash payments to employees. The following table summarizes stock option activity:
1999 1998 1997 -------------------------------------------------------------- Weighted Weighted Weighted Average Average Average Exercise Exercise Exercise Shares Price Shares Price Shares Price -------------------------------------------------------------- Outstanding at January 1 7,354,816 $ 29.30 5,972,350 $ 29.05 3,805,519 $ 27.33 Granted 1,964,164 20.88 2,008,245 28.61 1,222,219 37.63 Exercised 84,143 16.37 350,966 18.12 297,162 18.88 Cancelled 776,957 31.37 274,813 32.28 161,419 36.68 Converted FTX options - - - - 1,403,193 25.02 --------- ------- --------- ------- --------- ------- Outstanding at December 31 8,457,880 $ 27.30 7,354,816 $ 29.30 5,972,350 $ 29.05 ========= ======= ========= ======= ========= ======= Exercisable at December 31 4,971,217 $ 29.03 4,530,065 $ 27.91 4,216,057 $ 25.26 ========= ======= ========= ======= ========= ======= Available for future grant at December 31 5,088,699 574,338 2,307,770
Data related to significant option ranges, weighted average exercise prices and contract lives as of December 31, 1999 follows:
Options Outstanding Options Exercisable -------------------------------- -------------------- Average Weighted Weighted Number Remaining Average Average of Contractual Exercise Number of Exercise Range of Exercise Options Life Price Options Price - ----------------- --------- ----------- -------- --------- ------- $12.65 to $16.50 644,627 2 years $ 15.13 301,427 $ 16.05 $16.51 to $25.00 3,768,627 3 years 21.17 1,810,825 20.99 $25.01 to $37.50 1,918,851 7 years 30.77 1,170,073 30.51 $37.51 to $40.88 2,125,775 7 years 38.72 1,688,892 38.94 --------- --------- 8,457,880 5 years $ 27.30 4,971,217 $ 29.03 ========= =========
The assumption regarding the stock options contractual life was that 100 percent of such options vested in the first year after issuance rather than ratably according to the applicable vesting period as provided by the terms of the grants. If the Company's stock option plans' compensation cost had been determined based on the fair value at the grant date for awards beginning in 1995, consistent with the provisions of SFAS No. 123, "Accounting for Stock-Based Compensation," the Company's net earnings and earnings per share would have been reduced to the following pro forma amounts:
1999 1998 1997 ---- ---- ---- Net earnings (loss): As reported $(773.3) $ (9.0) $ 62.9 Pro forma $(783.5) $ (16.5) $ 51.4 Net earnings (loss) per share: Basic $ (6.75) $ (0.08) $ 0.67 Pro forma-basic $ (6.84) $ (0.14) $ 0.55 Diluted $ (6.75) $ (0.08) $ 0.67 Pro forma - diluted $ (6.84) $ (0.14) $ 0.54
For the pro forma disclosures, the estimated fair value of the options is amortized to expense over their expected six-year life. These pro forma amounts are not indicative of anticipated future disclosures because SFAS No. 123 does not apply to grants before 1995. Weighted average fair values of options as of their grant date during 1999, 1998 and 1997 were $7.91, $9.82 and $12.74, respectively. Because the Company's employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion the existing models do not provide a reliable single measure of the value of the employee stock options. The fair value of these options was estimated at the date of grant using the Black Scholes option pricing model using the following weighted average assumptions:
1999 1998 1997 ---- ---- ---- Expected dividend yield 0.95% 0.90% 0.85% Expected stock price volatility 29.0% 29.1% 25.0% Risk-free interest rate (7 year government) 6.6% 4.7% 5.8% Expected life of options 6 years 6 years 6 years
15.COMMITMENTS The Company purchases natural gas, ammonia, electricity and coal from third parties under contracts extending, in some cases, for multiple years. Purchases under these contracts are generally based on prevailing market prices. These contracts generally range from one to four years. The Company has entered into a third-party sulphur purchase commitment, the term of which is indefinite. Therefore, the dollar value of the sulphur commitments has been excluded from the schedule below after the year 2004. The Company leases plants, warehouses, terminals, office facilities, railcars and various types of equipment under operating and capital leases. Lease terms generally range from three to five years, although some leases have longer terms. A schedule of future minimum long-term purchase commitments and minimum lease payments under non-cancelable operating and capital leases as of December 31, 1999 follows:
Purchase Operating Capital Commitments Leases Leases ----------- --------- ------- 2000 $ 329.4 $ 23.2 $ 2.4 2001 169.3 21.1 1.9 2002 162.4 16.9 0.6 2003 159.6 12.6 - 2004 157.2 9.4 - Subsequent years 112.5 34.3 - -------- ------- ------ $1,090.4 $ 117.5 4.9 Less: Amount representing interest 0.1 ------ Present value of minimum capital lease payments $ 4.8 ======
Assets recorded under capital leases were $11.5 million and $21.6 million at December 31, 1999 and 1998, respectively, and are classified as machinery and equipment. Rental expense for 1999, 1998 and 1997 amounted to $42.9 million, $54.5 million and $35.0 million, respectively. International Minerals & Chemical (Canada) Global Limited, a wholly- owned subsidiary of the Company, is committed under a service agreement with Potash Corporation of Saskatchewan Inc. (PCS) to produce annually from mineral reserves specified quantities of potash for a fixed fee plus a pro rata share of total production and capital costs at the potash mines located at Esterhazy, Saskatchewan. This agreement extends through June 30, 2001 and is renewable at the option of PCS for five additional five-year periods. Potash produced for PCS amounts to an annual minimum of approximately 0.5 million tons, but not more than approximately 1.1 million tons. During 1999, production of potash for PCS amounted to approximately 0.8 million tons, or 24 percent of the Esterhazy mines' total tons produced. In November 1998, Phosphate Chemicals Export Association, Inc. (PhosChem), of which the Company is a member, reached a two-year agreement through the year 2000 to supply DAP to the China National Chemicals Import and Export Corporation (Sinochem). This agreement provides Sinochem with an option to extend the agreement to December 31, 2002. Sinochem is a state company with government authority for the import of fertilizers into China. Under the contract's terms, Sinochem will receive monthly shipments at prices reflecting the market at the time of shipment. In November 1999, the Company amended its phosphate rock sales agreement with U.S. Agri-Chemicals Corp., a wholly-owned subsidiary of Sinochem. The new agreement provides for the sale of phosphate rock until 2024. In December 1999, Canpotex Limited (Canpotex), an exclusive offshore marketing company for Saskatchewan potash producers that receives 35 percent of its potash product from the Company, entered into contracts with major Chinese customers. These contracts will result in shipments to China during the first half of 2000 equal to or slightly higher than the amount sold to China in all of 1999. These contracts were completed at prices unchanged from the previous year. 16.CONTINGENCIES Mining Risks Since December 1985, the Company has experienced an inflow of water into one of its two interconnected potash mines located at Esterhazy, Saskatchewan. As a result, the Company has incurred expenditures, certain of which due to their nature have been capitalized while others have been charged to expense, to control the inflow. Since the initial discovery of the inflow, the Company has been able to meet all sales obligations from production at the mines. The Company has considered alternatives to the operational methods employed at Esterhazy. However, the procedures utilized to control the water inflow have proven successful to date, and the Company currently intends to continue conventional shaft mining. Despite the relative success of these measures, there can be no assurance that the amounts required for remedial efforts will not increase in future years or that the water inflow, risk to employees or remediation costs will not increase to a level which would cause the Company to change its mining process or abandon the mines. Potash Antitrust Litigation The Company was a defendant, along with other Canadian and United States potash producers, in a class action antitrust lawsuit filed in federal court in 1993. The plaintiffs alleged a price-fixing conspiracy among North American potash producers beginning in 1987 and continuing until the filing of the complaint. The class action complaint against all defendants, including the Company, was dismissed by summary judgment in January 1997. The summary judgment dismissing the case was appealed by the plaintiffs to the United States Court of Appeals for the Eighth Circuit (Court of Appeals). The Court of Appeals in a divided opinion (2 to 1) rendered its decision reversing the grant of summary judgment as to certain defendants, including the Company, and affirming as to certain other defendants. The dissent strongly disagreed with the majority opinion, stating that the majority had erred in not affirming the dismissal of the case as to all defendants. According to the dissent, all of the defendants were entitled to summary judgment. The Company, along with the other defendants remaining in the case, obtained a rehearing of the case from the entire Court of Appeals and the decision of the Court of Appeals was vacated. The case was reargued before the entire Court of Appeals on September 13, 1999, and the Court of Appeals found that the class had failed to present evidence of collusion sufficient to create a genuine issue of material fact and affirmed the dismissal of the complaint by summary judgment. In addition, in 1993 and 1994, class action antitrust lawsuits with allegations similar to those made in the federal case were filed against the Company and other Canadian and United States potash producers in state courts in Illinois and California. The Illinois case was dismissed for failure to state a claim. In the California litigation, all proceedings have been stayed pending the decision of the Court of Appeals. FTX Merger Litigation In August 1997, five identical class action lawsuits were filed in Chancery Court in Delaware by unitholders of PLP. Each case named the same defendants and broadly alleged that FTX and FMRP Inc. (FMRP) had breached fiduciary duties owed to the public unitholders of PLP. The Company was alleged to have aided and abetted these breaches of fiduciary duty. In November 1997, an amended class action complaint was filed with respect to all cases. The amended complaint named the same defendants and raised the same broad allegations. The defendants moved the Court to dismiss the amended complaint in November 1998, and the cases were dismissed in May 1999. In May 1998, the Company and PLP (collectively, Plaintiffs) filed a lawsuit (IMC Action) in Delaware Chancery Court against certain former directors of FTX (Director Defendants) and MMR. The Plaintiffs alleged that the Director Defendants, as the directors of PLP's administrative managing general partner FTX, owed duties of loyalty to PLP and its limited partnership unitholders. The Plaintiffs further alleged that the Director Defendants breached their duties by causing PLP to enter into a series of interrelated non-arm's-length transactions with MMR. The Plaintiffs also alleged that MMR knowingly aided and abetted and conspired with the Director Defendants to breach their fiduciary duties. On behalf of the PLP public unitholders, the Plaintiffs sought to reform or rescind the contracts that PLP entered into with MMR and to recoup the monies expended as a result of PLP's participation in those agreements. On November 10, 1999, the Plaintiffs and MMR announced a settlement of the IMC Action pursuant to which MMR agreed to purchase PLP's 47.0 percent interest in the Exploration Program, which includes three producing oil and gas fields plus an inventory of exploration prospects and leases, for a total of $32.0 million. In May 1998, Jacob Gottlieb filed an action (Gottlieb Action) on behalf of himself and all other PLP unitholders against the Director Defendants, MMR and IMC asserting the same claims that IMC asserted in the IMC Action. Because IMC and PLP had already asserted these claims, in July 1998 IMC filed a motion to dismiss the Gottlieb Action. The court has not set a briefing schedule for IMC's motion to dismiss, and the plaintiff has made no substantial activity in this case within the past year. IMC has recently been advised that the plaintiff intends to withdraw the complaint without prejudice. Pine Level Property Reserves In October 1996, IMC-Agrico signed an agreement with Consolidated Minerals, Inc. (CMI) for the purchase of real property, Pine Level, containing approximately 100.0 million tons of phosphate rock reserves. In connection with the purchase, Phosphates has agreed to obtain all environmental, regulatory and related permits necessary to commence mining on the property. Within five years from the date of this agreement, Phosphates is required to provide notice to CMI regarding one of the following: (i) whether Phosphates has obtained the permits necessary to commence mining any part of the property; (ii) whether Phosphates wishes to extend the permitting period for an additional three years (Extension Option); or (iii) whether Phosphates wishes to decline to extend the permitting period when the permits necessary to commence mining the property have been obtained, Phosphates is obligated to pay CMI an initial royalty payment of $28.9 million (Initial Royalty). In addition to the Initial Royalty, Phosphates is required to pay CMI a mining royalty on phosphate rock mined from the property to the extent the permits are obtained. The Company anticipates submitting permit applications by mid-2001. In the event that the permits are not obtained by October 2001, the Company presently intends to exercise the Extension Option, at a cost of $7.2 million (Extension Fee). This Extension Fee would be applied toward the Initial Royalty. Environmental Matters The Company's contingent environmental liability arises from three sources: facilities currently or formerly owned by the Company or its predecessors; facilities adjacent to currently or formerly owned facilities; and third-party Superfund sites. At facilities currently or formerly owned by the Company or its corporate predecessors, including FTX, PLP and their corporate predecessors, the historical use and handling of regulated chemical substances, crop and animal nutrients and additives, salt and by- products or process tailings have resulted in soil and groundwater contamination. Spills or other unintended releases of regulated substances have occurred previously at these facilities, and potentially could occur in the future, possibly requiring the Company to undertake or fund cleanup efforts. At some locations, the Company has agreed, pursuant to consent orders with the appropriate governmental agencies, to undertake certain investigations to determine whether remedial action may be required to address contamination. At other locations, the Company has entered into consent orders with appropriate governmental agencies to perform required remedial activities that will address identified site conditions. During 1999, under a consent order with the state of South Carolina, the Company successfully deconstructed its former fertilizer production facility in Spartanburg, South Carolina. Subsequently, the EPA performed an ESI at this facility to determine whether the Company will be required to conduct any additional remedial activities. Because the results of that ESI have not been finalized, the Company cannot determine the cost of any remedial action that ultimately may be required. Recently, several attorneys purportedly representing 600 neighbors of the Spartanburg facility have expressed their intention to file suit against the Company for alleged personal injury and property damage. Until these suits are filed, the Company is unable to determine the magnitude of potential exposure; however, the Company intends to vigorously contest any actions that may be brought. In a limited number of cases, the Company's current or former operations also allegedly resulted in soil or groundwater contamination to neighboring off-site areas or third-party facilities. In some instances, the Company has agreed, pursuant to consent orders with appropriate governmental agencies, to undertake investigations, which currently are in progress, to determine whether remedial action may be required to address contamination. Four plaintiffs filed a class action lawsuit, Moore et al. vs. Agrico Chemical Company et al., which names Agrico Chemical Company, FTX, PLP and a number of unrelated defendants. The suit seeks unspecified compensation for alleged property damage, medical monitoring, remediation of an alleged public health hazard and other appropriate damages purportedly arising from operation of the neighboring fertilizer and crop protection chemical facilities in Lakeland, Florida. Agrico Chemical Company owned the Landia portion of these facilities for approximately 18 months during the mid-1970s. Because the litigation is in its early stages, it is difficult to determine the magnitude of any exposure to the Company; however, the Company intends to vigorously contest this action and to seek any indemnification to which it may be entitled. Concurrent with this litigation, the EPA has undertaken on-site and off-site investigations of these facilities to determine whether any remediation of existing contamination may be necessary. Pursuant to an indemnification agreement with the Company, The Williams Companies have assumed responsibility for any costs that Agrico Chemical Company might incur for remediation as a result of the EPA's actions. Superfund, and equivalent state statutes, impose liability without regard to fault or to the legality of a party's conduct, on certain categories of persons that are considered to have contributed to the release of "hazardous substances" into the environment. Currently, the Company is involved or concluding involvement at less than 20 Superfund or equivalent state sites. Finally, through the FTX Merger, the Company assumed responsibility for contamination and environmental impacts at a significant number of oil and gas facilities that were operated by FTX, PLP or their predecessors. The Company is currently involved in eight such claims, which allege destruction of marshland by oil and gas operations or contamination resulting from disposal of oil and gas residual materials. The Company intends to vigorously contest these claims and to seek any indemnification to which it may be entitled. The Company believes that, pursuant to several indemnification agreements, it is entitled to at least partial, and in many instances complete, indemnification for the costs that may be expended by the Company to remedy environmental issues at certain facilities. These agreements address issues that resulted from activities occurring prior to the Company's acquisition of facilities or businesses from parties including PPG Industries, Inc.; Kaiser Aluminum & Chemical Corporation; Beatrice Companies, Inc.; Estech, Inc.; ARCO; Conoco; The Williams Companies; Kerr- McGee Inc.; and certain other private parties. The Company has already received and anticipates receiving amounts pursuant to the indemnification agreements for certain of its expenses incurred to date as well as any future anticipated expenditures. Other Most of the Company's export sales of phosphate and potash crop nutrients are marketed through two North American export associations, PhosChem and Canpotex, respectively. As a member, the Company is, subject to certain conditions, contractually obligated to reimburse the export association for its pro rata share of any losses or other liabilities incurred. There were no such operating losses or other liabilities in 1999, 1998 and 1997. The Company also has certain other contingent liabilities with respect to litigation, claims and guarantees of debt obligations to third parties arising in the ordinary course of business. The Company does not believe that any of these contingent liabilities will have a material adverse impact on the Company's financial position, results of operations or liquidity. 17.OPERATING SEGMENTS The Company's reportable segments are strategic business units that offer different products and services. They are managed separately because each business requires different technology and marketing strategies. As of December 31, 1999, the Company had three reportable segments: Phosphates, Potash and Salt. The Company produces and markets phosphate crop nutrients through the Phosphates business unit. Potash crop nutrients and industrial grade potash are produced and marketed through the Potash business unit. Salt produces salt for use in road deicing, food processing, water softeners and industrial applications. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. All intersegment sales prices are market-based. The Company evaluates performance based on operating earnings of the respective business units. The Notes to the Consolidated Financial Statements include detail related to acquisitions, discontinued operations, divestitures and special charges and should be referred to when viewing the segment information herein. Segment information for the years 1999, 1998 and 1997 was as follows(a):
IMC IMC IMC Phosphates Potash(b) Salt(b) Other(c) Total ---------- --------- ------- -------- ----- 1999 Net sales from external customers $1,237.9 $ 639.2 $ 319.4 $ 172.8 $2,369.3 Intersegment net sales 94.5 52.9 2.3 - 149.7 Gross margins(d) 213.8 235.0 98.1 (4.2) 542.7 Operating earnings(loss)(e) 53.9 106.1 51.7 (529.9) (318.2) Depreciation, depletion and amortization 72.8 69.6 40.3 49.8 232.5 Total assets 1,620.7 1,341.6 986.8 1,246.8 5,195.9 Capital expenditures 85.2 88.2 40.2 34.8 248.4 1998 Net sales from external customers $1,393.9 $ 604.2 $ 176.1 $ 208.9 $2,383.1 Intersegment net sales 178.9 95.9 1.3 3.1 279.2 Gross margins(f) 358.4 283.3 57.1 - 698.8 Operating earnings(loss)(g) 189.4 253.4 18.8 (89.5) 372.1 Depreciation, depletion and amortization 84.5 54.0 26.5 48.7 213.7 Total assets 1,792.2 1,364.9 1,119.3 2,180.5 6,456.9 Capital expenditures 76.2 159.7 28.1 41.6 305.6 1997 Net sales from external customers $1,312.5 $ 537.7 $ - $ 265.8 $2,116.0 Intersegment net sales 172.3 79.7 - 32.3 284.3 Gross margins 298.7 237.7 - 38.5 574.9 Operating earnings(loss)(h) 257.4 214.8 - (212.8) 259.4 Depreciation, depletion and amortization 100.5 35.9 - 26.0 162.4 Total assets 1,752.2 891.1 - 2,030.6 4,673.9 Capital expenditures 82.3 123.3 - 8.4 214.0 (a) The operating results and assets of entities acquired during the three year period are included in the segment information since their respective dates of acquisition. The operating results of Chemicals, AgriBusiness and the oil and gas business have not been included in the segment information above as these businesses have been classified as discontinued operations. However, the assets of Chemicals, AgriBusiness and the oil and gas business have been included as part of total assets in the Other column. (b) In early 2000, the Company decided to explore strategic options, including divestiture or a joint venture, for the Salt business unit and a production facility located in Ogden, Utah. (c) Segment information below the quantitative thresholds are attributable to two business units (Feed Ingredients and Vigoro) and corporate headquarters. Vigoro was sold in June 1998. Corporate headquarters includes the elimination of inter-business unit transactions and the goodwill recorded as a result of the FTX Merger in 1997. (d) Includes special charges of $41.9 million related to the Rightsizing Program, additional asset write-offs and environmental accruals. (e) Includes special charges of $758.9 million related to the Rightsizing Program, additional asset write-offs and environmental accruals and the goodwill write-down. (f) Includes special charges of $19.0 million primarily related to Project Profit and $4.1 million related to the Vigoro Sale. (g) Includes special charges of $195.1 million primarily related to Project Profit and $14.0 million related to the Vigoro Sale. (h) Includes a special charge of $183.7 million related to the write-down of Main Pass.
Financial information relating to the Company's operations by geographic area was as follows:
1999 1998 1997 ---- ---- ---- Net Sales(a) United States $1,257.4 $1,196.1 $1,044.2 China 363.6 405.6 459.6 Other 748.3 781.4 612.2 -------- -------- -------- Consolidated $2,369.3 $2,383.1 $2,116.0 ======== ======== ======== (a) Revenues are attributed to countries based on location of customer. Sales through Canpotex, one of the Company's export associations, have been allocated based on the Company's share of total Canpotex sales. Amounts reflect continuing operations only. 1999(a) 1998 1997 ------- ---- ---- Long-Lived Assets United States $3,063.0 $3,944.0 $3,233.2 Canada 638.9 634.7 378.5 Other 264.6 395.6 - -------- -------- -------- Consolidated $3,966.5 $4,974.3 $3,611.7 ======== ======== ======== (a) Excludes net assets of discontinued operations held for sale.
18.SUBSEQUENT EVENTS In early 2000, the Company decided to explore strategic options, including divestiture or a joint venture, for the Salt business unit and a production facility located in Ogden, Utah. Any sale would be subject to certain conditions including the execution of a definitive agreement and the receipt of certain approvals. Also in early 2000, the Company announced Board of Directors' authorization to repurchase up to 5.4 million shares of its common stock through a forward stock purchase program executed by a financial institution. Quarterly Results (Unaudited)(a) Dollars millions, except per share amounts
Quarter(b) First Second Third Fourth(c) Year(c) - ----------------------------------------------------------------------------- 1999 Net sales $ 667.3 $ 660.3 $ 521.5 $ 520.2 $2,369.3 Gross margins 198.4 167.6 97.2 79.5 542.7 Operating earnings (loss) 163.4 131.0 64.6 (677.2) (318.2) Earnings (loss) from continuing operations 71.0 53.1 14.6 (749.8) (611.1) Total loss from discontinued operations (2.8) (0.9) (1.4) (150.1) (155.2) Extraordinary item - debt retirement - - - 0.5 0.5 Cumulative effect of a change in accounting principle (7.5) - - - (7.5) ------- ------- ------- ------- -------- Net earnings (loss) $ 60.7 $ 52.2 $ 13.2 $(899.4) $ (773.3) ======= ======= ======= ======= ======== Basic and diluted earnings (loss) per share(d): Earnings (loss) from continuing operations $ 0.62 $ 0.47 $ 0.13 $ (6.54) $ (5.33) Total loss from discontinued operations (0.02) (0.01) (0.01) (1.31) (1.35) Extraordinary item - debt retirement - - - - - Cumulative effect of a change in accounting principle (0.07) - - - (0.07) ------- ------- ------- ------- -------- Net earnings (loss) per share $ 0.53 $ 0.46 $ 0.12 $ (7.85) $ (6.75) ======= ======= ======= ======= ======== Quarter(b) First Second(e) Third Fourth(f) Year(e,f) - ------------------------------------------------------------------------------ 1998 Net sales $ 536.0 $ 690.3 $ 556.1 $ 600.7 $2,383.1 Gross margins 153.6 202.2 163.9 179.1 698.8 Operating earnings (loss) 116.2 154.4 131.7 (30.2) 372.1 Earnings (loss) from continuing operations 57.2 59.0 47.0 (53.4) 109.8 Total earnings (loss) from discontinued operations (9.2) 28.0 (9.2) (131.4) (121.8) Extraordinary item - debt retirement (2.7) - (0.9) 6.6 3.0 ------- ------- ------- ------- -------- Net earnings (loss) $ 45.3 $ 87.0 $ 36.9 $(178.2) $ (9.0) ======= ======= ======= ======= ======== Basic and diluted earnings (loss) per share(d): Earnings (loss) from continuing operations $ 0.50 $ 0.52 $ 0.41 $ (0.46) $ 0.96 Total earnings (loss) from discontinued operations (0.08) 0.24 (0.08) (1.15) (1.07) Extraordinary item - debt retirement(0.02) - (0.01) 0.06 0.03 ------- ------- ------- ------- -------- Net earnings (loss) per share $ 0.40 $ 0.76 $ 0.32 $ (1.55) $ (0.08) ======= ======= ======= ======= ======== (a)See Notes to Consolidated Financial Statements for detail related to acquisitions, discontinued operations, divestitures, and special charges. (b)The operating results and assets of entities acquired during the period are included in the quarterly financial information since their respective dates of acquisitions. All quarterly amounts have been restated to reflect Chemicals and the oil and gas business as discontinued operations. (c)Fourth quarter operating results from continuing operations includes special charges of $758.9 million, $776.8 million after tax and minority interest, or $6.78 per share, related to the Rightsizing Program, additional asset write-offs and environmental accruals, the goodwill write-down and a change in tax law. (d)Due to weighted average share differences, when stated on a quarter and year-to-date basis, the earnings per share for the years ended December 31, 1999 and 1998 do not equal the sum of the respective earnings per share for the four quarters then ended. (e)Second quarter operating results from continuing operations includes special charges of $14.0 million, $9.1 million after tax, or $0.08 per share, related to the Vigoro Sale. (f)Fourth quarter operating results from continuing operations include special charges of $195.1 million, $114.2 million after tax and minority interest, or $1.00 per share primarily related to Project Profit.
Five Year Comparison(a) Dollars millions, except per share amounts
Year ended December 31 1999(b,c) 1998(c,d) 1997(e) 1996(f,g) 1995(f) --------- --------- ------- --------- ------- Statement of Operations Data: Net sales $2,369.3 $2,383.1 $2,116.0 $2,143.3 $2,132.7 Gross margins 542.7 698.8 574.9 596.3 632.9 Operating earnings (loss) (318.2) 372.1 259.4 426.4 514.6 Earnings (loss) from continuing operations (611.1) 109.8 69.8 121.7 195.2 Total earnings (loss) from discontinued operations (155.2) (121.8) 18.0 13.5 23.8 Extraordinary item - debt retirement 0.5 3.0 (24.9) (8.1) (3.5) Cumulative effect of a change in accounting principle (7.5) - - - - -------- ------- -------- -------- -------- Net earnings (loss) $ (773.3) $ (9.0) $ 62.9 $ 127.1 $ 215.5 ======== ======= ======== ======== ======== Diluted earnings (loss) per share: Earnings (loss) from continuing operations $ (5.33) $ 0.96 $ 0.74 $ 1.25 $ 2.09 Total earnings (loss) from discontinued operations (1.35) (1.07) 0.19 0.14 0.25 Extraordinary item - debt retirement - 0.03 (0.26) (0.08) (0.04) Cumulative effect of a change in accounting principle (0.07) - - - - -------- -------- -------- -------- -------- Net earnings (loss) per share $ (6.75) $ (0.08)$ 0.67 $ 1.31 $ 2.30 ======== ======== ======== ======== ======== Balance Sheet Data (at end of period): Total assets $5,195.9 $6,456.9 $4,673.9 $3,485.2 $3,521.8 Working capital 437.0 577.5 389.1 582.6 507.6 Working capital ratio 1.9:1 1.6:1 1.6:1 2.7:1 2.0:1 Long-term debt, less current maturities 2,518.7 2,638.7 1,235.2 656.8 741.7 Total debt 2,548.6 3,047.0 1,424.1 711.9 889.5 Stockholders' equity 1,080.1 1,860.4 1,935.7 1,326.2 1,090.4 Total capitalization 3,628.7 4,907.4 3,359.8 2,038.1 1,979.9 Net debt/total capitalization 70.2% 62.1% 42.4% 34.9% 44.9% Other Financial Data: Cash provided by operating activities $ 458.4 $ 269.1 $ 563.4 $ 486.7 $ 513.8 Capital expenditures 248.4 367.6 244.0 209.0 146.0 Cash dividends paid 36.6 36.6 29.7 34.5 33.2 Dividends declared per share 0.32 0.32 0.32 0.32 0.31 Book value per share 9.43 16.28 16.98 13.80 11.25 (a)See Notes to Consolidated Financial Statements for detail related to acquisitions, discontinued operations, divestitures, and special charges. (b)Operating results from continuing operations includes special charges of $758.9 million, $776.8 million after tax and minority interest, or $6.78 per share, related to the Rightsizing Program, additional asset write-offs and environmental accruals, the goodwill write-down and a change in tax law. (c)Restated to reflect Chemicals and the oil and gas business as discontinued operations. (d)Operating results from continuing operations includes special charges of $209.1 million, $123.3 million after tax and minority interest, or $1.07 per share primarily related to Project Profit and the Vigoro Sale. (e)Operating results from continuing operations includes a special charge of $183.7 million, $112.2 million after tax, or $1.19 per share related to the write-down of Main Pass. (f)Restated to reflect the merger with The Vigoro Corporation which was accounted for as a pooling of interests. (g)Operating results from continuing operations includes a special charge of $84.9 million, $59.9 million after tax, or $0.62 per share, related to a restructuring of the Company immediately after the merger with The Vigoro Corporation.
- --------------------------- (a)Earnings from continuing operations before special charges, minority interest, interest charges, taxes, depreciation, depletion and amortization and after PLP distribution. EX-21 15 SUBSIDIARIES OF THE REGISTRANT EXHIBIT 21 SUBSIDIARIES OF THE REGISTRANT Certain of IMC Global Inc.'s subsidiaries are listed below. These subsidiaries are all included in the Company's consolidated financial statements, and collectively, together with IMC Global Inc., account for more than 90 percent of consolidated net sales, earnings from continuing operations before income taxes. Jurisdiction of Percent Incorporation Ownership ------------- --------- IMC Global Operations Inc. Delaware 100% IMC-Agrico Company Delaware 53.5% IMC Global Potash Holdings Inc. Delaware 100% International Minerals & Chemical (Canada) Global Limited Canada 100% The Vigoro Corporation Delaware 100% KCL Holdings, Inc. Delaware 100% IMC Kalium Ltd. Delaware 100% IMC Central Canada Potash Inc. Delaware 100% IMC Kalium Carlsbad Potash Company Delaware 100% IMC Kalium Canada Ltd. Canada 100% Western Ag-Minerals Company Nevada 100% Phosphate Resource Partners Limited Partnership Delaware 51.6% IMC Inorganic Chemicals Inc. Delaware 100% IMC Global Australia Pty. Ltd. Australia 100% (Australia) A number of subsidiaries are not shown, but even as a whole they do not constitute a significant subsidiary. EX-18 16 PREFERABILITY LETTER Exhibit 18 Mr. J. Bradford James Executive Vice President and Chief Financial Officer IMC Global Inc. 2100 Sanders Road Northbrook, IL 60062 Dear Mr. James: Note 2 of the notes to consolidated financial statements of IMC Global Inc. incorporated by reference in its Form 10-K for the year ended December 31, 1999 describes a change in the method of accounting for determining goodwill impairment from the undiscounted cash flow method to the discounted cash flow method. We conclude that such change in the method of accounting is to an acceptable alternative method which, based on your business judgment to make this change for the stated reason, is preferable in your circumstances. Sincerely, /s/ Ernst & Young LLP --------------------------- Ernst & Young Chicago, Illinois January 31, 2000 EX-23 17 CONSENT OF INDEPENDENT AUDITORS EXHIBIT 23 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the following Registration Statements of IMC Global Inc. and in the related prospectuses of our report dated January 31, 2000 with respect to the consolidated financial statements of IMC Global Inc. incorporated by reference in this Annual Report (Form 10-K) for the year ended December 31, 1999. Commission File No. -------------------------- Form S-3 Form S-8 -------------------------- 333-27287 333-00189 333-40377 333-00439 333-70797 333-22079 333-22080 333-38423 333-40377 333-40781 333-40783 333-56911 333-59685 333-59687 333-70039 333-70041 ERNST & YOUNG LLP Chicago, Illinois March 23, 2000 EX-24 18 POWER OF ATTORNEY Exhibit 24 POWER OF ATTORNEY The undersigned, being a Director and/or Officer of IMC Global Inc., a Delaware corporation (the "Company"), hereby constitutes and appoints Douglas A. Pertz, J. Bradford James and Rose Marie Williams his or her true and lawful attorneys and agents, each with full power and authority (acting alone and without the other) to execute and deliver in the name and on behalf of the undersigned as such Director and/or Officer, the Annual Report of the Company on Form 10-K for the fiscal year ended December 31, 1999 (the "Annual Report") under the Securities Exchange Act of 1934, as amended, and to execute and deliver any and all amendments to the Annual Report for filing with the Securities and Exchange Commission; and in connection with the foregoing, to do any and all acts and things and execute any and all instruments which such attorneys and agents may deem necessary or advisable to enable the Company to comply with the securities laws of the United States and of any state or other political subdivision thereof. The undersigned hereby grants unto such attorney and agents, and each of them, full power of substitution and revocation in the premises and hereby ratifies and confirms all that such attorneys and agents may do or cause to be done by virtue of these presents. Dated this ____ day of March, 2000 /s/ Richard L. Thomas - ----------------------------- Richard L. Thomas POWER OF ATTORNEY The undersigned, being a Director and/or Officer of IMC Global Inc., a Delaware corporation (the "Company"), hereby constitutes and appoints Douglas A. Pertz, J. Bradford James and Rose Marie Williams his or her true and lawful attorneys and agents, each with full power and authority (acting alone and without the other) to execute and deliver in the name and on behalf of the undersigned as such Director and/or Officer, the Annual Report of the Company on Form 10-K for the fiscal year ended December 31, 1999 (the "Annual Report") under the Securities Exchange Act of 1934, as amended, and to execute and deliver any and all amendments to the Annual Report for filing with the Securities and Exchange Commission; and in connection with the foregoing, to do any and all acts and things and execute any and all instruments which such attorneys and agents may deem necessary or advisable to enable the Company to comply with the securities laws of the United States and of any state or other political subdivision thereof. The undersigned hereby grants unto such attorney and agents, and each of them, full power of substitution and revocation in the premises and hereby ratifies and confirms all that such attorneys and agents may do or cause to be done by virtue of these presents. Dated this ____ day of March, 2000 /s/ Joseph P. Sullivan - ----------------------------- Joseph P. Sullivan POWER OF ATTORNEY The undersigned, being a Director and/or Officer of IMC Global Inc., a Delaware corporation (the "Company"), hereby constitutes and appoints Douglas A. Pertz, J. Bradford James and Rose Marie Williams his or her true and lawful attorneys and agents, each with full power and authority (acting alone and without the other) to execute and deliver in the name and on behalf of the undersigned as such Director and/or Officer, the Annual Report of the Company on Form 10-K for the fiscal year ended December 31, 1999 (the "Annual Report") under the Securities Exchange Act of 1934, as amended, and to execute and deliver any and all amendments to the Annual Report for filing with the Securities and Exchange Commission; and in connection with the foregoing, to do any and all acts and things and execute any and all instruments which such attorneys and agents may deem necessary or advisable to enable the Company to comply with the securities laws of the United States and of any state or other political subdivision thereof. The undersigned hereby grants unto such attorney and agents, and each of them, full power of substitution and revocation in the premises and hereby ratifies and confirms all that such attorneys and agents may do or cause to be done by virtue of these presents. Dated this ____ day of March, 2000 /s/ Douglas A. Pertz - ----------------------------- Douglas A. Pertz POWER OF ATTORNEY The undersigned, being a Director and/or Officer of IMC Global Inc., a Delaware corporation (the "Company"), hereby constitutes and appoints Douglas A. Pertz, J. Bradford James and Rose Marie Williams his or her true and lawful attorneys and agents, each with full power and authority (acting alone and without the other) to execute and deliver in the name and on behalf of the undersigned as such Director and/or Officer, the Annual Report of the Company on Form 10-K for the fiscal year ended December 31, 1999 (the "Annual Report") under the Securities Exchange Act of 1934, as amended, and to execute and deliver any and all amendments to the Annual Report for filing with the Securities and Exchange Commission; and in connection with the foregoing, to do any and all acts and things and execute any and all instruments which such attorneys and agents may deem necessary or advisable to enable the Company to comply with the securities laws of the United States and of any state or other political subdivision thereof. The undersigned hereby grants unto such attorney and agents, and each of them, full power of substitution and revocation in the premises and hereby ratifies and confirms all that such attorneys and agents may do or cause to be done by virtue of these presents. Dated this ____ day of March, 2000 /s/ Donald F. Mazankowski - ----------------------------- Donald F. Mazankowski POWER OF ATTORNEY The undersigned, being a Director and/or Officer of IMC Global Inc., a Delaware corporation (the "Company"), hereby constitutes and appoints Douglas A. Pertz, J. Bradford James and Rose Marie Williams his or her true and lawful attorneys and agents, each with full power and authority (acting alone and without the other) to execute and deliver in the name and on behalf of the undersigned as such Director and/or Officer, the Annual Report of the Company on Form 10-K for the fiscal year ended December 31, 1999 (the "Annual Report") under the Securities Exchange Act of 1934, as amended, and to execute and deliver any and all amendments to the Annual Report for filing with the Securities and Exchange Commission; and in connection with the foregoing, to do any and all acts and things and execute any and all instruments which such attorneys and agents may deem necessary or advisable to enable the Company to comply with the securities laws of the United States and of any state or other political subdivision thereof. The undersigned hereby grants unto such attorney and agents, and each of them, full power of substitution and revocation in the premises and hereby ratifies and confirms all that such attorneys and agents may do or cause to be done by virtue of these presents. Dated this ____ day of March, 2000 /s/ David B. Mathis - ----------------------------- David B. Mathis POWER OF ATTORNEY The undersigned, being a Director and/or Officer of IMC Global Inc., a Delaware corporation (the "Company"), hereby constitutes and appoints Douglas A. Pertz, J. Bradford James and Rose Marie Williams his or her true and lawful attorneys and agents, each with full power and authority (acting alone and without the other) to execute and deliver in the name and on behalf of the undersigned as such Director and/or Officer, the Annual Report of the Company on Form 10-K for the fiscal year ended December 31, 1999 (the "Annual Report") under the Securities Exchange Act of 1934, as amended, and to execute and deliver any and all amendments to the Annual Report for filing with the Securities and Exchange Commission; and in connection with the foregoing, to do any and all acts and things and execute any and all instruments which such attorneys and agents may deem necessary or advisable to enable the Company to comply with the securities laws of the United States and of any state or other political subdivision thereof. The undersigned hereby grants unto such attorney and agents, and each of them, full power of substitution and revocation in the premises and hereby ratifies and confirms all that such attorneys and agents may do or cause to be done by virtue of these presents. Dated this ____ day of March, 2000 /s/ Harold H. MacKay - ----------------------------- Harold H. MacKay POWER OF ATTORNEY The undersigned, being a Director and/or Officer of IMC Global Inc., a Delaware corporation (the "Company"), hereby constitutes and appoints Douglas A. Pertz, J. Bradford James and Rose Marie Williams his or her true and lawful attorneys and agents, each with full power and authority (acting alone and without the other) to execute and deliver in the name and on behalf of the undersigned as such Director and/or Officer, the Annual Report of the Company on Form 10-K for the fiscal year ended December 31, 1999 (the "Annual Report") under the Securities Exchange Act of 1934, as amended, and to execute and deliver any and all amendments to the Annual Report for filing with the Securities and Exchange Commission; and in connection with the foregoing, to do any and all acts and things and execute any and all instruments which such attorneys and agents may deem necessary or advisable to enable the Company to comply with the securities laws of the United States and of any state or other political subdivision thereof. The undersigned hereby grants unto such attorney and agents, and each of them, full power of substitution and revocation in the premises and hereby ratifies and confirms all that such attorneys and agents may do or cause to be done by virtue of these presents. Dated this ____ day of March, 2000 /s/ James M. Davidson - ----------------------------- James M. Davidson POWER OF ATTORNEY The undersigned, being a Director and/or Officer of IMC Global Inc., a Delaware corporation (the "Company"), hereby constitutes and appoints Douglas A. Pertz, J. Bradford James and Rose Marie Williams his or her true and lawful attorneys and agents, each with full power and authority (acting alone and without the other) to execute and deliver in the name and on behalf of the undersigned as such Director and/or Officer, the Annual Report of the Company on Form 10-K for the fiscal year ended December 31, 1999 (the "Annual Report") under the Securities Exchange Act of 1934, as amended, and to execute and deliver any and all amendments to the Annual Report for filing with the Securities and Exchange Commission; and in connection with the foregoing, to do any and all acts and things and execute any and all instruments which such attorneys and agents may deem necessary or advisable to enable the Company to comply with the securities laws of the United States and of any state or other political subdivision thereof. The undersigned hereby grants unto such attorney and agents, and each of them, full power of substitution and revocation in the premises and hereby ratifies and confirms all that such attorneys and agents may do or cause to be done by virtue of these presents. Dated this ____ day of March, 2000 /s/ Rod F. Dammeyer - ----------------------------- Rod F. Dammeyer POWER OF ATTORNEY The undersigned, being a Director and/or Officer of IMC Global Inc., a Delaware corporation (the "Company"), hereby constitutes and appoints Douglas A. Pertz, J. Bradford James and Rose Marie Williams his or her true and lawful attorneys and agents, each with full power and authority (acting alone and without the other) to execute and deliver in the name and on behalf of the undersigned as such Director and/or Officer, the Annual Report of the Company on Form 10-K for the fiscal year ended December 31, 1999 (the "Annual Report") under the Securities Exchange Act of 1934, as amended, and to execute and deliver any and all amendments to the Annual Report for filing with the Securities and Exchange Commission; and in connection with the foregoing, to do any and all acts and things and execute any and all instruments which such attorneys and agents may deem necessary or advisable to enable the Company to comply with the securities laws of the United States and of any state or other political subdivision thereof. The undersigned hereby grants unto such attorney and agents, and each of them, full power of substitution and revocation in the premises and hereby ratifies and confirms all that such attorneys and agents may do or cause to be done by virtue of these presents. Dated this ____ day of March, 2000 /s/ Raymond F. Bentele - ----------------------------- Raymond F. Bentele POWER OF ATTORNEY The undersigned, being a Director and/or Officer of IMC Global Inc., a Delaware corporation (the "Company"), hereby constitutes and appoints Douglas A. Pertz, J. Bradford James and Rose Marie Williams his or her true and lawful attorneys and agents, each with full power and authority (acting alone and without the other) to execute and deliver in the name and on behalf of the undersigned as such Director and/or Officer, the Annual Report of the Company on Form 10-K for the fiscal year ended December 31, 1999 (the "Annual Report") under the Securities Exchange Act of 1934, as amended, and to execute and deliver any and all amendments to the Annual Report for filing with the Securities and Exchange Commission; and in connection with the foregoing, to do any and all acts and things and execute any and all instruments which such attorneys and agents may deem necessary or advisable to enable the Company to comply with the securities laws of the United States and of any state or other political subdivision thereof. The undersigned hereby grants unto such attorney and agents, and each of them, full power of substitution and revocation in the premises and hereby ratifies and confirms all that such attorneys and agents may do or cause to be done by virtue of these presents. Dated this ____ day of March, 2000 /s/ Pamela B. Strobel - ----------------------------- Pamela B. Strobel EX-27 19 FINANCIAL DATA SCHEDULE
5 1000 YEAR DEC-31-1999 DEC-31-1999 (72,100) 152,900 260,100 5,900 439,600 927,900 5,228,600 1,977,900 5,195,900 490,900 2,518,700 125,200 0 0 954,900 5,195,900 2,369,300 2,369,300 1,826,600 1,991,100 689,400 0 154,500 (465,700) 145,400 (611,100) (155,200) 500 (7,500) (773,300) (6.75) (6.75) Earnings per share has been calculated in accordance with Statement of Financial Accounting Standard No. 128, "Earnings Per Share," and is, therefore, stated on a basic and diluted basis.
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